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SEFs: A Progress Report

February 26, 2015, Markets Media

For a business that’s all of 16 months old, swap execution facilities have made steady progress in establishing themselves as viable trading venues.

In December, weekly volume in interest-rate swaps was reported as high as $970 billion, while credit swaps weighed in at $236 billion, according to the FIA SEF Tracker released in early February. While that represents only a small fraction of a global swap market whose size is estimated at $600 to $700 trillion, SEF operators and observers note that trading volumes have increased from $0 as of Oct. 1, 2013, the day before the first SEFs commenced operations.

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SocGen Buys Stake in Trading Platform

By Philip Stafford
February 17, 2015, Financial Times

Société Générale has bought a minority stake in a UK start-up trading platform in a move that underlines how banks are exploring hybrid fixed income derivatives to ease their capital requirements.

The French bank has followed Deutsche Börse in buying an undisclosed stake in Global Markets Exchange Group and will provide execution and clearing services for its clients when the London-based venue goes live in the second quarter.

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CFTC to Propose Swaps Anonymity

By Katy Burne
February 16, 2015, The Wall Street Journal

U.S. regulators are poised to introduce measures that would ensure anonymity for traders in the $700 trillion market for swaps, said people familiar with the discussions, a flip-flop that would hand a victory to hedge funds and speedy trading firms while dealing a blow to banks.

The planned action from the Commodity Futures Trading Commission would encourage trading among any and all market participants, mirroring futures markets that the agency also oversees, and would raise the chance of traders dealing directly with one another, potentially bypassing banks that have historically been major providers for these complex transactions, the people said.

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New Rules on Bank Capital, Swaps Clearing Set to Clash

By Andrew Ackerman
February 12, 2015, The Wall Street Journal

A new rule requiring banks to hold extra capital against all the assets on their books may have the unintended effect of undermining a central plank of the 2010 Dodd-Frank law aimed at boosting the safety of the multitrillion-dollar swaps market, a top regulator warned Thursday.

Commodity Futures Trading Commission Chairman Timothy Massad , testifying on Capitol Hill, said he is concerned the rule would make it more expensive for banks to route swaps through clearinghouses, hindering a Dodd-Frank mandate that most swaps be cleared. Clearinghouses, the market plumbing seen as a key safety procedure for the financial system, take fees to guarantee swaps.

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CFTC Close to ‘Game-Changing’ Guidance on SEF Anonymity

By Joe Rennison
February 11, 2015, Risk

Agency could prevent Sefs from revealing identities of order book participants - a practice some buy-side firms claim is a way of preserving dealer interests.

The Commodity Futures Trading Commission (CFTC) is close to finalising guidance that could require parties trading on swap execution facilities (Sefs) to remain anonymous, according to three industry sources – a move one describes as a "game changer".

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SEC Officials Blast Agency Over Clerical Error on Swaps Rulemaking

By Sarah N. Lynch
February 11, 2015, Reuters

U.S. securities regulators failed to consider a comment letter from a key derivatives trade group before adopting new swaps data reporting rules last month, prompting criticism on Wednesday from the agency's two top Republicans.

The failure to review the letter was due to an inadvertent clerical error, but in a joint statement, Securities and Exchange Commission Republican members Daniel Gallagher and Michael Piwowar said they felt the mistake warranted the need to re-open the rule for public comment.

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JPMorgan Bankers Charged in Germany Over $64 Million in Swap-Sale Losses

By Karin Matussek
February 9, 2015, Bloomberg News

Two JPMorgan Chase & Co. employees were charged in Germany over the sale of swaps to the city of Pforzheim that resulted in 57 million euros ($64 million) of losses, prosecutors said.

The two men were charged with aiding in aggravated breach of trust for selling “highly speculative” swaps to the municipality, Mannheim prosecutors said in an e-mailed statement Monday. The indictment was filed two years after three city officials were charged over the deal.

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CFTC Commissioner Slams Agency’s Swaps Rules

By Jon Watkins
January 29, 2015, The Trade

A top U.S. regulator is urging the introduction of examinations for swaps traders and brokers, in the latest effort to overhaul opaque derivatives markets that have drawn criticism since the financial crisis.

J. Christopher Giancarlo, the lone Republican among four commissioners at the Commodity Futures Trading Commission, proposes the action to “enhance the knowledge, professionalism and ethics of personnel in the U.S. swaps markets.

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CFTC’s Giancarlo Proposes Swap Personnel Exams

By Katy Burne
January 28, 2015, The Wall Street Journal

A top U.S. regulator is urging the introduction of examinations for swaps traders and brokers, in the latest effort to overhaul opaque derivatives markets that have drawn criticism since the financial crisis.

J. Christopher Giancarlo, the lone Republican among four commissioners at the Commodity Futures Trading Commission, proposes the action to “enhance the knowledge, professionalism and ethics of personnel in the U.S. swaps markets.

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ISDA Outlines Proposals for Clearing Recovery

By Cian Burke
January 26, 2015, FOW

Trade body said members should be compensayed by CCP in event of losses.

The International Swaps and Derivatives Association (ISDA) has outlined a proposed framework for central counterparty (CCP) recovery and continuity.

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