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Morgan Stanley in Final SEF Agency Service Development Push

By Daniel O'Leary
Published September 11, 2014 Global Capital

Morgan Stanley is in the final development stages of its swap execution facility agency service and should launch the platform in the coming months.

Senior market officials at SEFs in New York told GlobalCapital the firm was making a final marketing push for the product with its clients. The SEF agency service will launch from the firm’s existing Morgan Stanley Passport e-trading platform, said one SEF official.

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Treasury Monitoring Swaps Loopholes at U.S. Banks

By Andrew Ackerman and Vctoria McGrane
Published September 11, 2014 The Wall Street Journal

The Treasury Department is monitoring U.S. banks that are shifting some trading operations overseas to avoid tough U.S. swaps rules, according to a department official.

Banks, including Citigroup Inc., Goldman Sachs Group Inc. and JP Morgan Chase & Co. have revoked their policy of guaranteeing some swaps issued by foreign affiliates, primarily in London, eliminating ties to their U.S. parent.

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Forward-starting Swap Volumes Fail to Surge, Says Isda

By Peter Madigan
Published September 10, 2014 Risk

Derivatives users have not flocked to forward-starting swaps to avoid having to execute trades on swap execution facilities (Sefs), despite claims to the contrary, according to data presented by the International Swaps and Derivatives Association on September 9.

The research, based on forward-stating swap trade data from October 2013 to August 2014, breaks down interest rate contracts into three categories. The first covered forward-starting swaps that start on one of the next two international money market (IMM) dates on which interest rate futures expire. These have been deemed made-available-to-trade (Mat) by the US Commodity Futures Trading Commission (CFTC) and must be transacted on a Sef.

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Fragmentation Worries OTC Users: Survey

Published September 10, 2014 Markets Media

Fragmentation in the OTC markets is being driven by a lack of cohesion by national regulators on execution, reporting, and clearing of swaps transactions, according to a survey by the International Swaps and Derivatives Association.

“We don’t want market fragmentation,” ISDA CEO Scott O’Malia said at a press briefing on Tuesday at the ISDA North America conference in New York. “In the end-user documentation, we have concerns regarding fragmentation, and the cost, and the quality of the liquidity. That’s a concern for end users, and they believe it’s going to undermine their ability to get access and get good pricing.”

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Swaps Dealers Warn on Market Transparency

By Gina Chon and Michael MacKenzie
Published September 9, 2014 Financial Times

Swaps market dealers are warning that efforts to reform the vast over-the-counter derivatives industry in the US are not delivering the greater transparency and increased competition desired by regulators.

But Timothy Massad, the new chairman of the Commodity Futures Trading Commission, told the Financial Times it was too early to judge how trading was faring on the newly created swap execution facilities, or Sefs, given that mandatory trading for certain swaps began in February.

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U.S. Regulator Would Welcome Delay of EU Clearing Rules

By Douwe Miedema
Published September 10, 2014 Reuters

A top U.S. regulator said on Wednesday he would welcome a delay by the European Union that gave more time to resolve a conflict with Washington over making derivatives markets safer.

Reuters reported last week that the EU is discussing whether to move a deadline by which U.S. clearing houses, which act as go-betweens for buyers and sellers, must meet EU rules when doing business there.

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Clearinghouses Get CFTC Scrutiny So Solution Isn’t Problem

By Silla Brush and Robert Schmidt
Published September 8, 2014 Bloomberg

The U.S. Commodity Futures Trading Commission plans to intensify oversight of swaps clearinghouses to ensure they don’t threaten the financial system they are meant to help secure.

CFTC Chairman Timothy Massad said in a Sept. 5 interview that his agency will bolster examinations of clearinghouses, which process trillions of dollars in transactions and are potentially vulnerable to market shocks or cyber attacks. The agency is working with the Federal Reserve on the effort, he said.

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CFTC to Scrutinize Swaps Loophole

By Andrew Ackerman and Scott Patterson
Published September 5, 2014 The Wall Street Journal

The Commodity Futures Trading Commission plans to scrutinize U.S. banks that are shifting some trading operations overseas to avoid tough CFTC rules. The agency also will work with other regulators to determine if the practice poses a risk to Wall Street.

Timothy Massad, the new CFTC chairman, said in an interview he is concerned about recent moves by several large Wall Street firms to sidestep CFTC oversight by changing the terms of some swap agreements made by foreign affiliates.

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Rates Businesses Diverge

By Christopher Whittall
Published September 5, 2014 IFR

The retrenchment in banks’ rates trading businesses shows little signs of abating, as what was once the engine room of investment banks’ revenue streams continues to feel the squeeze from the combined weight of tougher regulations and record low interest rates.

The decision from rates trading behemoth Barclays to overhaul its operations earlier this year, and hive off exposures into a non-core unit, was viewed as symptomatic of a broader malaise in the asset class, which has already seen deeper cuts at former stalwarts including Credit Suisse, RBS and UBS.

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Regulators Unveil New Version of Swaps-Margin Rule

By Victoria McGrane
Published September 3, 2014 The Wall Street Journal

Commodity industry groups have urged Brussels to resolve a long-running delay over their definition of off-exchange derivatives, arguing the deferment is putting European markets “at a material competitive disadvantage” to rivals.

Lobby groups representing more than 900 commercial commodity market participants sent a letter last Friday to Jonathan Faull, the head of the European Commission’s markets division, urging him to define which overseas markets would be exempt from tougher new rules clearing over-the-counter derivatives trades.

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