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44 Percent of Buyside is Processing Complex Swaps Manually, Survey Says

By John D'Antona Jr.
August 27, 2015, Traders Magazine

It seems that when it comes to trading and processing derivatives trades such as complex swaps, the buyside favors a manual approach.

A recent survey released by SimCorp, a provider of electronic investment management solutions, has revealed that 44% of buyside asset managers are relying on mostly or completely manual processes for managing complex swaps across the investment lifecycle. And more than 50% claim they still require some amount of manual intervention in a semi-automated process.

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Brokers Defy BlackRock Over Average Pricing on SEFs

By Robert Mackenzie Smith
August 27, 2015, Risk

"We're lions, not zebras," says Icap's Paulhac, but BlackRock is offering a strong incentive for brokers to deliver average pricing

Broker-run swap trading platforms are resisting calls from the world's largest asset manager to offer average pricing and direct allocation capabilities for buy-side trades.

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SEF Trading in the Doldrums, ISDA Data Show

By David Wigan
August 25, 2015, IFR

The evolution of electronic derivative trading continued its stuttering progress in recent months, with swap execution facility (SEF) volumes barely growing, according to data from Isda.

Some 51.2% of average daily interest rate derivative trading activity was executed on SEFs in the second quarter, compared with 50% in the same period in 2014. Trade sizes were 19.5% lower than a year earlier on average.

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Single-Name Clearing Catches On

By Mike Kentz
August 22, 2015, IFR

Credit investors are buying into clearing for single-name credit default swaps as a cure for the ailing market – even though it is sometimes more expensive than existing bilateral execution methods.

The Intercontinental Exchange has signed up 21 new buyside firms to its single-name CDS clearing offering this year – more than doubling the total buyside participation to 39 firms – via a lobbying effort that includes discounts for buyside firms that back-load existing swaps into clearing between June and December.

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Corporates Fear End to EMIR's Hedge Exemption

By Fiona Maxwell
August 21, 2015, Risk

Counting all trades towards clearing threshold ‘would be a nightmare’.

Corporate treasurers are protesting against proposals that would end the exemption their hedges enjoy in European swaps market reforms, potentially forcing them to clear many of their over-the-counter trades and post margin on non-cleared trades.

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U.S. Banks Moved Billions in Trades Beyond CFTC's Reach

By Charles Levinson
August 21, 2015, Reuters

This spring, traders and analysts working deep in the global swaps markets began picking up peculiar readings: Hundreds of billions of dollars of trades by U.S. banks had seemingly vanished.

"We saw strange things in the data," said Chris Barnes, a former swaps trader now with ClarusFT, a London-based data firm.

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CFTC Proposes Changes to Data Reporting Rules for Uncleared Swaps

August 19, 2015, Automated Trader

The Commodity Futures Trading Commission voted to propose amendments to existing regulations in order to provide additional clarity to swap counterparties and registered entities regarding their reporting obligations for cleared swap transactions.

The move also tackles improving the efficiency of data collection and maintenance associated with the reporting of the swaps involved in a cleared swap transaction.

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CME to Cut Minimum Guaranty Contribution for Rate Swap Clearing

By Tom Polansek
August 19, 2015, Reuters

CME Group Inc plans to reduce by 70 percent the minimum contribution that clearing members in the interest rate swaps market must make to a guaranty fund because of increased trading, the exchange operator said on Wednesday.

Starting on Aug. 31, the minimum contribution to CME's interest rate swap, or IRS, guaranty fund will drop to $15 million from $50 million, according to a notice sent to customers and posted on the company's website.

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Comment: Frenemies at the Gate

By Joe Channer
August 18, 2015, Banking Technology

The sector is not renowned as a home for co-operation: competition is intense, the stakes high, and individualism rewarded. Yet the industry has recently seen a marked increase in collaborative ventures. The post-crisis environment, with regulations driving transparency, is forcing firms to focus resource on areas where there is less competitive advantage, such as risk management or reporting. As a result, fierce rivals are beginning to buck the trend, putting aside their differences to mutualise solutions to problems regulatory, logistical and technical. Consortiums, industry groups and open source projects abound.

Only last month, 13 major banks announced joint backing for an effort to create a utility to reduce disputes over the margin used in swaps trading. This comes soon after the world’s largest swaps dealers began discussions on the creation of an open source model for calculating margin for bilateral derivatives deals. Both moves are a direct response to new rules requiring dealers to post more margin in order to mitigate counterparty risk.

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A Green Light Doesn't Mean Go for Swaps Clearing

By James Rundle
August 17, 2015, Financial News

Just because 20 of the world’s most powerful people want something to happen does not mean it will happen.

Leaders of the G20 said in 2009 that to help prevent another financial crisis they wanted the world’s over-the-counter derivatives – traded largely in private between banks – to be reported and run through clearing houses so risks could be reduced and measured.

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