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CFTC to Test Role of Anonymity in SEF Order Book Flop

By Peter Madigan 
November 21, 2014, Risk

Buy-side firms say they are being discouraged from using some swap order books because their identity is disclosed post-trade – an old practice that regulators are poised to kill off. But opinions are split on whether that will kick-start order book trading. Peter Madigan reports.

An "old business practice that... will quickly go away" - that is the hope Vincent McGonagle, director of the division of market oversight at the Commodity Futures Trading Commission (CFTC), shared with attendees at an industry event in New York on November 12.

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Europe Eyes Longer Respite for U.S. Swaps Clearers: Source

By Douwe Miedema
November 18, 2014, Reuters

The European Union will soon push back a deadline by which U.S. clearing houses need to comply with its rules, a source familiar with the matter said, taking the sting out of a dispute with America over how to regulate swaps.

The deadline will be postponed until June 15, 2015, from Dec. 15, said the source, asking not to be named. Reuters first reported in September that Brussels was considering a delay, but such a move was not a foregone conclusion.

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Europe Tackles Trade Reconstruction

November 18, 2014, Markets Media

New global regulations and complex reporting requirements make it difficult for financial institutions to implement and maintain simple and straightforward compliance solutions.

For foreign swap dealers registered with the CFTC, meeting the Dodd-Frank Act trade reconstruction requirements poses significant business challenges. However, a new survey of non-U.S. swaps dealers suggests that some firms are starting to recognize that adopting compliance solutions to meet reporting requirements for Dodd-Frank can be leveraged to meet other regulatory reporting obligations such as MiFID2 or MiFIR.

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CFTC’s Giancarlo Slams Automatic Cut to Dealer Threshold

By Alexander Osipovich
November 17, 2014, Risk

Republican commissioner Chris Giancarlo is calling for the CFTC to hold a "proper vote" and seek industry input before de minimis threshold is slashed from $8 billion to $3 billion in 2017.

Chris Giancarlo, the sole Republican on the US Commodity Futures Trading Commission (CFTC), has criticised the agency's plan to sharply lower a key threshold for swap dealer registration in 2017, a move that could force a number of energy firms to register as dealers under the US Dodd-Frank Act.

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CFTC’s Giancarlo: New Rules Divide Swaps Market

By Katy Burne
November 10, 2014, The Wall Street Journal

A top U.S. regulator said new rules governing the multitrillion-dollar derivatives markets are sending swaps trading overseas, threatening Wall Street jobs and potentially destabilizing financial markets.

In remarks he intended to deliver at an industry conference this week, J. Christopher Giancarlo, the lone Republican among four commissioners at the Commodity Futures Trading Commission, said the agency’s rules have split the swaps market into domestic and foreign niches, as non-U.S. firms seek to avoid CFTC oversight.

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End Users Face Swap Margin Requirements

November 11, 2014, Markets Media

The issue of margin for non-cleared derivatives is a contentious one for swap-market participants.

Although hedge funds are generally subject to both initial and variation margin, non-financial end users are faced with the prospect of having to post margin for the first time.

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Comment: Flawed U.S. Rules Fragment Swaps Market

By J. Christopher Giancarlo
November 10, 2014, Financial Times

Over the past several decades, regional and national markets for financial products have expanded into a truly global marketplace benefiting economies around the world.

This expansion has included trading markets for derivatives products such as swaps, futures and options that promote price stabilisation for everyday goods like groceries, gasoline and winter heating fuel.

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U.S. CFTC Pushes Back Electronic Trading Mandates for Some Swaps

By Karen Brettell
November 5, 2014, Reuters

The Commodity Futures Trading Commission will push back a deadline to require that more swaps trade on electronic trading platforms, to give market participants more time to prepare, the agency's chairman said on Wednesday.

The CFTC was due to require swaps that are packaged with other uncleared swaps or with other securities, such as Treasuries, to trade on mandated electronic venues from Nov. 15, but investors have said that more time is needed to develop technology and processes.

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MAC Launches Bridge Swaps Gap

By Mike Kentz
November 1, 2014 IFR

A regulatory struggle to transform the trading infrastructure for over-the-counter swaps may be on the cusp of a big leap towards the exchange-like regime envisioned under Dodd-Frank regulations. Several segments of the market are poised to coalesce around a new standardised swaps contract – known as a Market-Agreed Coupon or “MAC” swap – within an order book framework that more closely resembles exchange trading.

GFI Group, an inter-dealer broker and swap execution facility operator, is set to introduce MAC trading on a central limit order book (or CLOB) with a set of dedicated liquidity providers in the next two weeks, according to sources. Javelin Capital Markets, another SEF, expects to introduce a similar offering by year-end.

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Swap Transaction Costs Remain a Mystery

By Mike Kentz
November 1, 2014 IFR

Four years on from Dodd-Frank derivatives reforms being signed into federal law, transaction costs for over-the-counter swaps remain a mystery to the market.

Participants are now forced to electronically execute, clear and report a wide range of swaps contracts – a full reversal from the days when bilateral negotiation was the norm.

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