News

Current Articles | RSS Feed RSS Feed

Massad Reinforces CFTC’s Push for Margining Uncleared Swaps

By Eugene Grygo
July 28, 2015, FTF News

CFTC Chairman Timothy Massad says he will push for new rules to cover margin collection for uncleared swaps, and changes for clearinghouses, swaps dealers, SEFs and swaps data repositories.

Five years after the onset of the Dodd-Frank Act (DFA), CFTC Chairman Timothy G. Massad outlined last week the regulator’s next phase in the DFA rule-making process, which will include margin collection for uncleared swaps, stress tests for clearinghouses, a new definition of a swaps dealer, SEF trading improvements, and cross-border harmony for swaps data repositories (SDRs).

full article describe the image (subscription)

SocialTwist Tell-a-Friend Related Posts with Thumbnails

Swap Execution Facilities: Be Careful What You Wish For

By Paul Golden
July 22, 2015, Global Investor

Data from the Futures Industry Association supports the view that swap execution facilities (SEFs) have made uneven progress. The association’s SEF tracker indicates that trading volume across all three asset classes (interest rates, credit default swaps and foreign exchange) averaged $364.8bn per day in April, down 27% from the previous month but up 8% from April 2014.

The International Swaps and Derivatives Association (ISDA) has been concerned about the fragmentation of derivatives markets along geographic lines since the SEF rules came into force and  says the effects have been particularly notable in the market for euro interest rate swaps.

full article describe the image (subscription)

SocialTwist Tell-a-Friend Related Posts with Thumbnails

Comment: Signal to Noise: the New Market Data Imperative

By Mark Brennan
July 17, 2015, FOW

Post-crisis regulation consistently strives to increase transparency and reduce risk. The structure and fabric of such reforms, if not the mandated behavior, rely fundamentally on market data. Whether it’s the SEF trade mandate in the US; the forthcoming Market Abuse Regulation (MAR) in the EU or various provisions of MiFID 2 including best execution, derivatives trading obligations and HFT oversight including order to trade ratios,  market data underpins it all.   

For example, Organized Trading Facilities (OTFs) may have execution discretion but will rely on market data. Sell-side and buy-side institutions will look to validate and verify best execution through market data. And any kind of market abuse or disruptive trading monitoring functionality depends critically on market data. Wherever you look, market data inheres, the veritable lifeblood.

full article describe the image (subscription)

SocialTwist Tell-a-Friend Related Posts with Thumbnails

Challenges Remain for Derivatives Market Reform, Says ISDA, as Dodd-Frank Turns Five

By Dan Alderson
July 20, 2015, GlobalCapital

Marking the five-year anniversary of the US signing into law the Dodd-Frank Act, the International Swaps and Derivatives Association has put forward a wish list of “targeted amendments” for derivatives regulatory regimes.

Although ISDA believes that “significant progress has been made in implementing derivatives market reforms”, the organisation contends that a number of outstanding issues need to be resolved.

full article describe the image (subscription)

SocialTwist Tell-a-Friend Related Posts with Thumbnails

Swaps Users Lament MAT Rules

By Mike Kentz
July 18, 2015, IFR

Market participants agreed that the CFTC needed to make changes to its highly controversial “made available to trade” rule at a public roundtable last Wednesday.

The roundtable was the first open forum held by the agency on a topic that has long frustrated swaps users. Participants said the rule gave too much regulatory power to swap trading platforms that may be swayed by commercial interests.

full article describe the image (subscription)

SocialTwist Tell-a-Friend Related Posts with Thumbnails

Dealing with Swaps

By Anna Reitman
July 10, 2015, Automated Trader

If you ask CFTC commissioner Mark Wetjen to describe the ideal SEF marketplace of the future, he'll tell you that a vision could look like the futures exchanges today - deep liquidity, active trading, ease in getting in and out of positions, and a diverse group of liquidity providers.

But that comes with a caveat. There are important differences between futures and swaps markets, and recognising those differences is a policy goal. As a result, SEFs are designed to be "flexible".

full article describe the image (free)

SocialTwist Tell-a-Friend Related Posts with Thumbnails

Automation Could Determine OTC Swaps Survivors

July 9, 2015, Automated Trader

Speed and certainty of execution, as well as clarity on cost of trade, are going to define which players stay in OTC derivatives markets in a MiFID II environment.

The situation, said Christian Lee, partner and head of Clearing, Risk and Regulation at Catalyst, a consultancy, is a bit like what happened to the futures markets in the 90s, with open outcry pits now almost entirely gone. Lee was speaking at an event organised by City & Financial Global on the impact of MiFID II on trading and markets

full article describe the image (free)

SocialTwist Tell-a-Friend Related Posts with Thumbnails

Regulatory Impact on Swaps Minimal, Managers Say

By David Wigan
June 27, 2015, IFR

Soaring interest rate volatility led to a surge in hedging activity in recent weeks, providing the first clear picture of the impact of post-crisis regulation on investor demand for over-the-counter derivatives. And the apparent answer is that not much has changed.

With European and US bond yields soaring to their highest levels in eight months, fund manager appetite for swaps appeared to be undiminished, while futures activity remained flat.

full article describe the image (subscription)

SocialTwist Tell-a-Friend Related Posts with Thumbnails

Smooth Operator: Japan Looks to Ease Into Electronic Trading

By Aaron Woolner
June 17, 2015, Risk

Japanese authorities look to avoid a repeat of the Sef mandate liquidity fracture.

It is not obvious exactly how much cleared dollar interest rate swap volumes fell on the first day of mandated Sef trading on February 2014, but fall they did. And with Japan going live with its electronic trading platform (ETP) mandate on September 1, you would expect brokers in Tokyo to be preparing for a sizeable fall in their yen IRS volumes.

full article describe the image (subscription)

SocialTwist Tell-a-Friend Related Posts with Thumbnails

Pressure to Complete U.S. Swaps Revolution

By Philip Alexander
June 1, 2015, The Banker

The advent of swap execution facilities has not brought about the open access to trading that buy-side participants expected.

What’s happening?

The US swap execution facility (SEF) mandate came into force in February 2014. Any swap deemed by an SEF to be made available to trade (MAT) on its electronic platform must be traded through a SEF and cleared through a central counterparty. Central clearing is designed to reduce bilateral counterparty risk in derivative trades, while SEF trading is intended to increase price transparency and ensure equal access for all participants.

However, the Commodity Futures Trading Commission (CFTC) devoted part of the first meeting of its newly created market risk advisory committee (MRAC) in April 2015 to the question of why SEFs have not fulfilled expectations. More than 50% of swap trades now take place on SEFs, but buy-side representatives at the MRAC complained that the underlying relationships between market participants have not changed. 

What’s the problem?

SEFs offer two general methods of trading. Clients can place requests for quotes (RFQs) that will be fulfilled by dealers, or market players can participate in a central limit order book (CLOB) that operates in the same manner as a stock exchange. But SEF market activity is bifurcated, and increasingly consolidating around a few platforms. Most dealer-to-client SEF business happens on an RFQ basis on Bloomberg or Tradeweb. On the other hand, dealers are hedging client trades on a CLOB basis, on SEFs operated by the dominant inter-dealer brokers such as ICAP and Tradition. The CLOB allows the SEF to operate more like a conventional exchange.

full article describe the image (subscription)
SocialTwist Tell-a-Friend Related Posts with Thumbnails
All Posts