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Dodd-Frank's Swaps "Push-out" Rule Upsets Smaller Banks

By Victoria McGrane
October 31, 2014 The Wall Street Journal

Regional banks are quietly joining the fight against one of the most hated Dodd-Frank provisions on Wall Street.

The target is the so-called swaps push-out provision, which requires banks to spin off certain derivatives trading activities into units that don’t enjoy access to the government safety net.

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Asia-Pac Clearers Given Green Light But EU Stalls on US Approval

By Tim Cave
October 30, 2014 Financial News

The European Commission has today given its international seal of approval to clearing houses in Asia Pacific, in a long-awaited move that will help European banks avoid higher capital costs against swap exposures.

The EU's executive body did not, however, go as far as granting approval to clearers based in the US, as concerns mount among European firms over disruption to their transatlantic swaps trades.

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Retail Investors Flock to Derivatives for Income and Safety

By Dan Freed
October 30, 2014 TheStreet.com

Retail investor interest in derivatives continues to grow as investorslearn more about trading the instruments and see it as an attractive way to hedge against risk and generate income, according to online brokers and industry data.

The increased derivatives trading is particularly impressive in light of the fact that until October's wild market swings, volatility had been at its lowest levels in several years. Volatility typically leads to an increase in derivatives bets, and indeed, October will be the second-best options trading month in history, according to Jim Binder, spokesman for The Options Clearing Corp.

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Uncertainty Surrounds CFTC Footnote 513

By Ashley Lee
October 30, 2014 International Financial Law Review

The CFTC's no-action relief for yet another wide-reaching extraterritorial provision ends this year. The market is concerned that it will not be renewed.

Footnote 513 was included in the CFTC's 76-page cross-border guidance released in July 2013. It states that a US branch of a non-US swap dealer would be subject to transaction-level requirements without substituted compliance available.

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Pimco Pulled Futures-Clearing Business From State Street

By Katy Burne
October 30, 2014 The Wall Street Journal

Pacific Investment Management Co. in the past month pulled all its futures-clearing business from a unit of State Street Corp. after State Street asked Pimco to reduce some positions, said people familiar with the matter.

The spat occurred as Pimco was grappling with the departure of legendary bond investor Bill Gross and the billions of dollars of investor cash that followed him out the door, the people said. It wasn’t clear if State Street’s request was prompted by his exit.

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MACs Loom Large in Swaps Markets

October 29, 2014 Markets Media

The Securities Industry and Financial Markets Association’s market agreed coupon (MAC) product, launched in spring 2013, represents the standardization of certain swap contracts.

“Traditional par swaps with on-market rates won’t net or collapse into a single line item at the clearing house, but MAC swaps, by virtue of standardized dates and a fixed, standardized rate, are fungible and will collapse into a single line item at the clearing house,” Elisabeth Kirby, director of rates strategy at Tradeweb, told Markets Media.

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Manage Asia Derivative Risk Locally, Says Bank of England

By Viren Vaghela
October 29, 2014 Risk

Booking trades where they are originated rather than within offshore booking hubs creates better risk management

Banks in Asia should book and manage transactions closer to home as it leads to better risk management according to Paul Fisher, deputy head of the Prudential Regulation Authority and executive director, supervisory risk and regulatory operations at the Bank of England.

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EU Transaction Tax Bid Falters on Revenue Disagreement

By Rebecca Christie
October 29, 2014 Bloomberg

The European Union must figure out how to handle revenues from a proposed financial-transaction tax to meet a year-end deadline for moving ahead with the levy in participating nations.

Ten nations pledged in May to seek agreement on a “progressive” tax on equities and “some derivatives” by the end of 2014, with implementation planned for a year later. As that deadline approaches, nations have found broad agreement on how to handle equities, according to an Oct. 27 planning document obtained by Bloomberg News.

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Eurex CEO Slams European Clearing Mandate Delay

By Aaron Woolner
October 29, 2014 Risk

The global nature of OTC derivative markets means a synchronised approach to clearing is required, according to Andreas Preuss, Eurex chief executive

The European Union's decision to delay the introduction of its over-the-counter derivative clearing mandate to 2015 is "unfortunate" and creates an "implemented disadvantage" for the aim of increasing safety in the sector, according to Andreas Preuss, chief executive of Frankfurt-based Eurex.

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Depository Trust Drops Remaining Data Claims Against CFTC

By Andrew Harris
October 29, 2014 Bloomberg

Depository Trust & Clearing Corp., having had most of a lawsuit over data-reporting requirements thrown out, agreed to drop the rest of its claims against the U.S. Commodity Futures Trading Commission.

The regulator and New York-based DTCC, which acts as a transaction data repository, agreed to the dismissal of the remaining claims, they said today in a federal court filing in Washington.

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