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Crawling Before Walking

By James Rundle
Published September 29, 2014 Waters Technology

It must be tough, being a swap execution facility (SEF) operator. The things are enormously expensive to run, and if you're not Bloomberg, Tradeweb, or some of the larger interdealer brokers (IDBs) and information providers, you're already facing an uphill battle from the start.

Because, as everyone out of the dozen people I spoke to for my feature this month on how SEFs have done to date agreed, volume is king. Yes, you can have nifty compression tools, the occasional instrument that can't be found on other venues, and all kinds of technology to give away for free, but if you don't have liquidity on your books, then you're not going anywhere.

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ISDA Seeks Green Light on Margin Model

By Philip Stafford
Published September 26, 2014 Financial Times

Derivatives markets participants are expecting to receive the green light from regulators to develop an industry initiative designed to head off potential pricing confusion as new rules come into force.

The International Swaps and Derivatives Association, an industry trade body, said this week it had finalised a standard model to calculate the margin needed to back trades that would not be processed by clearing houses.

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FSB Backs Derivatives Crisis-Clause

By Philip Stafford
Published September 29, 2014 Financial Times

Global regulators have backed a plan by the global derivatives industry to allow authorities more time to decide on a resolution plan if a bank gets into financial difficulty.

The Financial Stability Board on Monday accepted a proposal overseen by the International Swaps and Derivatives Association, an industry trade body, to insert a so-called “stay” on the bank’s derivatives contracts, which are frequently worth billions of dollars in notional value.

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CFTC Gripped by Fiscal Year-End Hiring Frenzy

By Alexander Osipovich
Published September 29, 2014 Risk

Budget uncertainties are leading the CFTC to make a last-minute hiring push before a September 30 deadline, in what has become an annual tradition for the agency

The US government's fiscal year ends on September 30, and that means one thing at the Commodity Futures Trading Commission (CFTC): it's time to hire new employees, the quicker the better.

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ASX Hails First Customer for Client Clearing Service

By Simon Osborne
Published September 29, 2014 The Trade

The Australian Securities Exchange (ASX) has marked the first customer on its client clearing service.

The service is available for ASX’s futures and OTC clearing.

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Isda Seeks Green Light on Margin Model

By Philip Stafford
Published September 26, 2014 Financial Times

Derivatives markets participants are expecting to receive the green light from regulators to develop an industry initiative designed to head off potential pricing confusion as new rules come into force.

The International Swaps and Derivatives Association, an industry trade body, said this week it had finalised a standard model to calculate the margin needed to back trades that would not be processed by clearing houses.

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Catch Me If You Can: Emir Reporting Crackdown Looks Tricky

By Fiona Maxwell
Published September 29, 2014 Risk

Laughter is not the usual response to questions about the enforcement of new regulations, but it's surprisingly common when asking treasurers and lawyers whether they fear being fined for breaching Europe's seven-month-old derivatives reporting rules. Three sources for this article chuckle throughout their interviews – on and off, admittedly. One lawyer keeps a straight face until asked how authorities will track down offenders, and then dissolves. So, what's the joke?

"Just the idea of it is quite ridiculous," says Pedro Madeira, London-based assistant treasurer at UK airline operator Heathrow Limited. "For them to properly go counterparty-by-counterparty, verify which firms have complied and which have not, check that all trades reported were done correctly and matched up, and then fine all those that have not complied is absolutely impossible. It would be way too much for them to handle – if they even tried to, they would become the largest employer in the City by far."

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CFTC Eyes NDF Clearing Mandate

By Joe Parsons
Published September 26, 2014 FOW

The US derivatives watchdog is considering extending the clearing mandate to non-deliverable forwards (NDF) despite concerns over slow electronic trading and ongoing cross-border challenges.

The US Commodies Futures Trading Commission (CFTC) will hold its global markets advisory committee on October 9, where the agency will discuss whether a clearing mandate is appropriate for NDF contracts and what impact the mandate will have on the wider FX derivatives market.

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Credit Suisse Offloads $40bn Global CDS Portfolio

By Aaron Woolner
Published September 29, 2014 Risk

Credit Suisse offloaded a global $40 billion credit default swap (CDS) portfolio to French bank Societe Generale earlier this summer, with sources indicating that a further deal involving purely Asian names is imminent.

The terms of the deal were confidential but Asia Risk understands that the entire $40 billion portfolio was transferred on a single day via a master swap agreement covering all the underlying credit default swaps with the novation process ongoing.

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Canada Prepares for Derivatives Transparency Overhaul

By Marisol Collazo
Published September 24, 2014 John Lothian News

Following the September 2009 commitment by G20 leaders to improve the integrity of the markets, reporting of derivatives trades to trade repositories has become critical to regulatory efforts to monitor and detect the build-up of risk in the financial system.

To date, a number of jurisdictions around the world have developed rules and regulations requiring mandatory reporting of derivatives to trade repositories. Derivatives trades are being reported to trade repositories in the United States (since 2012), Japan, Hong Kong, Singapore and Australia (since 2013), the European Union (since 2014), and will soon be followed by Canada which is the latest jurisdiction to transpose G20 requirements on derivatives trade reporting into law.

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