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Banks Bemoan Data Gap in MiFID II Systematic Internalizer Test

By Fiona Maxwell
September 3, 2015, Risk

E.U.-wide data is needed before banks can determine their market share under a key 'systematic internalizer' rule in MiFID II.

Dealers are complaining it is impossible to work out which products they trade bilaterally will be subject to controversial transparency requirements in 16 months' time. A lack of data is leaving them unable to prepare for the rule and calculate corresponding cost increases for end-users, they say.

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Banks Split on Accounting for KVA – Risk Survey

By Fiona Maxwell
September 2, 2015, Risk

The capital valuation adjustment (KVA) accounting standard is coming, say some, but others see no KVA requirement.

Banks are divided on whether the capital costs associated with their trading businesses will ultimately be recognised in the form of an accounting charge, even though the majority of respondents to a Risk survey already include the so-called capital valuation adjustment (KVA) when pricing trades.

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Quebec Extends Deadline for Derivatives Rules

By Dan Alderson
September 2, 2015, GlobalCapital

The state of Quebec has delayed the implementation of a new rule that would require registration for foreign brokers trading derivatives for investors located there.

In Canada, much of the regulation of securities and commodity markets is managed on the state or provincial level rather than at the federal. Not all of these individual regulatory bodies specifically address derivatives, with the results having created headaches for investors and a steady flow of work for regulatory attorneys.

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Buy and Sellside Hike Regulatory Spend as E.U. Deadline Looms

By James Rundle
September 2, 2015, Financial News

Trading firms on both the buyside and sellside have substantially increased their spending on compliance-related activities and technology over the past 12 months, according to a survey by Nasdaq.

The exchange operator’s first Global Compliance Survey collected responses from 330 trading firms involved in the retail as well as wholesale sectors. It correlated responses from 158 compliance-specific respondents to generate the data, which found that over half of their firms had increased their budgets for compliance-related activities by 25% or more.

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Exchange Lobby Wants Faster CCP Approval from Europe

By James Rundle
September 2, 2015, Financial News

The European Commissioner for financial services has been urged to help speed up the process for recognising non-EU clearing houses as fit for purpose, as a crucial deadline for using clearers in the region looms large for trading firms.

The World Federation of Exchanges has written to Lord Hill to complain that Europe's lengthy process of approving clearers could end up hurting emerging market economies.

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Market Calls for U.S. and Europe to End Derivatives Dispute

By Philip Stafford
September 2, 2015, Financial Times

An influential group of advisers has called on the US and Europe to end a long-running dispute over harmonising derivatives rules, arguing their differences do not amount to a systemic risk to markets.

The U.S. Committee on Capital Markets Regulation and London-based Financial Markets Law Committee on Wednesday said both sides needed to recognise each other’s rules as equivalent, to prevent global derivatives markets from fragmenting

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Germany, France, Britain Call for Rethink on New E.U. Securities Rules

By Huw Jones
September 1, 2015, Reuters

Germany, France and Britain are seeking amendments to new E.U. rules that aim to increase transparency in bond trading, arguing that the current proposals could have negative unintended consequences for investors and markets.

In a joint letter to the European Commission, seen by Reuters on Tuesday, the three countries said the rule changes now proposed could result in "significant negative implications for the proper functioning of these vital markets".

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Fitschen Points to Regulation After Being Slammed for Volatility

By Carolynn Look and Nicholas Comfort
September 2, 2015, Bloomberg Business

Deutsche Bank AG co-Chief Executive Officer Juergen Fitschen rejected criticism that banks are responsible for recent market swings, saying lenders are handcuffed by stricter regulations.

“Someone told me yesterday that we bankers are to blame again for the fact that there is so much volatility in the market and that we benefit from that because those swings allow a lot of space for sustainable profits,” Fitschen said in a panel discussion at a conference in Frankfurt on Wednesday. “No, the opposite is true.”

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ESMA Consults on ITS Under MiFID II

September 1, 2015, Automated Trader

The European Securities and Markets Authority (ESMA) has published aconsultation paper (CP) on the remaining draft implementing technical standards (ITS) under MiFID II on which ESMA has not yet consulted.

This CP covers the following: (1) the suspension and removal of financial instruments from trading on a trading venue, (2) the notification and provision of information for data reporting services providers (DRSPs) and (3) the weekly aggregated position reports for commodity derivatives, emission allowances and derivatives thereof.

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CDS Markets Should Be More Transparent

August 31, 2015, Markets Media

Other countries have been urged to increase post-trade transparency in the credit default swap market after mandatory disclosure in the United States was found to have no impact on market activity.

Buyers of CDS contracts are protected against negative credit events such as a downgrade or default through receiving a payment from the seller. As the risk of a downgrade or default increases, buying protection becomes more expensive.

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