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Derivalert’s Top 10 News Stories of the Year: 2014

Just twelve months ago, as we turned the corner from 2013 to 2014, it looked like some of the derivatives reform upheaval was starting to subside – at least in the U.S.  Final SEF rules had been passed; swaps were being made-available-to-trade; we survived the government shut-down. By most accounts, things were transitioning in an orderly fashion in the U.S. and Europe looked like it was going to be the center of the action.

In fact, as we wrote in the January 15, 2014 edition of the DerivAlert newsletter: “It feels like déjà vu all over again as the headlines about European derivatives reform start to pile up on both sides of the Atlantic.  Just as we saw last year in the U.S., as each new rule implementation deadline draws closer, the fever pitch of industry concerns grows louder.”

We were partly right.  European derivatives reform did intensify over the course of 2014.  But so did the ongoing scrutiny of U.S. reforms, with the jury still out on what the final impact of the transition to SEF trading of derivatives will be on the industry.

But what were the absolute biggest stories of the year?  To find out, we dug into the analytics to find out which posts were the most viewed over the course of 2014. 

Here they are in descending order, as chosen by you, the DerivAlert reader, our top ten news stories of 2014:

10) Packaged Swaps Get SEF Go-Ahead

By Mike Kentz
Published May 3, 2014, IFR

Multi-legged swap transactions are set to make the move to swap execution facilities after the CFTC confirmed a set of phase-in dates. The decision finally removes a major industry bugbear, as the delayed migration of packages towards mandatory SEF trading was seen to be hampering volumes on the new regulated platforms. 

full article  (subscription)

9) Wall Street Gets Three-Month Delay on Interest-Rate Swap Mandate

By Silla Brush
Published February 10, 2014, Bloomberg

U.S. banks and other financial firms won a three-month delay for as much as half of the interest-rate swap market to meet a federal requirement to trade on platforms designed to increase competition and transparency.

full article  (free)

8) Thousands of Derivatives Users Not Ready for EMIR Reporting

By Fiona Maxwell
Published February 4, 2014, Risk

With just over a week left on the clock, regulators are said to be worried the market is not ready for the start of mandatory trade reporting under the European Market Infrastructure Regulation (Emir). According to some estimates, a little over 8% of the region's derivatives users have so far registered for the preliminary legal entity identifier (LEI) that will allow them to report their over-the-counter and listed trades.

full article  (subscription)

7) Time for a Change in Derivatives Trading

By Anish Puaar
Published April 21, 2014, Financial News

The clock has finally started ticking down to one of the most substantial changes ever seen in the European market for over-the-counter derivatives, a significant part of the global market worth €692 trillion at the end of June 2013, according to the Bank for International Settlements.

full article  (subscription)

6) SEF Execution of Package Trades to be Postponed

By Peter Madigan
Published November 6, 2014, Risk

CFTC chairman confirms no-action relief extension due to lack of market readiness.

The Commodity Futures Trading Commission (CFTC) is to postpone the migration of the most complex package transactions into swap execution facility (SEF) trading after recognizing that US swap market participants are not prepared to execute them on the trading venues.

full article  (subscription)

5) CFTC Said Ready to Push Interest-Rate Swaps to Trading Platforms

By Silla Brush
Published January 9, 2014, Bloomberg

The Commodity Futures Trading Commission is poised to push interest-rate and credit swaps onto trading platforms designed to make prices more transparent and competitive.

full article  (free)

4) Many Firms Will Not Meet EMIR Reporting Deadline, Says ISDA’s Pickel

By Tom Osborn
Published January 27, 2014, Risk

Many market participants will not be able to comply with new European derivatives reporting requirements when they take effect next month, and will have to rely on regulatory forbearance, according to Bob Pickel, chief executive of the International Swaps and Derivatives Association, who was speaking at a legal conference today in the Netherlands.

full article  (subscription)

3) SEF Trading Volumes Emerging from Summer Doldrums

By Ivy Schmerken
Published September 18, 2014, Wall Street & Technology

Despite the summer doldrums of SEF trading in interest rate swaps, activity in early September is showing signs of a rebound as traders conduct more of their business on the electronic venues. Tradeweb Markets announced Wednesday that average daily volume on its TW SEF for trading of interest rate swaps increased 20-fold to more than $20 billion in the first two weeks of September, over the first two weeks of trading on SEFs in October 2013.

full article  (free)

2) Make or Break Time for SEFs

By Mike Kentz
Published May 17, 2014, IFR

Two swap execution facilities have parted ways with their CEOs in the last two weeks in what market participants believe could trigger attrition across the 24 registered platforms. Consolidation has been predicted since the beginning of SEF discussions, but in a surprise turn it could be occurring just as volumes are set to receive a boost. 

full article  (free)

1) SEF Merger Talk Grows Stronger

By Mike Kentz
Published June 14, 2014, IFR

The saturated U.S. market for over-the-counter swap execution is on the cusp of the first wave of consolidation, just four months on from the first mandated execution of standardized derivatives on newly created swap execution facilities.

full article  (free)

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DerivAlert’s Top 10 News Stories of the Year: 2013

There was no shortage of big news from the derivatives market this year.  In the month of October alone, the deadline for trading derivatives electronically on SEFs was met while the federal government implementing these regulations was shut down. Across the Atlantic, another group of regulators was lobbying for a delay in those rules, citing potential cross-border issues.  

Meanwhile, CFTC Chairman Gary Gensler, who announced that he will step down at the end of the year, held firm to his agency’s game plan.  And so, the new era of SEF-based OTC derivatives trading was born, as mandated by Dodd-Frank. 

Amidst all of the upheaval of the past year – the passed rules and agency guidance, the extended deadlines, uncertainty around extraterritoriality and the gridlock in Washington – which stories grabbed the most attention among DerivAlert readers?  To find out, we dug into the analytics to find out which posts were the most viewed over the course of 2013. 

Here they are, chosen by you, the DerivAlert reader:

The Top Stories of 2013 
(along with a few honorable mentions that we couldn’t resist including on the list):

10) EMIR Flaws Could See Futures Reporting Delayed Till 2015
By Tom Osborn
Published July 29, 2013, Risk

The European Securities and Markets Authority (Esma) has confirmed it is considering pushing back its trade reporting deadline for exchange-traded derivatives until as late as January 2015, in order to give firms more time to adapt the reporting framework to futures and options products.

full article  (subscription)

 9) Standardized OTC Swaps to Launch Within Weeks
By Peter Madigan
Published April 19, 2013, Risk

Within weeks, fixed-income market participants will be able to trade a new, exchange-traded version of the over-the-counter interest rate swap, with eight tenors, standard coupons and quarterly maturity dates like those used in the futures market. Some of those involved in the work see it as a way of defending the OTC market against the threat posed by swap futures.

full article  (subscription)

8) Uh Oh: The Attempt to Regulate Swaps is Failing
By John Carney
Published April 6, 2013, CNBC

It's hardly surprising to hear that some of the largest derivatives brokerages are looking to set up futures exchanges. A huge portion of the traditional business these brokers did is in the process of migrating out of swaps and into futures.

full article  (free)

7) US in Compromise on Derivatives Trade Rules
By Michael Mackenzie and Gregory Meyer
Published May 16, 2013, Financial Times

Commissioners on the US Commodity Futures Trading Commission voted 4 to 1 to pass long-awaited derivatives trading rules on Thursday that preserve voice-based transactions in conjunction with electronic platforms.

full article  (subscription)

6) SEF Rules Hit Non-US Cross-Border Trading
By David Wigan
Published October 31, 2013, Euromoney

The requirement from October 2 for swap dealers and regular users of derivatives to transact swaps on Commodity Futures Trading Commission-mandated swap execution facilities (SEFs) was the last piece in the puzzle for US derivatives market regulation, after mandatory reporting and clearing came in earlier this year.

full article  (free)

5) Swaps Clearing Rules Divide Market
By Philip Stafford
Published August 21, 2013, Financial Times

An obscure part of the Dodd-Frank Act has become the unwitting battleground among market infrastructure operators as they seek to meet rules tightening derivatives trading.

full article  (subscription)

4) SEF Execution Agreement Requirement Angers Buy-Side
By Peter Madigan
Published September 24, 2013, Risk

Buy-side firms are refusing to sign participation agreements with some newly registered US swap execution facilities (Sefs), because of a controversial requirement that commits end-users to negotiate bilateral trade breakage agreements with any counterparty they transact with on the trading venues, Risk has learned.

full article  (subscription)

3) Traders Take Their Swaps Deals to Futures ExchangesBy Matthew Philips
Published January 24, 2013, Bloomberg Businessweek

On Friday, Oct. 15, a rule designed to improve government oversight of the multitrillion-dollar market for derivatives took effect. The following Monday, many energy traders moved their swaps business to a futures exchange. After the U.S. Commodity Futures Trading Commission put two years into building its regulatory framework for swaps, a slice of the market simply sidestepped it.

full article  (free)

2) CFTC to Shake Up Swaps Trading Market
By Michael Mackenzie, Gina Chon, and Philip Stafford
Published November 17, 2013, Financial Times

New guidance from the main US regulator of privately negotiated derivatives is set to test the business models of interdealer brokers, who have long played a crucial intermediary role between global banks.

full article  (subscription)

1) High Drama at the CFTC: The Battle Over Swaps and Futures
By Matthew Philips
Published February 1, 2013, Bloomberg Businessweek

Hearings at the U.S. Commodity Futures Trading Commission aren’t exactly known for their riveting entertainment value. Nor for their mass-market appeal. Yet on Thursday, it was standing-room-only at the CFTC headquarters in Washington as the commission held a roundtable discussion about the recent migration of swaps trading into the futures market.

full article  (free)

Honorable Mentions:
The Stories Made Us Stop and Say, ‘Whoa’

Three Wall Street Trade Associations Sue US Regulator
By Katy Burne
Published December 4, 2013, Wall Street Journal

Three Wall Street trade groups are suing a top U.S. regulator alleging procedural violations at the agency, in the latest effort by large banks to fight new rules that they contend will unfairly crimp their trading business.

full article  (subscription)

Wetjen Said to Face Vote as Acting CFTC Head Replacing Gensler
By Silla Brush
Published December 13, 2013, Bloomberg

Commodity Futures Trading Commissioner Mark P. Wetjen is poised to be voted acting chairman of the top U.S. derivatives regulator within days, according to two people with knowledge of the process.

full article  (free)

SEF MAT Submissions: Reality Check
By Radi Khasawneh
Published November 1, 2013, Tabb Forum

Implementing the Made Available to Trade rule will transform the swap market. But based on early SEF submissions to the CFTC, the industry needs clarity on which swaps will qualify.

full article  (free)

Standardization Needed in SEF Reporting Conventions
By Michael Watt
Published October 25, 2013, Risk

One of the core principles behind swap execution facilities (Sefs) – the new breed of trading platforms that opened for business under the US Dodd-Frank Act on October 2 – was to create greater transparency in the swaps market. In the words of the Commodity Futures Trading Commission (CFTC), Sefs must "make public timely information on price, trading volume, and other trading data on swaps to the extent prescribed by the commission".

full article  (subscription)

EMIR Reporting Questions Pile Up for Corporates
By Fiona Mawell
Published October 3, 2013, Risk

Amid fundamental questions about the timing and scope of Europe’s new derivatives reporting rules, corporates are weighing whether to delegate the work to their dealers. But some large companies are not keen – and many banks are sitting on the fence. Fiona Maxwell reports

full article  (subscription)

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Most Read Articles: October 24-November 6

Here are the five most-read articles on DerivAlert for the past two weeks:

For the latest breaking derivatives news, bookmark DerivAlert, follow us on Twitter @DerivAlert or subscribe to our daily e-mail newsletter by clicking here.

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Most-Read Articles: October 8th-16th

Here are the five most-read articles on DerivAlert for the past week:

For the latest breaking derivatives news, bookmark DerivAlert, follow us on Twitter @DerivAlert or subscribe to our daily e-mail newsletter by clicking here.

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DerivAlert Selected as Finalist in FTF News Technology Innovation Awards 2011

After more than a year of aggregating news and providing original content on regulatory reform in the OTC derivatives market, DerivAlert is proud to be acknowledged as a finalist in FTF News’ Technology Innovation Awards 2011 for the most effective use of social media.  In the past year, DerivAlert has evolved to become a premier blog portal for news and information on regulatory reform of the OTC derivatives markets through aggregated news alerts, blog commentary, legislative timelines, video content, industry research, a directory of financial & regulatory leaders, and other educational material.  And in the limited universe of global market participants in the swaps markets, DerivAlert now reaches a world-wide audience of more than 8,500 regulators, buy- and sell-side traders, journalists, analysts and industry leaders each month – plus more than 600 followers on Twitter!

We’d like to thank you, our readership, for your continued interest in derivatives reform and helping to make DerivAlert a success, in addition to the editorial team at FTF News for naming DerivAlert to the list of finalists.

To learn more about this year’s awards or support DerivAlert, you may register to FTF News for free here and submit your vote through this link before 6 p.m. ET on April 8th.

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CFTC, EC Release Joint Statement on OTC Derivatives Regulation

CFTC Chairman Gary Gensler traveled to Brussels the week September 27 to discuss various rules that will affect the OTC derivatives markets on both sides of the pond with European Commissioner Michel Barnier. After their meeting, the two released a joint statement solidifying the transatlantic intent to cooperate closely in strengthening the global financial system.

According to the joint statement, Commissioner Barnier and Chairman Gensler discussed several issues pertaining to enhancing oversight and reducing risk in the OTC derivatives market including:

  • Comprehensive regulating of derivatives dealers for capital and margin, recordkeeping and reporting and business conduct standards
  • Requiring standardized OTC derivatives to be cleared by central counterparties, imposing stringent prudential and organization rules for central counterparties and imposing risk mitigation standards for non-standardized contracts that are not centrally cleared
  • Increasing transparency of the OTC derivatives market

Read the full joint statement here.

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Transcripts & Webcast: SEC/CFTC Roundtables on SEFs and Swaps Data

On September 14th and 15th, the SEC and CFTC held two days of roundtables in Washington to discuss various issues relating to the Dodd-Frank Act, including swap execution facilities (SEFs), swaps data repositories and exceptions from the mandatory electronic trading rule.

The 400-page transcript of the roundtable discussions from September 14th is available here.

Streaming copies of the two webcasts from September 15th are available from the SEC via the following links:

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Tradeweb Responds to CFTC Draft Rules

Tradeweb has issued a statement in response to the CFTC draft rules that were announced today:

"We are entirely supportive of the regulators' efforts to modernize the derivatives market, but the new rules need to encourage the growth of a competitive marketplace. Investment in trading and clearing venues by market participants has provided the seed capital leading to the creation of solutions that support the transparency and systemic risk reduction the Dodd-Frank Act seeks to achieve. Competition between clearing organizations, in particular, is best stimulated by rules that ensure open and equal access to DCO's for all SEFs and market participants. Failure to achieve a level playing field for DCO's runs the danger of forming a combined execution and clearing monopoly, stifling innovation and competition."

In reference to governance:

"Tradeweb is in favor of independent directors, but at this stage it is unclear what their role will be. For outside board members to be effective, their interests need to be aligned with investors and other stakeholders." SocialTwist Tell-a-Friend

Senate Banking Committee Testifies on the Dodd-Frank Act

Federal Reserve Board Chairman Ben Bernanke and other top financial regulators will meet with the Senate Banking Committee this morning, at 10am EST, to discuss the implementation of the new financial regulation bill.

Watch the hearing live on C-SPAN3 here.

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Industry Presentations & Comments to the CFTC on Swap Execution Facility Registration

Over the past several weeks, the CFTC received public comments and held meetings with financial industry participants on SEF Registration Requirements and Core Principle Rulemaking,.  Coinciding with the recent CFTC-SEC roundtable discussions on SEFs held on September 14th and 15th, copies of presentations from these internal meetings are now available online to the public.

Links to PDFs for each of the presentations are available from the CFTC in chronological order below:

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