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EU Participants Fear RFQ Definitions Will Quash Liquidity

By Gabriel Suprise
February 26, 2015, GlobalCapital

Market participants in Europe are raising concerns over the definitions for request-for-quote and voice brokerage systems under the Markets in Financial Instruments Directive. The suggested definition from the European Securities and Markets Authoriy would require the disclosure of provided quotes to the public, which could hamper liquidity.

“In Europe – although we have had rules governing these sorts of issues – they have only formally applied to equity trading venues,” Simon Gleeson, partner at Clifford Chance in London, told GlobalCapital. “The whole question of how you apply this to derivatives trading venues in the first place is a bit of an unknown, as we’re making it up as we’re going along.”

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ESMA Highlights Low Levels of Best Execution

February 26, 2015, Markets Media

The European Securities and Markets Authority found that the lack of a consolidated tape for the region contributed to the low level of implementation of best execution regulations.

Esma reviewed national regulators to find out how they supervise and enforce the MiFID provisions relating to investment firms’ obligation to provide the best possible result for their clients when executing their orders. The regulator found that the level of implementation and supervisory practices by national regulators is relatively low.

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U.S. Set to Raise Swaps Requirements

By Philip Stafford
February 26, 2015, Financial Times

The new head of the main US derivatives regulator has signalled a willingness to break from the agency’s recent past and harmonise swaps rules with Europe and Japan to help police the vast $700tn global derivatives market.

Timothy Massad, chairman of the US Commodity Futures Trading Commission, told an audience of derivatives users on Thursday he was looking at raising the margin requirements for rarely traded swaps, so that US rules were consistent with overseas jurisdictions.

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ISDA Calls for Standardized Trade Reporting

By Cian Burke
February 26, 2015, FOW

Trade body has called on global regulators to standardize reporting.

The International Swaps and Derivatives Association (ISDA) has called on global regulators to standardize reporting regimes to allow greater transparency in derivatives markets. 

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EU Calls for Treaty to Avoid Transatlantic Regulatory Spats

By Huw Jones
February 25, 2015, Reuters

Transatlantic spats over regulating banks and markets could be avoided under a treaty-based system of cooperation, the European Union's financial services chief said on Wednesday.

The EU and United States are locked in talks over the finer details of recognizing each other's rules on clearing houses for derivatives, part of global efforts to make markets safer after the 2007-09 financial crisis.

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Bank Regulation Takes Back Seat to Kick-Starting Economy

By Huw Jones and John O'Donnell
February 25, 2015, Reuters

As the banking crisis fades in memory, only to be replaced by a lingering economic slowdown, governments are losing interest in financial reform despite warnings that dangers still lurk.

The shift could mark the beginning of an era reminiscent of the more hands-off approach to regulation preceding the 2008 financial crash, albeit one that follows a raft of reforms - from capping bonuses to boosting capital - that have curbed banks' freedom to take risks.

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EU Regulator Wary of Fed Capital Rules

By Viktoria Dendrinou and Stephen Fidler
February 25, 2015, The Wall Street Journal

The European Union’s new financial-markets chief said he remained concerned about U.S. requirements that force foreign banks to hold extra capital and would continue to press Washington to change the rule.

In an interview with The Wall Street Journal ahead of his first trip to the U.S. in his new role, Commissioner Jonathan Hill said he welcomed recent adjustments made to the rules that should lighten costs for foreign banks operating in the U.S.

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Janet Yellen Not Seeking to Alter Dodd-Frank

By Kate Davidson
February 24, 2015, The Wall Street Journal

Sen. Elizabeth Warren (D., Mass.) on Tuesday grilled Federal Reserve Chairwoman Janet Yellen about critical comments made by the central bank’s general counsel about provisions of the 2010 Dodd-Frank law.

“The Fed’s general counsel or anyone at the Fed’s staff should not be picking and choosing which rules to enforce based on their personal views,” Ms. Warren said during Ms. Yellen’s testimony before the Senate Banking Committee.

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Doubts Rankle as European Commission Races Towards MiFID II Deadline

By Elliott Holley
February 25, 2015, Banking Technology

European regulator ESMA is preparing to issue hundreds of pages of MiFID II cost-benefit analysis and Q&A material between now and July – but market participants are concerned about unresolved issues and rushed implementation as the deadline draws ever closer.

Last week in Paris, ESMA held a public hearing on implementing technical standards. In addition to the 355 pages of MiFID II consultation which were discussed at the meeting, there will be a further 2,000 pages of consultation and CBA before MiFID II is finally implemented in 466 days’ time. But given the extremely tight deadline, some market participants questioned the practicality of issuing a cost-benefit analysis just months before implementation.

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Risks Squeezed Out of Banks Pop Up Elsewhere

By Tracy Alloway
February 24, 2015, Financial Times

Investors are reaching for a toolkit of exchange traded funds, mutual funds and credit derivatives to make up for a dearth of liquidity in parts of the financial system, according to market participants and research from Barclays.

Regulations intended to improve the stability of the financial system after the 2008 crisis have sucked liquidity from large swaths of the financial market, making it more difficult to trade assets without affecting their prices.

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