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Regulators Weighing New Rules for Private Trading Venues

By Scott Patterson
Published September 10, 2014 The Wall Street Journal

Market regulators are considering imposing additional steps to require greater transparency and disclosures by private trading platforms and heightened oversight of computerized trading strategies.

The Financial Industry Regulatory Authority will weigh a new set of rules at its Sept. 19 meeting, including a proposal that would require trading platforms, including so-called dark pools, to provide additional details about buy and sell orders. Dark pools are alternative trading venues that currently don't post buy and sell orders, only reporting trades after they take place.

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Clearinghouses Get CFTC Scrutiny So Solution Isn’t Problem

By Silla Brush and Robert Schmidt
Published September 8, 2014 Bloomberg

The U.S. Commodity Futures Trading Commission plans to intensify oversight of swaps clearinghouses to ensure they don’t threaten the financial system they are meant to help secure.

CFTC Chairman Timothy Massad said in a Sept. 5 interview that his agency will bolster examinations of clearinghouses, which process trillions of dollars in transactions and are potentially vulnerable to market shocks or cyber attacks. The agency is working with the Federal Reserve on the effort, he said.

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U.S., Europe Head Toward Delay in Squabble Over Swaps Rules

By Douwe Miedema
Published September 4, 2014 Reuters

The European Union is discussing delaying a deadline for a second time in its efforts to reform the global derivatives market, a source familiar with the matter said, as talks with U.S. regulators have failed to produce a breakthrough on a main sticking point.

The two sides are still at odds on allowing clearing houses, which stand between buyers and sellers of derivatives to reduce risk, to operate in each others' jurisdictions.

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SEC Widens the Net of Mutual Hedge Fund Review

By Madison Marriage
Published August 24, 2014 Financial Times

The US regulator has widened its investigation into how the alternative mutual fund industry operates as concerns build about the liquidity terms being promised to investors.

The Securities and Exchange Commission said in June that it would approach 15-20 providers of alternative mutual funds – strategies that mimic hedge funds in a retail-friendly format – to ensure they are fully compliant with the watchdog’s rules.

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Carney Urged to Help End Masking of Swap Counterparties

By Fiona Maxwell
Published August 21, 2014 Risk

Twelve regulators have called for the Financial Stability Board (FSB) to make a "clear and unambiguous statement" that countries need to remove obstacles preventing derivatives users reporting their trades, such as privacy laws that prohibit the disclosure of counterparty details. Two banks told Risk in May that they are choosing to breach reporting rules where they conflict with local laws, by deliberately masking counterparty identities.

The letter represents the view of the OTC Derivatives Regulators Group (ODRG), but is signed by Mary Jo White, chair of the US Securities and Exchange Commission. It was sent to the FSB chairman, Mark Carney, on August 12.

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Once Powerful, Mary Jo White’s S.E.C. Is Seen as Sluggish and Ineffective

By Jesse Eisinger
Published August 13, 2014 New York Times DealBook

Mary Jo White took the helm of the Securities and Exchange Commission facing high hopes that she could turn around the once-proud agency. More than a year into her tenure, she has disappointed a wide swath of would-be allies.

Over the last several weeks, I’ve been talking to fellow regulators, administration officials, current and former S.E.C. staff members, financial reform advocates and people on Capitol Hill whose opinions of Ms. White’s performance range from dissatisfied to infuriated.

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Bill Gross’s Total Return ETF Allowed to Trade Derivatives

By Mary Childs
Published August 11, 2014 Bloomberg

The U.S. Securities and Exchange Commission approved the use of derivatives in Pacific Investment Management Co.’s Total Return exchange-traded fund, allowing it to more closely track the world’s biggest bond mutual fund.

The regulatory body’s approval of the Nov. 6 request to amend the ETF (BOND)’s description means it will be able to invest in options, futures or swap agreements, according to the July 24 filing.

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Divergent Nexus Rules Threaten Reporting Chaos in Asia

By Viren Vaghela
Published August 6, 2014 Asia Risk

Asian jurisdictions are accustomed to playing second fiddle to their more established derivatives counterparts in Europe and the US. This has been especially noticeable in post-crisis reforms with the phrase "we are taking a wait-and-see approach" becoming predictably familiar among some regional regulators. However, in a rare move Asia is taking the lead in determining how so-called nexus trades should be reported.

"The nexus issue is unique to Asia," says a compliance source at a global bank in Hong Kong. "The US Securities and Exchange Commission is looking at this approach but hasn't come up with a proposal yet meaning we will be the first to implement it so we need to ensure as a region that we get the definition right."

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US Regulators Urged to Accept Dealers' Use of Affiliates

By Peter Madigan
Published July 18, 2014 Risk

Politicians and regulators in the US should learn to live with the fact that US banks are funnelling a large portion of their overseas swaps business through non-guaranteed affiliates (NGAs), according to two former senior regulators. Potential responses to the strategy – which insulates the affiliates and their non-US customers from the Dodd-Frank Act – could set the US on a collision course with foreign officials, they argue.

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SEC's Cross-Border Rules Expose Loopholes

By Jon Watkins
Published July 8, 2014 The Trade

The Securities and Exchange Commission (SEC) has stepped out of the shadows to enforce US regulatory requirements on foreign banking operations, though issues remain in its cross-border reach.

Under the SEC’s new rules, the sweeping new derivatives regulations will apply to foreign affiliates whose swap trades are guaranteed by US banks.

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