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Banks United on Collateral Crisis

By Tim Cave
February 23, 2015, Financial News

A group of investment banks including Goldman Sachs is in the early stages of a project to help the financial industry meet an expected surge in demand for collateral as a result of post-crisis regulations.

The initiative, dubbed “Project Colin”, aims to create an “industry collateral infrastructure”, according to people familiar with the plans. The banks are working with settlement house Euroclear, according to one person. All parties declined to comment.

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ESMA Faces Industry Scrutiny at MiFID Hearing

By Cian Burke 
February 18, 2015, FOW

Fidessa has highlighted transaction reporting as a key issue ahead of hearing. 

The European Securities and Markets Authority is set to face industry scrutiny in Paris Thursday when it holds an open hearing on the recently published consultation paper on MiFID II/MiFIR.

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Intra-Group Query Threatens EMIR Timetable

By Helen Bartholomew
February 7, 2015, IFR

Final regulatory technical standards for Europe’s interest rate swap clearing obligation look set to miss the anticipated timetable for publication into the Official Journal later this month. The latest setback to already-delayed implementation comes as the European Securities and Markets Authority and European Commission thrash out final details on a clearing exemption for intra-group over-the-counter-derivatives transactions.

Publication of the RTS in the Official Journal was expected in late January to early February, triggering the first wave of obligatory swaps clearing under the European Markets Infrastructure Regulation by mid-year. However, the latest setback could push timing back by another six weeks for publication of final rules in late March.

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EMIR Takes the Limelight Back from MiFID II

By Jon Watkins
February 5, 2015, The Trade

The arrival of MiFID II just before Christmas ensured a heavy workload for the derivatives industry as they returned to their desks in the New Year.

But as if living and breathing the contents of the more than 1,600-page report wasn’t enough, the European Commission has thrown a number of changes to its European Market Infrastructure Regulation into the mix for good measure. 

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ESMA Rejects Commission Exemption for Intragroup Derivs

By Hazel Sheffield
January 30, 2015, GlobalCapital

The European Securities and Markets Authority has raised concerns over the European Commission’s proposal for a three-year exemption from clearing and collateral responsibilities for firms making intragroup interest rate derivatives transactions with third-country entities, because such entities are not yet deemed to have regimes equivalent to the European Market Infrastructure Regulation.

Lawyers have said the decision is likely to be greeted with dismay by market participants who saw the exemption as a relief. “I’m not sure the market would have thanked anyone for raising issues with it because financial institutions that have these intragroup transactions would have thought that is what they need. But ESMA’s points do seem to have some substance to them,” Emma Dwyer, partner at Allen & Overy, told GlobalCapital.

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Setting the Stage for Regulatory Change in 2015

By Joe Dunphy
January 21, 2015, Finextra

Financial institutions have emerged from the rigorous regulatory and data demands of 2014 a little battle weary, suffering a few scrapes and scars, but otherwise unscathed. On a whole, 2014 will be remembered as the year when regulators started to flex their muscles, levying a record number of fines and promising to become more involved at an earlier stage, making many financial institutions finally sit up and take notice.   

2015 is being hailed by many commentators as the turning point for financial regulation. However, looking at the regulatory roadmap for the year ahead, 2015 may actually offer financial institutions a well-needed respite from regulatory implementation. Don’t get us wrong – there are plenty of regulatory requirements to be getting busy with, but it appears that a lot of the execution comes in 2016 and beyond. Therefore, in 2015, financial institutions will have the opportunity to set the stage and make the necessary preparation to help them meet the regulatory demands facing them over the coming years. Some of the topics that we feel will garner more attention this year include:

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Europe and Hong Kong Cut Clearing House Deal

By Cian Burke
January 19, 2015, FOW

Agreement outlines tools ESMA can use to monitor Hong Kong clearing houses.

The European Securities and Markets Authority (ESMA) and the Hong Kong Securities and Futures Commissions (SFC) are set to enhance cooperation on the monitoring of Hong Kong's qualified central clearing parties (QCCPs) continued compliance under EMIR. 

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APG, PGGM Expecting Extension for Pension Funds' EMIR Exemption

By Maarten Van Wijk
January 19, 2015, Investment & Pensions Europe

The European Commission is likely to extend pension funds’ exemption from the European Market Infrastructure Regulation (EMIR) – which aims to increase stability in the OTC derivatives market – to 2017, according to asset managers APG and PGGM. 

Together with the Dutch Pensions Federation, APG and PGGM – asset managers for the €334bn civil service scheme ABP and €156bn healthcare scheme PFZW, respectively – have been the chief advocates for the Dutch pensions industry in Brussels calling for the postponement or adjustment of EMIR. 

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Derivs Reporting to Converge Under Multiple EU Regimes

By Hazel Sheffield
January 15, 2015, GlobalCapital

The way that firms report trade and transaction data under the European Market Infrastructure Regulation and the Markets in Financial Instruments Directive could coverage before the implementation of MiFID II in January 2017, according to market participants.

Paul Gibson, business consultant at Sapient, told GlobalCapital that he expects trade and transaction reporting under the two different regulations to harmonise in the future, streamlining the reporting process. “Under MiFID II the lines start to blur a bit because the products become more similar especially in the [over­the­counter] world. We’re potentially seeing some of the trade repositories looking at registration as [Authorised Reporting Mechanisms]. For some of the larger trade repositories that have that data, they don’t want to report it to a new entity,” Gibson said.

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Third Country End Users Face Clearing Challenges

By Hazel Sheffield
January 15, 2015, GlobalCapital

Peter Green, partner at Morrison & Foerster in London, said that in 2014, the firm had seen a flurry of queries relating to EMIR reporting requirements for exchange ­traded and over­the counter derivatives, but that clearing was still a concern for some third ­countries. “Once the clearing obligations kick­in we will expect another flurry of activity. In particular those that have the most concerns are end users in the US and Asia who enter into hedging and other arrangements with EU banks and are being asked to sign the various protocols and other documents to ensure EMIR compliance as well as guidance on what it all means,” Green said.

He noted that the issue of mutual recognition between clearing houses in the EU and the US is a particular concern. The European Commission granted equivalence to clearing regimes in Singapore, Japan, Hong Kong and Australia on October 30, 2014, but equivalence with the US is proving elusive.

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