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Finance Industry Should Fund Swaps Oversight, CFTC’s Bowen Says

By Silla Brush
April 14, 2015, Bloomberg Business

Wall Street banks and other financial firms should pay new fees to bankroll their own government oversight, according to a member of the top U.S. derivatives regulator.

Sharon Y. Bowen, a Democrat on the Commodity Futures Trading Commission, said Congress should let the agency set fees on banks and other companies that trade derivatives. Fees on firms that register with the CFTC and on specific trades would help the agency -- which says its $250 million budget is inadequate -- respond faster to industry requests, she said in testimony for a House Agriculture subcommittee hearing Tuesday.

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Firms Urged to Waste No Time with Margin Rule Delay

By Gabriel Suprise
April 13, 2015, GlobalCapital

Global swaps participants should use the BCBS-IOSCO margin rules delay as an opportunity to face new issues posed by initial and variation margin requirements, experts say.

The Basel Committee on Banking Supervision/International Organization of Securities Commissions proposal to regulate margin requirements on non¬centrally cleared swaps that was released in September 2013 was amended in March 2015 in order to delay the imposition of rules surrounding variation margin and initial margin by a timespan of 9 to 15 months.

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Comment: The Treasurer: Creating Price Tension on the Derivatives Front

By David Renz
April 13, 2015, Banking Technology

After the latest round of bank stress tests last month, the Federal Reserve announced that, by and large, the nation’s biggest banks would all be able to withstand another crisis without requiring bailouts.

This month, Thomas Hoenig, vice chairman of the Federal Deposit Insurance Corporation, released data that contradict the Fed’s conclusions.

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Comment: Is the End of Open Outcry Worth Mourning?

April 9, 2015, FTSE Global Markets

It has been decades since these pits were the norm; the LME has the last open outcry floor in Europe. Electronic trading has come to dominate the landscape – it’s more efficient, you can trade multiple markets from a single screen, it’s less physically taxing and is arguably safer.  So does this mean that voice trading will be relegated to the history books?

While electronic trading is, thus far, the best way of both trading and ensuring compliance, there will always be a place for human interaction. Technology has simplified the process of trading, and has enabled modern traders to turn themselves into an advisory partner to their clients. When it comes to trading, trust is paramount and there will always need to be a voice at the end of the phone – after all, trading is probably one of the most relationship-driven capital markets functions.

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DE Shaw, Citadel Urge CFTC to Allow Anonymous Swaps Trades

By Silla Brush
April 2, 2015, Bloomberg Business

D.E. Shaw & Co. and Citadel LLC are putting renewed pressure on the main U.S. derivatives regulator to reduce Wall Street banks’ dominance of the $700 trillion swaps market.

At a Commodity Futures Trading Commission event in Washington Thursday, the hedge funds urged Chairman Timothy Massad and his fellow commissioners to ensure that they can trade on the same platforms as banks without revealing their identities. Banks currently have an advantage by knowing not only the price of a trade but who’s behind it, the asset managers said.

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Pimco Sues AIG Over Losses from 2008 Financial Meltdown

By Edvard Pettersson
April 1, 2015, Bloomberg Business

Pacific Investment Management Co. accused American International Group Inc. of misleading investors about “colossal” losing bets on unregulated credit-default swaps and subprime debt before the 2008 financial crisis.

Pimco seeks to hold AIG accountable for tens of billions of dollars in shares and bonds that were wiped out because of the insurer’s exposure to the swaps and residential mortgage-backed securities. AIG falsely claimed its exposure was remote even in a severe situation, Pimco said in a complaint filed March 27 in state court in Santa Ana, California.

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Treasury Help Sought in Cross-Border Swaps Dispute

By Andrew Ackerman
March 26, 2015, The Wall Street Journal

Senate Agriculture Committee Chairman Pat Roberts (R., Kansas) is pressing the Obama administration to help resolve a protracted cross-border dispute over derivatives regulation, a fight that threatens to harm big U.S. firms like CME Group Inc. that fall under the committee’s oversight.

Mr. Roberts, whose panel has jurisdiction over derivatives markets, is asking the U.S. Treasury Department to help resolve a dispute over the cross-border treatment of clearinghouses—entities that are supposed to help prevent a market-wide collapse by ensuring either party in a derivatives transaction would get paid if the other side falters.

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Chris Giancarlo Calls for Swaps Rule Rethink

By Aaron Timms
March 25, 2015, Institutional Investor

J. Christopher Giancarlo disagrees. He disagrees with the suggestion that the Commodity Futures Trading Commission’s overhaul of the U.S. swaps market is too advanced for there to be meaningful revisions to the rules already passed. And he disagrees with the suggestion that as a new CFTC commissioner recently arrived in Washington after 12 years in the interdealer brokerage business, his strident calls over the past couple of months for the CFTC to revisit its own rules on swaps trading represent the final death rattle of a stricken industry.

“This is not about defending an industry,” Giancarlo says. “Brokers have been around since the beginning of time and likely will be around to the end of time. It’s about defending liquidity and trading in the U.S. swaps market, which is vital to corporations’ ability to manage risk.”

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Swap Gauge Expands in Latest Effort to Revive Derivatives Market

By John Glover
March 20, 2015, Bloomberg Business

Gauges investors use to hedge against losses or speculate on the credit quality of Europe’s financial companies have been expanded in the latest effort to revive the $14.8 trillion credit derivatives market.

Benchmark indexes of credit-default swaps now protect 30 of the region’s banks and insurers, up from 25 previously tracked. That’s the most since they were created and follows two successive expansions of Europe’s high-yield corporate benchmark.

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Q&A: Commissioner Christopher Giancarlo, CFTC

By Gabriel Suprise
March 10, 2015, GlobalCapital

Swaps regulation needs to be overhauled in the US in order to stop trading flow moving away from the trading centres in New York and elsewhere in the US to foreign marketplaces, according to Christopher Giancarlo, Commissioner at the Commodity Futures Trading Commission. Gabriel Suprise was granted an exclusive interview with Commissioner Giancarlo, to discuss how these flows can be reversed and moved back to North America cia regulatory harmonization and global cooperation. Topics of discussion also included the made-available-to-trade process, Title VII under Dodd-Frank, electronic trading protocols, position limits and more.

GlobalCapital: You have mentioned that there have been a few problems with the execution of Title VII under Dodd-Frank within the remit of the CFTC. What are the most critical concerns affecting the derivatives markets that the CFTC should focus on this year?

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