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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.

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ISDA Delays Overhaul of $18 Trillion Derivatives: Credit Markets

By Abigail Moses
Published September 18, 2014 Bloomberg

The International Swaps & Derivatives Association said it postponed the biggest overhaul to the $18 trillion credit derivatives market in more than a decade to give investors more time to prepare for the changes.

New rules governing credit-default swaps will take effect Oct. 6 rather than Sept. 22, ISDA said in a statement yesterday. The changes seek to fix flaws in sovereign and bank insurance that prevented some contracts from paying out as intended since the financial crisis.

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US Margin Rules 'Punish Lenders', Warns CFTC's Giancarlo

By Peter Madigan
Published September 18, 2014 Risk

The Commodity Futures Trading Commission (CFTC) has unanimously approved proposed rules on margining for non-cleared swaps, despite one commissioner's concerns that the rules will apply to more US entities than would be the case under the equivalent international standards.

In a 4-0 vote held yesterday at the commission headquarters in Washington, DC, the CFTC released proposals that would eventually catch entities that have non-cleared swap portfolios with a gross notional exposure of more than $3 billion. International standards released last year set the threshold at €8 billion – or roughly $11 billion.

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Regulators Weigh Delay for Separating Banks’ Swaps Units

By Jesse Hamilton and Silla Brush
Published September 19, 2014 Bloomberg

U.S. banks may get another year to shift some swaps trading from their government-insured units as regulators respond to demands to give them more time, according to two people familiar with the talks.

A delay until July 2016 in applying the Dodd-Frank Act separation requirement is being weighed in discussions between bank lobbyists and officials from the Federal Reserve and Office of the Comptroller of the Currency, according to the people, who requested anonymity to talk about the matter.

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Comment: Beware European Market Data Smokescreen

By Mark Hemsley, Richard Metcalfe, Rudolf Siebel and Helle Søby Thygesen
Published September 18, 2014 Financial Times

In recent weeks, European market participants have finished, filed and published their initial responses to the latest Markets in Financial Instrument Directive (Mifid). Many will breathe a sigh of relief that the end of a lengthy process is in sight.

But the huge effort expended by policy makers, regulators and financial firms to improve European capital markets will have been hobbled if steps are not taken to address the de facto monopoly regime in market data, the oxygen of the financial markets.

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CFTC Seeking Comment on Overseas Impact in Swap-Collateral Rules

By Silla Brush
Published September 17, 2014 Bloomberg

The U.S. Commodity Futures Trading Commission has released revised collateral rules for swaps traded directly between banks, manufacturers and other firms while seeking comment on how to apply the regulations overseas.

The request for input on how to apply the rules to foreign banks and overseas units of U.S. firms came as CFTC members voted unanimously today to re-propose the collateral measure. The vote comes a day after a federal judge upheld the agency’s guidelines for how cross-border rules should be applied.

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Tradeweb SEF Trading Increases Twenty Fold Since October Launch

Published September 17, 2014 Markets Media

Tradeweb Markets, the leading global provider of fixed income and derivatives marketplaces, announced that average daily trading volume on TW SEF for interest rate swaps(IRS) has increased twenty-fold to more than $20 billion in the first two weeks of September compared to the first two weeks of trading on swap execution facilities (SEFs) in October. The number of clients trading derivatives on Tradeweb has also grown over 400 percent.

Derivatives trading has increased dramatically on SEFs since they first launched in October 2013. In the first two weeks of September, more than 110 institutional derivatives trading clients executed over $230 billion in global interest rate swaps on Tradeweb’s request-based (RFQ) SEF.

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Iosco Outlines Standards for Uncleared Swaps

By Joe Parsons
Published September 17, 2014 FOW

The International Organisation of Securities Commissions (Iosco) has proposed in a report seven methods to standardise uncleared swaps trades between banks.

The methods put forth by the global regulatory body are intended to promote international risk techniques and legal certainty for over-the-counter derivatives not cleared through a central counterparty.

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Goldman Sachs Bought $24 Billion CDS Portfolio from UBS

By Viren Vaghela
Published September 18, 2014 Risk

Goldman Sachs purchased a portfolio of 4,500 Australian credit default swaps (CDSs) from UBS last year, after the Swiss bank opted to retrench from the fixed-income business across Europe and Asia, a source has revealed.

The deal was concluded in November with Goldman coming out winners for a portfolio of mixed Australian index CDSs with between two and five years' duration remaining.

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EU Clearing Timeline Will Not Force Out FCMs – Risk.net Poll

By Catherine Contiguglia
Published September 17, 2014 Risk

Banks can afford to wait for mandatory clearing to take effect in Europe, according to almost three-quarters of respondents to a Risk.net poll.

Asked how many banks would close their client clearing businesses if the lion's share of European derivatives users have until 2016 before they are required to start clearing – the likely consequence of draft rules published by the European Securities and Markets Authority (Esma) in July – 72% of respondents said no institutions would shut up shop.

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