News

Current Articles | RSS Feed RSS Feed

Comment: How Many Ways to Win in Swaps?

By Duncan Wood
February 9, 2016, Risk

Throughout the history of the swaps market, there has only been one way to win: you had to be a bank, with offices around the world, trading swaps with a wide range of customers, while offering a long menu of other services.

The problem with that model today is its very first criterion – being a bank means being subject to bank regulation, which is an instant handicap for almost any trading business.

full article describe the image (subscription)

SocialTwist Tell-a-Friend Related Posts with Thumbnails

Uncleared Margin Rules Face Trans-Atlantic Mismatch

By Mike Kentz
January 30, 2016, IFR

Yet another mismatch is looming in the delivery of post-crisis derivatives reforms across borders – this time in an area that participants say will have the deepest competitive implications for the banking industry of any of the 2009 G20 reforms.

European regulators have yet to finalise rules requiring the collateralisation of uncleared derivatives, but remain publicly committed to an implementation schedule that begins this September.

full article describe the image (subscription)

SocialTwist Tell-a-Friend Related Posts with Thumbnails

Massad: Let Market Decide What It Wants from SEFs

By Catherine Contiguglia
January 25, 2016, Risk

U.S. Commodity Futures Trading Commission (CFTC) chairman, Timothy Massad, says he is happy for the market to decide whether it wants to execute derivatives trades via voice or electronic execution when trading on swap execution facilities (SEFs).

While some market participants have complained that dealers have sought to retain voice trading as a way to stall the take-up of fully electronic central limit order book (CLOB) execution, where banks can be disintermediated, Massad says he is happy to leave it up to the market to decide which way it wants to trade.

full article describe the image (subscription)

SocialTwist Tell-a-Friend Related Posts with Thumbnails

U.S. Watchdog Approves New Venues for Trading Interest Rate Swaps

By Philip Stafford and Joe Rennison
January 22, 2016, Financial Times

U.S. regulators on Friday formally recognized 18 new venues for trading interest rate swaps, reflecting the industry’s growing uptake of electronic trading under new rules.

New rules for trading swaps, which are used by banks and corporations to either hedge or take exposure to fluctuating interest rate and currency moves, have dramatically altered the market in the U.S.

full article describe the image (subscription)

SocialTwist Tell-a-Friend Related Posts with Thumbnails

CFTC Chair Massad Outlines 2016 Priorities

January 22, 2016, FTSE Global Markets

CFTC Chairman Timothy Massad in a speech to the ABA Derivatives and Futures Law Committee, 2016 Winter Meeting today outlined some of the priorities for the regulator this year. Cybersecurity and automated trading are in the regulator’s sights this year.

The regulator will focus on clearinghouse strength and resiliency generally, Massad told the audience. “This includes, determining whether we can develop standards for stress testing of CCPs. This would help us evaluate clearinghouse risk across borders. And it also includes recovery planning. What happens if there is a problem at a CCP—one or more clearing members default? What happens if the so-called “waterfall” of resources available for a default are insufficient – that is, the initial margin of the defaulting members, the clearinghouse’s capital, the other clearing members’ prefunded contributions to the default fund, and potential assessments on clearing members,” he said.

full article describe the image (free)

SocialTwist Tell-a-Friend Related Posts with Thumbnails

SEFs Boost Liquidity and Cut Costs, Says BOE

By David Wigan
January 23, 2016, IFR

The impact of post-financial crisis legislation to move trading of standardised swaps onto electronic venues has been overwhelmingly positive, boosting liquidity and cutting costs, according to a Bank of England staff paper.

The impact suggests that the Dodd-Frank mandate should be extended to cover more asset classes, the paper says.

full article describe the image (subscription)

SocialTwist Tell-a-Friend Related Posts with Thumbnails

U.S. Interest Rate Swaps Trading Rules 'Fragment' Global Market

By Philip Stafford
January 17, 2016, Financial Times

New rules governing interest rate swaps trading in the U.S. on electronic venues have increased liquidity and saved tens of millions of dollars for companies but fragmented the global market, a new study by the Bank of England has found.

The report into the effects of a key piece of post-financial crisis market reform said there were significant effects for trading U.S. dollar-denominated swaps, which are among the most high-value deals executed on global markets.

full article describe the image (subscription)

SocialTwist Tell-a-Friend Related Posts with Thumbnails

Cross-Border Conundrums Still Hampering OTC Derivatives Markets

By Michael Watt
December 1, 2015, The Banker

Laufenburg, a small, non-descript town of some 2000 people, straddling the Swiss-German border, is not likely to be familiar to the average derivatives market regulator, but it offers a cautionary tale that could have proved useful over the past few years.

In 2003, the authorities in Laufenburg decided to build a bridge over the river Rhine, which bisects the town. Construction was started on both banks, but as the structure neared completion, it became clear that someone had blundered – the two sections of the bridge did not neatly meet in the middle. In fact, one was a full half-metre higher than the other, forcing an embarrassing rebuild on the German side.

Derivatives market supervisors have found themselves in a similar fix. The years since the financial crisis have seen the construction of perhaps the most extensive and intensive set of regulatory changes in the history of financial markets. Given the scale of the change, it is remarkable that so many new rules, which encompass dozens of different jurisdictions, have been brought into force with a minimum of fuss. Regulators have introduced massive changes to capital and liquidity standards without serious geographic schisms.

full article describe the image (subscription)

SocialTwist Tell-a-Friend Related Posts with Thumbnails

Comment: SEF Trading: Challenges and Regulatory Hurdles

By Ivy Schmerken
November 10, 2015, Markets Media

The regulatory overhaul of the OTC derivatives market has brought mandatory clearing and electronic trading to standardized swaps, but many say the market structure is stuck, citing regulatory ambiguity and separate liquidity pools.

While a significant portion of volume in interest rate and credit default swaps has shifted to new trading venues, panelists at the SEFCON VI conference on Oct. 26 contend that the jury is still out on whether the market structure has changed.

full article describe the image (free)

SocialTwist Tell-a-Friend Related Posts with Thumbnails

Prop Firms Press CFTC to Loosen Trading Rules

By David Wigan
November 7, 2015, IFR

Chicago-based prop trading firms are ramping up pressure on the CFTC to relax rules that require large non-bank derivative traders to register as swap dealers for the purposes of transacting on swap executions facilities.

The companies have called on the regulator to remove restrictions they claim limit the ability of so-called floor traders to compete with banks on the electronic venues designed to increase transparency in the over-the-counter derivatives market. They key characteristic of a “floor trader” is that it acts on its own account.

full article describe the image (subscription)

SocialTwist Tell-a-Friend Related Posts with Thumbnails
All Posts