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Massad Backs Cross-Border Co-operation

By Luke Jeffs
November 18, 2014, Futures & Options World

The Europeans have not yet recognized the equivalenc of US clearing houses.

Tim Massad, the chairman of the Commodity Futures Trading Commission, has backed the principals of dual registration and co-operation between national regulators but admitted cross-border harmonization G20 reforms "will take time".

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Clearing House Members Fear They May Have to Stump Up in Case of a Failure

By Philip Stafford
November 5, 2014 Financial Times

Post-financial crisis, regulators have been steadfast in their insistence that more of the derivatives market be passed through risk managers known as clearing houses. But many market participants worry about the implications of a failure of one these institutions.

Clearing houses, which stand between two parties in a trade, and guarantee it in the event that one party defaults, are meant to act as the financial markets’ shock absorbers.

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ICAP’s Post-trade Business Under Threat from MiFID II

October 31, 2014 The Trade

ICAP is lobbying for an amendment to the MiFID II trading obligation rule which in its present form would force the interdealer broker to discontinue four of its key post-trade risk reduction services. 

The group’s TriOptima and Reset services for OTC derivatives are post-trade risk management tools allowing firms to reduce second order risks in their portfolio.

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Iosco Warns on Data Challenge to Risk Oversight

By Jeremy Grant
October 29, 2014 Financial Times

The top body representing global markets watchdogs has issued a warning over the proliferation of data collection systems in the $700tn derivatives markets, saying regulators will be unable to spot risks building up in the financial system unless data are aggregated properly.

The group of G20 nations in 2009 directed governments to create a composite record of over-the-counter (OTC) derivatives deals to better spot potential systemic risk in banks and clearing houses and help prevent the next big financial meltdown.

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Singapore to Examine Swaps Trading Change

By Jeremy Grant
October 28, 2014 Financial Times

Singapore is considering whether to require market participants to trade on regulated electronic trading platforms, marking a change of tack on its policy on a key aspect of over-the-counter (OTC) derivatives reforms.

Sweeping reforms of the $700tn OTC derivatives markets have been under way since the G20 in 2009 agreed on measures to clean up the financial system after the crisis of the previous year.

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ICE Clear Europe Eyes OTC Rates Push

By Tim Cave
October 13, 2014 Financial News

IntercontinentalExchange is planning to introduce an over-the-counter interest rate swap clearing service to coincide with the introduction of European reforms next year, in a bid take on incumbent provider LCH.Clearnet.

ICE Clear Europe, the Atlanta-based group's London clearing house, aims to have an interest rate swaps clearing service in place during the second half of 2015, according to a person familiar with the situation.

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Deutsche Pullback Shows CDS Challenges

By Christopher Whittall
October 11, 2014 IFR

Deutsche Bank has significantly scaled back single-name credit default swap trading in Europe as it struggles to meet regulatory hurdles on leverage. It is a move that is symptomatic of a wider malaise in a market wallowing in low volumes and spiralling costs.

As the market adjusts to trading a brand new CDS contract, participants say the industry giant is conspicuous by its absence in single names, capping off a two-year period that has seen an exodus of senior traders and a fall in market share in CDS trading.

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Out-of-step Regulators Are Walking Swaps Market Into Trouble

By Tim Cave
Published October 13, 2014 Financial News

The European swaps industry is facing up to what some market practitioners have called a “doomsday” moment later this year.

The cost of European banks’ exposures to swaps in foreign jurisdictions could soar in mid-December because of a failure by European and US regulators to formally recognise each other’s post-crisis rulebooks.

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U.S. Long-Term Debt Rule Will Be Stricter for Big Banks

By Ryan Tracy
Published October 9, 2014 The Wall Street Journal

The U.S. will likely adopt a minimum long-term debt requirement for big banks that is stricter than guidelines agreed to by international regulators, Federal Reserve Gov. Daniel Tarullo said Thursday, addressing soon to be released rules designed to make bank bailouts less likely.

Mr. Tarullo, the Fed’s regulatory point man, said the rule the Fed is currently drafting “will probably be a little bit more rigorous with respect to some of the qualifying instruments,” referring to the types of debt that would qualify for the minimum.

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Banks Face Basel Clampdown on Risk-Model Variation

By Boris Groendahl and Rebecca Christie
Published October 9, 2014 Bloomberg

Global regulators are preparing to narrow banks’ options for assessing credit risk in a bid to prevent the understatement of possible losses.

The Basel Committee on Banking Supervision will publish a report by early November on “excessive” variability in the models banks use to assign risk and measure capital needs, Secretary General Bill Coen said in an interview at the regulator’s headquarters in Basel, Switzerland. The document has been prepared for the Group of 20 nations.

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