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Swap Regulator Wetjen Stepping Down After Four Years at CFTC

By Silla Brush
August 14, 2015, Bloomberg Business

Mark P. Wetjen, a member of the main U.S. derivatives regulator, is stepping down after almost four years of helping to put in place one of the most wide-ranging market oversight rewrites in generations.

Wetjen, a Democrat, pushed for increased coordination with overseas regulators as the U.S. Commodity Futures Trading Commission wrote rules for the swap market required by the Dodd-Frank Act following the 2008 credit crisis. Wetjen was often viewed as a more moderate voice on the commission as he looked to build consensus on cross-border oversight, rules increasing competition on new trading platforms and limits on commodity market speculation.

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CFTC Extends Relief for Non-U.S. Swap Dealers

By Cian Burke
August 14, 2015, FOW

No-action grants relief from transaction level requirements for non U.S. SDs.

The U.S. Commodity Futures Trading Commission (CFTC), on Thursday, extended no-action relief from certain transaction level requirements for non-U.S. swap dealers entering into swaps with non-U.S. counterparties. 

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FIA Releases SEF Tracker Report for May

August 13, 2015, Automated Trader

This issue of FIA SEF Tracker shows volume trends from January 2014 to May 2015 for interest rate, credit default and foreign exchange products. This issue also includes a spreadsheet containing weekly data going back to January 2014.

• In this issue of FIA SEF Tracker, trading activity is measured on an average daily basis. Data for the total amount traded is available on the SEF Tracker website. https://fia.org/articles/fiareleases-sef-tracker-report-may

• Trading activity in interest rate products averaged $347.4 billion per day in May, up 13.1% from April, but well below the levels seen in February and March (see page 6). Bloomberg continued to gain market share in the trading of interest rate swaps and other non-FRA products. Its volume averaged $29.6 billion per day in May, and it had more volume in non-FRA products than any other SEF that month. Tradition was the second largest, with $28.3 billion non-FRA trading per day. Also worth noting was the increase in trading on the two SEFs operated by Tradeweb. Their combined volume averaged $20.7 billion per day, twice as much as May 2014 (see page 7).

• Total SEF trading in credit products averaged $19.6 billion per day during May, down 10.6% from the previous month, but up 7.9% compared to May 2014 (see page 14). Bloomberg captured nearly 70% of the market, and Tradeweb and ICE were second and third with 8.3% and 6.1% respectively (see page 16). On a year-over-year basis, Tullett Prebon and MarketAxess had the biggest increase in percentage terms, while ICAP and Tradition had the biggest declines (see page 14).

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ICE Credit Swap Futures Off to a Slow Start

By Catherine Contiguglia
August 13, 2015, Risk

Credit investors see "no need" for contract; Ice hopes other players will see appeal.

Three-and-a-half months into the life of Ice's new index credit default swap (CDS) contract, critics are already casting it as the latest in a series of failed attempts to ape one of the over-the-counter market's big success stories.

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CCP Basis Driving CME Clients to LCH, Traders Say

By Robert Mackenzie Smith  
August 12, 2015, Risk

LCH sees doubling in client notional, while CME notional halves.

Client-cleared notional at LCH.Clearnet has more than doubled since April – probably the result of the higher cost of pay-fixed US dollar interest rate swaps cleared at rival CME Group, traders say.

The price differential, which exploded to as much 2 basis points for a 10-year trade in the first weeks of May before settling down to around 1bp at the end of July, is said to have hurt liquidity in CME-cleared swaps and prompted some clients to switch venues, according to a rates trader at a bank in New York.

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Intra-Group Margin Will Stifle Internal Hedging Banks Warn

By Fiona Maxwell 
August 11, 2015, Risk

Banks in the US are lobbying against a requirement to post initial margin for internal trades.

Banks in the US will be forced to rework how they manage risk if they are granted no exemption from posting initial margin on uncleared derivatives in intra-company trades, dealers have warned. A carve-out exists under European Union and Japan rules but not in the US, which will double costs and ultimately be passed on to end-users, the dealers say.

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Banks Said Poised to Win Delay of U.S. Curbs on Overseas Swaps

By Silla Brush
August 10, 2015, Bloomberg Business

Wall Street banks are close to winning a further delay of a U.S. policy that clamps down on their overseas derivatives trades, according to two people with knowledge of the matter.

The Commodity Futures Trading Commission is probably going to postpone subjecting transactions set up in the U.S., but held in overseas divisions, to Dodd-Frank Act trading regulations, said the people, who asked not to be named because the deliberations are private. The regulator is weighing how long the delay should be, the people said.

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CCPs Confront Cleared Swap Basis Threat

By Fiona Maxwell
August 10, 2015, Risk

In theory, a price difference could emerge for any derivative that is cleared at two or more clearing houses – as recently happened for US dollar swaps at CME and LCH.Clearnet. From Japan to Mexico, other clearers explain how they are trying to avoid it.

Who’s next? It’s the obvious question when a company falls victim to pressures that apply across its sector.

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New European Clearing Rules Faces Further Delay

By Cian Burke
August 6, 2015, FOW

European Commission has been vocal in its April plans for mandatory clearing.

The European Commission has on Thursday adopted new rules to enforce mandatory clearing of interest rate swaps, however changes made to previous draft rules could delay the expected compliance date of April 2016.

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Swap Dealers Eye Relief in SEC Policy Curbing Bank Penalty Scope

By David Michaels
August 5, 2015, Bloomberg Business

The U.S. Securities and Exchange Commission proposed a way for banks to shield their derivatives businesses from disruption triggered by enforcement actions, reprising a long-running fight over how severely the agency should punish Wall Street firms accused of wrongdoing.

The SEC voted 3 to 2 Wednesday to issue a policy that outlines how banks can avoid collateral damage for their derivatives businesses when unrelated units or employees face sanctions.

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