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Crowded Trades a Risk in Clearing Houses

By Philip Stafford
Published April 8, 2014 Financial Times

Are clearing houses overlooking the risks around crowded trades? A new academic paper suggests investors’ positions are far more exposed in turbulent markets than they realise.

It may seem that most issues around clearing house risk have been debated – if not resolved – in the last few years.

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Interdealers Try on the Exchange Business for Size

By Sarah Spikes
Published April 7, 2014 Financial News

If imitation is the sincerest form of flattery, stock exchanges should feel flattered.

As part of the G20’s agenda to prevent another financial crisis, over-the-counter derivatives, which are currently traded over the phone by interdealer brokers, are to be forced onto electronic trading platforms where regulators think they can keep a better eye on what’s going on.

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G20 OTC Derivatives Group Details Remaining Cross-Border Issues

By Staff
Published March 31, 2014 Automated Trader

A Group of 20 group focused on derivatives regulation said in a report that it is working on a number of remaining cross-border implementation issues, including substituted compliance, clearing determinations, margin requirements and access to trade reposittory data.

The Over-the-Counter Derivatives Regulators Group, or ODRG, is working on various issues, including the treatment of branches and affiliates and the implementation of the trading commitment through organized trading platforms, it said.

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Manual Processes and Bottlenecks Threaten to Throttle OTC Derivatives Reform

By Elliott Holley
Published March 12, 2014 Banking Technology

Regulatory change in the OTC derivatives market has produced serious problems that indicate a clear need for more automation of cleared derivatives post-trade processing, according to a new report published by research house Greenwich Associates.

Market reforms currently affecting the derivatives markets include the G20 agenda agreed in Pittsburgh in 2009, under which 20 countries agreed in principle to reduce systemic risk by improving transparency in the OTC derivatives market. The Dodd-Frank Act in the US and EMIR in Europe are attempts to implement that agenda. Both pieces of legislation essentially mandate the central clearing and reporting of the bulk of formerly OTC derivatives contracts, along with their standardisation and trading on exchange-like platforms wherever possible.

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Comment: Risks Remain in G20 Clearing Plan

By Thomas Krantz
Published January 28, 2014 Financial Times

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Exclusive: Global Regulators Eye Forex Benchmarks After Rigging Probe

By Douwe Miedema
Published January 24, 2014 Reuters

A powerful global financial regulator will scrutinize benchmarks used in currency trading, it said on Friday, a first sign that the largely unregulated market may be kept on a tighter leash after allegations of manipulation.

The Financial Stability Board, which coordinates regulation for the Group of 20 leading economies, is already working on a reform of interest rate benchmarks after the Libor interbank rate-fixing scandal.

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Regulating Derivatives: Teething Problems

By M.S.
Published January 22, 2014 The Economist

It must have seemed like a no-brainer in 2009. Leaders of the G-20 vowed to get control over the huge and opaque world of derivatives blamed by many for precipitating the financial crisis that had engulfed them. The most common sorts of derivatives (contracts that take their value from the performance of an underlying asset) were to be traded on recognised platforms, cleared through central counterparty systems with high collateral requirements and reported to trade depositories. The markets would be safer, banking supervisors would know where everyone stood, and taxpayers could sleep quietly at night, knowing they were unlikely to have to bail out the world’s financial system again.

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Mexico to Publish Derivatives Rules Soon-Banking Regulator

By Alexandra Alper
Published December 18, 2013 Reuters

Rules aimed at boosting oversight of Mexican derivatives trades and pushing most transactions through a central clearing house will soon be published, Mexico's banking regulator said on Wednesday.

Mexico's central bank, finance ministry and banking regulator have been working on swaps rules agreed to in general by Group of 20 economic powers after risky derivatives trading helped fuel the 2007-2009 financial crisis and led to multi-billion dollar taxpayer bailouts.

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Asia Regulators Attack EU Over Clearing House Standards

By Jeremy Grant
Published December 3, 2013 Financial Times

Europe has come under attack from Asian market regulators who are warning that the one-size-fits-all tests for clearing houses will hamper business and liquidity in their region.

The criticism shows divisions over the implementation of landmark G20 reforms of the financial system that have created friction between the US and Europe are now spreading to Asia.

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EU’s Swaps Rule Plan May Breach G-20 Accords, Barnier Warns

By Jim Brunsden
Published October 31, 2013 Bloomberg

The European Union’s financial services chief told legislators that a planned overhaul of the bloc’s rules for trading swaps may breach international agreements, threatening EU access to overseas markets.

Michel Barnier, the financial services commissioner, is urging changes to the blueprint which, as it stands, could “lead to an increase of trading of derivatives instruments on dark venues,” undermining transparency agreements reached in 2009 by the Group of 20 nations, according to a letter sent to legislators obtained by Bloomberg News.

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