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SEFs Are Off to a Slow Start, MarketAxess CEO Says

By Joe Mantone
Published April 23, 2014 SNL Financial

MarketAxess Holdings Inc. Chairman and CEO Richard McVey said his company is still committed to offering a swap execution facility even though the business has not met expectations.

Speaking April 23 during an earnings conference call, McVey said the industrywide SEF trading volumes and fees have been less than most anticipated.

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ISDA AGM: What Does the Future Hold for the OTC Markets?

By Jim Bennett
Published April 23, 2014 FOW Intelligence

Regulation and how the derivatives industry is coming to terms with this new market order was the central theme of the recent ISDA AGM in Munich, says Jim Bennett, Sapient Global Markets.

This was reflected in the various panel discussions and the chatter on the conference floor and through the exhibition hall.

From the opening address and throughout the following two days, the event focused on the benefits derivatives can bring to end-users and the regulatory barriers that might prevent their continued use. This included the requirement to execute some trades on swap execution facilities (SEFs), as well as clearing and reporting requirements.

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Coen Appointed Secretary General of Basel Banking Committee

By Huw Jones
Published April 23, 2014 Reuters

William Coen has been appointed secretary general of the Basel Committee, a body of global banking regulators, which is phasing in tougher capital requirements for lenders in the wake of the 2007-09 financial crisis.

Coen has held several positions with the U.S. Federal Reserve System and is currently deputy secretary general of the Basel Committee, a position he has held for the past seven years.

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CFTC Approves GAIN Capital Affiliate's Swap Execution Facility

By Jocelyn Grace Perdigon
Published April 23, 2014 SNL Financial

GAIN Capital Holdings Inc. said April 22 that affiliate GTX SEF LLC received CFTC approval for a temporary registration to operate a swap execution facility.

GTX SEF will provide a venue for trading that complies with the Dodd-Frank Act where clients will be able to trade non-deliverable forwards that are required to be traded on a swap execution facility, subject to mandatory clearing at some future time. The company intends to later expand its product offering to coincide with CFTC's mandatory clearing deadlines.

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Top Banking Executives Defect as Image Problems and Regulations Bite

By Martin Arnold
Published April 24, 2014 Financial Times

Why would anyone in their right mind want to run a big UK bank? This question, posed by a British executive working at a high level in a Wall Street bank in London, underscores the challenges facing the sector more than five years after the financial crisis.

The executive had spent the previous hour rattling off many of the reasons why a job at the top of a big bank was no longer such an attractive prize for an ambitious financier. These include regulation, squeezed profits, lower pay and a besmirched image.

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SEFs: Through the Looking Glass

Published April 22, 2014 Markets Media

Swap execution facilities are required by law to maintain an order book, yet only a few have chosen to make that order book accessible electronically. One of them is interdealer broker Tradition, which operates both a central limit order book and an RFQ (request for quote) system on its Trad-X SEF.

The inter-dealer world operated for many years on a voice-to-voice basis. A few years ago, Tradition introduced a central limit order book including a full implied engine with liquidity support from 12 large global banks.

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Recordkeeping Requirement Irks OTC Industry

Published April 22, 2014 Markets Media

The derivatives industry is pushing back against a proposal by the Commodity Futures Trading Commission that would require all participants on a swap execution facility or a derivatives exchange to record all pre-execution trade information.

The requirement serves as a large surtax on exchange transactions and causes end users to take transactions away from SEFs or designated contract markets, according to an April 17 comment letter submitted by IntercontinentalExchange (ICE).

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Slow Start to Swaps Trading Revolution

By Gregory Meyer and Michael Mackenzie
Published April 22, 2014 Financial Times

A revolution in swaps trading mandated by US regulators has had a slow start. However, the pace should quicken from next month when new rules expand trading opportunities.

The changes, dating from mid-February, moved the opaque and previously unregulated trade in over-the-counter derivatives, primarily interest rate swaps and credit default swaps, on to so-called swap execution facilities, or Sefs, which are subject to strict rules and regulations.

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CCPs Gain Traction in Europe

Published April 22, 2014 Markets Media

The use of central counterparties for funding collateral has increased according a survey by the European Central Bank ahead of mandatory clearing being introduced in the region.

The ECB’s March 2014 survey on credit terms and conditions in euro-denominated securities financing and over-the-counter derivatives markets collected information on changes in credit terms between December 2013 and February 2014. Respondents were a panel of 28 large banks, made up of 13 euro area banks and 15 banks with head offices outside the euro area.

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CME Said to Have Shelved Inflation Futures Plan

By Kris Devasabai
Published April 22, 2014 Risk

CME Group has shelved plans to launch a futures contract linked to US inflation, after roughly two years of exploratory talks, according to market participants – a decision said to have been taken late last year, but which has only come to light now. Disappointed would-be traders of the contract say a launch may now be off the agenda for years.

Specifications for a Consumer Price Index (CPI) futures contract and a deliverable Treasury inflation protected securities (Tips) futures contract were agreed in early 2013, say sources familiar with the initiative. But after failing to receive sufficient pledges of support from fund managers and dealers, CME is said to have put the plans on ice.

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