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SEC Rule Hikes Cost of Trading U.S. CDS for Non-U.S. Firms

By Peter Madigan
February 11, 2016, Risk

New rules adopted by the US Securities and Exchange Commission (SEC) earlier today (February 10) will make it more expensive for non-U.S. counterparties to trade U.S. single-name credit default swaps (CDS), while making it more difficult for foreign dealers to circumvent U.S. regulations. 

The SEC voted unanimously to approve final rules requiring security-based swap transactions "arranged, negotiated or executed" by staff in the U.S. on behalf of non-U.S. persons to be subjected to the agency's rules under Title VII of the Dodd-Frank Act.

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E.U.'s MiFID II Market-Rule Delay Seen as Too Little, Too Late

By Julia-Ambra Verlaine, Silla Brush and Birgit Jennen
February 10, 2016, Bloomberg Business

The European Union’s plan to push back the start date of MiFID II, an overhaul of market rules covering everything from derivatives trading to bond pricing, by a year to 2018 ran into opposition from some lawmakers before the ink was dry on the press release. This adds to uncertainty about whether 12 months are enough.

The European Commission, the E.U.’s executive arm, proposed the delay on Feb. 10 to “take account of exceptional technical implementation challenges faced by regulators and market participants.” The European Securities and Markets Authority had pushed for an extension because there wasn’t sufficient time for banks and other financial institutions to build necessary data-reporting systems before the original 2017 deadline.

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Long Slog to E.U.-CFTC Clearing Deal May Color Future Talks

By Ed Beeson
February 10, 2016, Law360

U.S. and European financial regulators on Wednesday dodged a potential market crisis down the road when they announced a major accord covering the $550 trillion global derivatives market. While the agreement on clearing arrangements scored applause, the yearslong process to reach it raised questions about the next time authorities need to resolve differences overseas.

The deal covers the regulation of central counterparties that clear derivatives transactions in the U.S. and Europe. Under it, the European Commission will soon agree to recognize U.S.-based clearinghouses as regulated as...

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Pension Funds Quick off the Mark Over Swaps Clearing

By Charlotte Moore
February 11, 2016, Financial News

Given a deadline for completion of a big, complicated, demanding task, there is a natural temptation to put the whole thing off to the last minute.

Whole sectors of the finance industry have been known to ask regulators to delay the imposition of rules, pleading that they are not ready.

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Comment: What Credit Auction Friction Says About the OTC Market

By Tom Osborn
February 10, 2016, Risk

Credit risk auctions are a neat case study of the ways in which capital burdens and pricing complexity are changing the over-the-counter market.

They have become a popular tool when executing large, long-dated, credit-intensive swaps. These trades generate big credit valuation adjustment (CVA) capital charges, but the actual cost depends heavily on the existing book a dealer has with a client, a sector, or geography.

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ESMA Calls on Market Data Experts

February 9, 2016, Global Investor Magazine

European securities regulator ESMA is on the hunt for market data experts.

The watchdog is trying to form a panel of 20 industry insiders to work on market data issues.

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Market Experts Welcome MiFID II Delay

By Alice Atwood
February 10, 2016, FOW

Futures and options experts welcomed Wendesday's news that the European Commission has deleyaed the implementation of its sweeping European direction MiFID II by a year but warned firms to use the extra time to ensure they are ready for the new deadline.

The long-awaited decision on a delay has drawn a line under months of speculation, with market participants now working to the new deadline of January 3, 2018.

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Old Lady Calls Next LIBOR Reform Meeting in March

By Luke Jeffs
February 9, 2016, FOW

The Bank of England has called in early March the next meeting of its working group to find an alternative to the much-maligned LIBOR benchmark rate, marking the group's second meeting this year in what is a crucial phase.

A spokesman for the Bank of England told FOW the next meeting of the group, which comprises senior figures from the 15 largest banks and represenatives of the central bank, the Financial Conduct Authority, trade body the International...

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ESMA, ECB Move to Secure Europe-Wide Pacts

By Alice Atwood
February 9, 2016, FOW

European Securities and Markets Authority (ESMA) and the European Central Bank (ECB) have agreed on a template for the exchange of information between themselves and Europe's individual national regulators and central banks as part of their preparations for the implementation of MiFID II. 

ESMA and the ECB linked a memorandum of understanding (MOU) to allow the exchange of information between themselves and...

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Beware the Next Avalanche, Warns CFTC’s Sharon Bowen

By Louis Chunovic
February 10, 2016, FTF News

The CFTC commissioner is pushing for more enforcement powers and a bigger budget to help implement them.

New regulations may require that “all swaps transactions, whether cleared or uncleared” be reported to a trade repository, but more needs to be done, according to U.S. CFTC Commissioner Sharon Y. Bowen In a recent speech at George Washington University Law School, she called for closing loopholes and ending risky practices, as well for as...

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