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CFTC Chairman Offers Hope to Derivatives End-users

By Mark Pengelly
October 23, 2014 Risk

Timothy Massad, the new chairman of the US Commodity Futures Trading Commission, seems to be steering the agency towards a more deliberate and pragmatic approach to Dodd-Frank regulation

During the past five years, when the financial world has not been gripped by budgetary battles in the US Congress or economic turmoil in the eurozone, it has increasingly been fixated on the actions of regulators.

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Buy-side Firms Slam Broker SEFs Over Lack of Anonymity

By Peter Madigan
October 24, 2014 Risk

"When I trade in a Clob I want to be anonymous," says Eaton Vance's O'Brien. But broker-run platforms claims users want to keep name give-up

An old broking practice is causing unrest in the new world of swap execution facilities (Sefs).

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The European Market Data Debate

By Philip Stafford
October 23, 2014 Financial Times

Few topics in European exchanges stir the passions like price and access market data.

Often a delicate subject, it’s particularly acute right now as everyone tries to find ways to economise and authorities finalise the rules of Mifid II.

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ECB Tries for Third Time Lucky in European Stress Tests

By Jeff Black
October 24, 2014 Bloomberg

For the European Central Bank, success as the euro area’s financial supervisor may begin this weekend with a few failures.

At noon in Frankfurt on Oct. 26, investors will learn which of the currency bloc’s 130 biggest banks fell short in the ECB’s year-long examination of their asset strength and ability to withstand economic turbulence. After two previous stress tests run by the European Banking Authority didn’t reveal problems at lenders that later failed, the ECB has staked its reputation on getting this exercise right.

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Fed Lays Out Scenarios for 2015 Bank Stress Tests

By Douwe Miedema
October 23, 2014 Reuters

The U.S. Federal Reserve said on Thursday it would assume wider corporate bond spreads and a higher oil price in the most strenuous scenario it will use in next year's run of its annual check of banks' health.

Overall, however, the Fed said its "severely adverse" scenario was largely similar to the one it had used in its 2014 run of the so-called stress tests, mandatory for any bank with assets of more than $50 billion.

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FCMs Face Buyside Pressure to Reduce Clearing Fees

By Beth Shah
October 21, 2014 GlobalCapital

Futures Commission Merchants are expected to come under increasing pressure from the buyside to reduce the clearing fees that they charge as trading volumes increase. This comes following an increase in rates charged by some FCMs in a bid to cover the rising costs of business associated with the implementation of various regulatory frameworks.

In a report, TABB Group wrote that buyside institutions generally are not putting pressure on FCMs to lower execution rates, however there is rising pressure from asset managers to lower clearing rates. Pressure to reduce commission levels is expected to progressively emerge as volumes continue to rise.

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Deutsche Bank CRO: Derivatives Becoming Loss Leader

By Kris Devasabai
October 22, 2014 Risk

Banks may have to rethink their interest rate derivatives businesses in the face of tough capital requirements, warns Deutsche Bank's Stuart Lewis

New prudential rules have squeezed the profitability of interest rate derivatives to such an extent that even traditional pillars of the business may no longer be viable on a standalone basis, according to Stuart Lewis, group chief risk officer at Deutsche Bank.

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Clarity Needed on Clearing Rules for Non-EU Entities

By Hazel Sheffield
October 22, 2014 GlobalCapital

Market participants outside of the EU are grappling with European regulation that mandates clearing for non-EU derivatives contracts, resulting in a lot of interpretive differences according to lawyers.

On October 10, the European Market Infrastructure Regulation came into force for derivative contracts between two non-EU counterparties in jurisdictions not deemed equivalent to Europe, but where the contract could have a direct, substantial and foreseeable effect in the EU. From this date, certain non-EU counterparties, or third country entities as they are known, must comply with the clearing obligation and apply risk mitigating techniques for uncleared transactions.

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Citadel "Nervous" About Lack of SEF Competition

By Peter Madigan
October 22, 2014 Risk

Swap end users raise concerns about Sef competition - and are also worrying about execution rules for NDFs and package trades

Derivatives end users are increasingly worried that just two swap execution facilities (Sefs) - Bloomberg and Tradeweb - are dominating dealer-to-client trading. Innovation coud suffer and costs could rise if there is no competition, they warn.

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Eurex Puts Asia at Core of Growth Strategy

By Jon Watkins
October 21, 2014 The Trade

Eurex has outlined a medium-term plan, putting expansion into Asia and the growth of its OTC clearing business at the forefront of its ambitions.

The German exchange said it is in ‘advanced talks’ with regulators in Singapore to launch its clearing house, while cross-listing and market data deals with Asian exchanges are also on the horizon.

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