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ISDA Rallies Support for Derivatives Data Reporting Rethink

By Elliott Holley
June 16, 2015, Banking Technology

Eleven financial associations have published their support for a new set of derivatives reporting standards developed by ISDA, which is calling for greater cross-border harmonisation of data standards – even if that means some national laws will have to be amended.

ISDA – essentially the representative body for participants in the derivatives markets with 800 members including banks, exchanges, clearing houses, investment managers, commodities and energy companies, insurers and government entities –  has published a set of data reporting principles, which it says will improve the consistency of the data being reported and thus help regulatory transparency.

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Leverage Ratio Threatens Clearing Viability, Warns FIA

By Helen Bartholomew
June 13, 2015, IFR

The swaps clearing mandate under the European Market Infrastructure Regulation is not viable unless regulators relent on Basel III leverage ratio requirements that treat client segregated margin as a leveraged asset on the balance sheet, the Futures Industry Association in Europe has warned.

Coinciding with its annual European IDX Derivatives Expo held in London last week, the industry group – representing 170 firms involved in listed and centrally cleared derivatives markets – is calling on regulators to recognise the exposure-reducing effect of client segregated margin that is held by clearing brokers to back cleared over-the-counter derivatives trades.

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MiFID II Open Access to CCPs Called Into Question

By Elliott Holley
June 11, 2015, Banking Technology

As the European Commission’s MiFID II legislation moves towards implementation of technical standards, some of Europe’s national regulators are seriously worried that mandatory open access to CCPs may not be such a good idea. Concerns about the ability to manage risk and the ability to effectively handle data were highlighted by speakers at the IDX FIA conference in London yesterday.

“A CCP must be able to contain all the risks it is introducing,” said Sander van Leijenhorst, senior supervision officer, Netherlands Authority for the Financial Markets. “The whole point is to mitigate risk. If there is a regulatory requirement to provide access to a venue, but the CCP can’t mitigate the risk from that venue, that’s not good. Forcing the entire industry to access each other’s infrastructure is not good if it means that CCPs can’t mitigate the risk.”

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Leverage Ratio Threatens Clearing Viability, Warns FIA

By Helen Bartholomew
June 8, 2015, IFR

The swaps clearing mandate under the European Markets Infrastructure Regulation is not viable unless regulators relent on Basel III leverage ratio requirements that treat client segregated margin as a levered asset on the balance sheet, the Futures Industry Association in Europe has warned.

Ahead of its annual European International Derivatives Expo to be held in London this week, the industry group – representing 170 firms involved in listed and centrally cleared derivatives markets – is calling on regulators to recognise the exposure-reducing effect of client segregated margin that is held by clearing brokers to back cleared over-the-counter derivatives trades.

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Spotlight on CCP Risk

June 4, 2015, Automated Trader

Regulators around the world are increasingly looking to central counterparty (CCP) clearing houses as a way to mitigate counterparty risk in the market. But is this just the next too-big-to-fail in the making?

CCPs bring counterparties together and manage the risk of financial transactions between them. But by becoming an essential infrastructure, CCPs can possibly pose significant systemic risk to the market.

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Calling Collateral

June 3, 2015, Automated Trader

After cracks developed in global financial markets post-crisis, regulators embarked on sweeping reforms to the OTC derivatives world. The $630 trillion notional OTC derivatives market has been impacted by regulations such as Dodd-Frank in the US, EMIR in Europe and Basel III globally. Implementation means a major shake-up in how derivatives are settled, collateralised and reported.

Consequently, the once obscure world of collateral management is being thrust into the spotlight.

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Lord Hill: No EMIR II on the Horizon – for Now

By James Rundle
June 1, 2015, Financial News

One of Europe’s senior policy chiefs has allayed market participants' concerns that supervisors are gearing up for a wholesale revision of the region’s derivatives rulebook, but said they could revisit certain aspects if such a move proves justified.

Lord Hill, the European commissioner for financial services, who was speaking at a public hearing held in Brussels on Friday to review the impact of the European Market Infrastructure Regulation, sought to put an end to speculation over a potential second version of the rules.

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ESMA Calls for Modification of UCITS Directive

May 26, 2015, Automated Trader

In the Opinion, ESMA calls for a modification of the UCITS Directive to take into account the clearing obligations for certain types of over-the-counter (OTC) financial derivative transactions under EMIR.

Indeed, under EMIR, certain OTC financial derivative transactions are subject to the clearing obligation. Therefore, the question arises as to how the limits on counterparty risk in OTC financial derivative transactions that are centrally cleared should be calculated by UCITS and whether UCITS should apply the same rules to both OTC financial derivative transactions that are centrally cleared and exchange-trade derivatives (ETDs).

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European Regulators Brace for EMIR Grilling

By James Rundle
May 28, 2015, Financial News

A select group of market participants will convene in Brussels tomorrow to iron out continuing issues with its derivatives trading rulebook.

The European Commission is to host its second public hearing on the review of the European Market Infrastructure Regulation, which radically changed derivatives markets in Europe when it came into force in August 2012.

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Norwegian Adoption of EMIR to Fix Cross-Border Clash

By Fiona Maxwell
May 25, 2015, Risk

EU banks will be required to clear Nkr swaps – Norwegian banks currently are not.

Non-EU countries Liechtenstein and Norway plan to transpose the European Market Infrastructure Regulation (Emir) into their local laws in 2015 – a move that could head off problems for European banks that trade Norwegian krone swaps.

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