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EC to Delay Frontloading of Cleared Swaps

By Fiona Maxwell
December 19, 2014, Risk

The European Commission has written to Esma, informing it of plans to change the frontloading timeline, with the intention of removing uncertainty in the controversial requirement.

The European Commission (EC) has confirmed it will amend the timeline for the frontloading of over-the-counter derivatives – which drags existing trades into Europe's clearing regime – pushing the window back two months for clearing members and five months for other larger investment firms. Dealers had complained that an earlier attempt to fix the controversial requirement had introduced a number of serious bugs.

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CFTC Extends Relief to Four Foreign Clearers

By Clan Burke
December 19, 2014, FOW

The U.S. futures regulator has offered relief to four clearing non-U.S. clearers.

The Commodities Futures Trading Commission (CFTC) has extended no action rlief for four clearing organizations.

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Volcker Criticizes Delay To Namesake Rule

By Andrew Ackerman
December 19, 2014, The Wall Street Journal

Paul Volcker isn’t happy with delays to provisions of an eponymous rule that forces banks to pull out of certain risky investments.

The former Federal Reserve chairman sharply criticized the Fed’s decision to give banks until 2017 to sell stakes in private-equity, venture-capital and hedge funds covered by the “Volcker rule,” a key plank of the 2010 Dodd-Frank financial law. The rule is designed to restrain banks from engaging in risky activities that could threaten clients’ federally insured deposits.

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ESMA Publishes Second MiFID II Consultation

By John Bakie
December 19, 2014, The Trade

The European Securities and Markets Authority (ESMA) has published its consultation on draft regulatory technical standards for the Markets in Financial Instruments Directive (MiFID) II.

The consultation consists of two papers, outlining responses to its previous discussion paper and further questions from ESMA. The second paper covers draft regulatory technical standards.

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Combating the Lack of a Formal Standard in Derivatives Reporting

December 22, 2014, FTSE Global Markets

Now that some of the dust has settled following the implementation of several regulatory initiatives, such as Dodd-Frank, MiFID II/MiFIR, and European Market Infrastructure Regulation (EMIR), many financial institutions are grappling with how to deal with the impact these initiatives have had on their derivatives business. In this article, Phil Matricardi, who manages the Clearing Connectivity Standard for the communication of cleared OTC derivatives data on behalf of ISDA and Adam Kott, a senior associate business consultant based in New York, discuss why firms are adopting the new ISDA Clearing Connectivity Standard (CCS), introduced two years ago, for derivatives reporting and communication and why an industry utility for data transformation is a necessary next step.

New regulatory requirements, combined with the increasing volume of cleared derivative trades, number of new players, and expansion of new offerings from existing players have added more complexity and expense to managing derivatives. As a result, firms—those interested in remaining competitive and protecting revenues— have begun to critically evaluate their operating models, processes and technology and look for ways to be more efficient and cut unnecessary costs.

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Fed Grants Volcker Reprieve in Banks' Second Big Win This Month

By Jesse Hamilton and Cheyenne Hopkins 
December 19, 2014, Bloomberg

Banks added to their wins in Washington this month by getting a reprieve from the Volcker Rule that will let them hold onto billions of dollars in private-equity and hedge-fund investments for at least two more years.

The Federal Reserve granted the delay yesterday after banks said selling the stakes quickly might force them to accept discount prices. Goldman Sachs Group Inc. has $11.4 billion in private-equity funds, hedge funds and similar investments, while Morgan Stanley has $5 billion, securities filings show.

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U.S. Treasury Criticizes Europe’s Plan to Fix Tainted Benchmarks

By Silla Brush and Jim Brunsden
December 18, 2014, Bloomberg

A European proposal to regulate financial benchmarks that have been tainted by manipulation allegations is running into criticism from the U.S. Treasury Department.

The plan requires that other countries have equivalent oversight of indexes, which could prevent European banks and asset managers from using U.S. benchmarks, according to a counselor to Treasury Secretary Jacob J. Lew. Europe wants national governments to take responsibility for regulating financial and commodity benchmarks -- something the U.S. has no plans to do.

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Investors Buy Bulk Bond Default Insurance Options

By Tracy Alloway
December 18, 2014, Financial Times

Big investors have been buying hundreds of billions of dollars worth of exotic credit derivatives to protect themselves against the possibility that growing numbers of corporate bond issuers will default.

Options that give investors the right to buy insurance against bond defaults have exploded in popularity this year as asset managers and hedge funds seek to affordably offset the risk of a big blow-up in credit.

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Nasdaq Clearing Signs Up Major Buy-Side Swaps Client

December 18, 2014, The Trade

Sweden’s largest fund manager Swedbank Robur has begun clearing interest rate swaps through Nasdaq Clearing, the first central counterparty (CCP) to be approved by EU regulators earlier this year.

Though the mandatory clearing of interest rate swaps has not yet been enforced by the European Securities and Markets Authority, some buy-side firms are using clearing services in preparation for the tough new rules.

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EU Toughens Up Research Fee Rules

By Philip Stafford, Kate Burgess and Sam Fleming
December 17, 2014, Financial Times

EU regulators on Wednesday agreed tougher rules on the way broker research is paid for, in an attempt to tackle conflicts of interest and a lack of transparency in the investment industry.

Details of the new rules — which have been the subject of intensive lobbying — are expected as soon as Friday, with the UK’s Financial Conduct Authority among those hoping for an outright ban on banks charging investors for research out of share-dealing commissions.

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