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Barnier Hints at Longer Pensions Clearing Exemption

By Cecile Sourbes
Published September 12, 2014 Risk

The EC's head of internal markets, Michel Barnier, has hinted that the regulator will extend the pension funds derivatives clearing exemption beyond 2015

The European Commission's outgoing head of the internal market and services division, Michel Barnier, has hinted that the EC will extend the temporary exemption pension funds have from mandatory clearing of their over-the-counter derivatives trades beyond 2015.

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D.E. Shaw: Buyside Irked Over Counterparty Trading Constrictions

By Beth Shah
Published September 9, 2014 Global Capital

US regulation may mean investment managers that are operated and managed out of the US will have to constrict their trading to US counterparties, therefore introducing barriers to trading opportunities and hampering their competition.

Speaking at the International Swaps and Derivatives Association’s 2014 Annual North America Conference on Tuesday, Darcy Bradbury, managing director and director of external affairs at the D.E. Shaw Group, noted where a firm is established has become an issue. If an investment manager operates out of, and is headquartered in the US, they will be subject to US rules for a US entity despite perhaps having funds that are in other jurisdictions, for example the Cayman Islands, Bradbury said. “A UK manager might have an offshore location as well and the establishment language in both [the European Market Infrastructure Regulation] and [Markets in Financial Instruments Directive and Regulation] doesn’t give them a lot of flexibility,” she said.

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Frontloading Still a Thorn in Industry's Side

Published September 2, 2014 Automated Trader

Published responses to ESMA's clearing obligation consultation show an industry still grappling with the potential fallout of implementation.

Under the European Market Infrastructure Regulation, firms will be clearing interest rate and credit default swaps through central counter parties. For IRS, four classes of swaps are up; basis swaps, fixed-to-float interest rate swaps, forward rate agreements and overnight index swaps on a range of currencies and maturities.

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EBA: Objections Over WGMR Rules Not Our Fault

By Fiona Maxwell, Duncan Wood
Published September 2, 2014 Risk.net

The European Banking Authority has defended its interpretation of WGMR requirements, which dealers describe as overly confusing

European regulators have defended their stance on global margin requirements for uncleared derivatives, arguing they are bound by the original recommendations from the Working Group on Margin Requirements (WGMR). But banks insist they would be unable to implement the requirements owing to confusion over the complex rules, and an industry group has called for a two-year delay to the implementation date.

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Industry Fears Mifid Shake-up of Futures Clearing

By Cecile Sourbes
Published August 26, 2014 Risk.net

Dealers fear European rules designed to broaden access to over-the-counter derivatives clearing houses could be extended to the futures market, where a similar service already exists but is subject to much looser rules. If the stricter OTC standards were applied in the exchange-traded world, the service would require a radical rethink and may not be possible at all, banks and industry bodies argue.

The concerns were sparked by the European Securities and Markets Authority (Esma), in its draft standards on the implementation of the revised Markets in Financial Instruments Directive (Mifid II). In its May 22 proposals, Esma asked market participants whether there was any reason to have different rules on indirect clearing in the exchange-traded and OTC markets.

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Collateral Optimization Benefits the Big

By Mike Kentz
Published August 23, 2014 IFR

Market participants expecting to glean material cost-savings in the over-the-counter swaps market through collateral optimization strategies may want to think again, according to a report from Deloitte.

Only the largest swaps users capable of making significant investment in IT systems and navigating the changing cost of collateral that will occur with the eventual rise in rates should dive into building internal optimization capabilities, the report said.

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New EMIR Reporting Requirements Kick In

Published August 19, 2014 Markets Media

Trade repositories have received millions of valuation reports under the new reporting regulations which came into effect under the European Market Infrastructure Regulations last week.

Since February, both sides of derivatives deals in Europe have been required to report over-the-counter and exchange-traded derivatives to one of six approved trade repositories under the Emir.

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Surprisingly Good Start for European Derivatives Reporting Mandates

By Jon Watkins
Published August 14, 2014 The Trade

The start of collateral and valuations reporting under the European market infrastructure regulation (EMIR) has been smoother than OTC and listed derivatives transaction reporting requirements introduced in February, according to industry experts.

From 11 August, both buy- and sell-side firms in Europe had to begin reporting the collateral they post for derivatives trades along with the valuations of transactions, in addition to the 85 fields already required by regulators.

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‘Lessons Learned’ as New Reporting Rules Pass Without a Hitch

By Anish Puaar
Published August 14, 2014 Financial News

The latest wave of derivatives reporting rules in Europe have been well handled by market participants, with many stating that lessons have been learnt from the shambles that followed the initial deadline in February.

On August 11, valuations and collateral held against derivatives trades done in Europe needed to be reported to approved trade repositories on a daily basis as part of the European Market Infrastructure Regulation.

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Germany Finds Emir Enforcement Fix

By Fiona Maxwell
Published August 13, 2014 Risk

Derivatives users in Germany are set to face stricter supervision of their reporting obligations than their counterparts elsewhere, thanks to a unique system that turns external auditors into the eyes and ears of the regulator – and forces companies to pay for the new checks. Lawyers in other countries, including the UK, say it will be next-to-impossible for their own local authorities to enforce the new reporting rules, which came into force as part of the European Market Infrastructure Regulation (Emir) in February this year.

"The new law puts pressure on corporates to ensure they have a proper Emir process – previously, they weren't directly regulated," says Frank Müller, senior manager in the financial services division of KPMG in Germany, one of the firms that will be auditing Emir compliance.

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