News

Treasury Traders Becoming ‘24 Hour Party People’

By Alexandra Scaggs
January 27, 2016, Bloomberg Business

If your idea of a party is staring at a computer screen in the middle of the night in New York, JPMorgan Chase & Co. analysts have a market for you.

The $13.2 trillion Treasuries market is getting pushed around more by global developments, the analysts wrote in a note titled “24 hour party people redux: Global liquidity in U.S. Treasury futures.”

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FCM Client Clearing Numbers in Steep Decline

By Jonathan Watkins
December 17, 2015, The Trade

The number of futures commission merchants (FCMs) clearing for customers in the U.S. is set to drop to just 54, a huge decline from pre-crisis levels. 

Recent data from the Commodities Futures Trading Commission (CFTC) shows 55 active customer clearing brokers in the US, though one more name now needs to be struck off the list.

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Banks Say New Rules Will Double Capital Needed to Cover Securitized Debt

By Huw Jones
October 20, 2015, Reuters

Banks will have to double the amount of capital they hold to cover possible default on their pooled-debt under planned new global rules, they said on Tuesday, potentially hampering the E.U.'s drive to boost market-based financing for the economy.

Overall, capital held against trading books will on average have to quadruple, some 28 banks including Citi, Deutsche Bank, Goldman, HSBC and JPMorgan said in a submission to regulators.

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Bank Regulators Considering Concessions on Key Capital Rule

By Silla Brush and Jesse Hamilton 
August 26, 2015, Bloomberg Business

Wall Street is making headway in a campaign to persuade regulators to soften a key rule that has forced banks to boost capital since the financial crisis.

After financial firms complained for about a year that some of the new requirements will make it overly expensive to offer derivatives to clients, regulators planned to discuss possible concessions at a private meeting starting Wednesday, according to two people with knowledge of the talks. The meeting consists of policy advisers to a group of global authorities that includes the Federal Reserve, the European Central Bank and the Bank of England, the people said.

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Wall Street Could Save Billions on Swaps as Regulators Squabble

By Jesse Hamilton and Silla Brush
June 25, 2015, Bloomberg Business

A quarrel among regulators could add up to billions in savings for Wall Street banks.

At stake is a proposed rule that has dragged on for years that could require firms like JPMorgan Chase & Co. and Morgan Stanley to set aside tens of billions of dollars in collateral when trading swaps with their own affiliates. Now, a last-ditch effort by bank lobbyists has helped spur some regulators to second-guess how strict they should be, according to three people familiar with the discussions.

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Fed Heeds Banks’ Warning on Where Next Crisis May Come From

By Silla Brush and Jesse Hamilton
April 10, 2015, Bloomberg Business

JPMorgan Chase & Co. and BlackRock Inc. have argued for years that a key response to the last financial crisis could help fuel the next one. Global regulators are starting to heed their warnings.

At issue is the role of clearinghouses -- platforms that regulators turned to following the 2008 meltdown to shed more light on the $700 trillion swaps market. A pivotal goal was ensuring that losses at one bank don’t imperil a wide swath of companies, and the broader economy.

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Clearing Houses Get Insurance Policy

By Philip Stafford
March 11, 2015, Financial Times

A consortium of 20 top-rated global insurance companies are underwriting a policy for clearing houses that would limit losses for users of derivatives and possibly taxpayers in the event of market turbulence.

The scheme aims to create an extra layer of protection for clearing houses, which have become a critical component of the global derivatives industry since the financial crisis.

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Swap Dealers Making Industry Model to Price Derivatives Deals

By Philip Stafford
March 9, 2015, Financial Times

The world’s largest swap dealers are working on an industry utility to allow them to independently calculate the full price of bilateral derivatives deals and head off a potential upcoming pricing confusion.

Dealers such as JPMorgan, Goldman Sachs and Deutsche Bank are involved in discussions over the creation of an open source model to work out the margin they will need to post for privately-negotiated deals between banks.

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SEC Scrutinizing Bank Efforts to Comply with Capital Rules

By Jody Shenn
February 18, 2015, Bloomberg

The Securities and Exchange Commission is scrutinizing banks’ efforts to appear safer to regulators and shareholders.

The agency is looking for improper behavior related to how banks value complicated assets and to transactions they use to shift risks to other entities, said Michael Osnato, head of the complex financial instruments group in the SEC’s enforcement division.

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JPMorgan Bankers Charged in Germany Over $64 Million in Swap-Sale Losses

By Karin Matussek
February 9, 2015, Bloomberg News

Two JPMorgan Chase & Co. employees were charged in Germany over the sale of swaps to the city of Pforzheim that resulted in 57 million euros ($64 million) of losses, prosecutors said.

The two men were charged with aiding in aggravated breach of trust for selling “highly speculative” swaps to the municipality, Mannheim prosecutors said in an e-mailed statement Monday. The indictment was filed two years after three city officials were charged over the deal.

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Warren, Cummings Ask Wall Street for Answers on Dodd-Frank Rollback

By Victoria McGrane
January 29, 2015, The Wall Street Journal

Elizabeth Warren and her allies are keeping up the pressure on the contentious Dodd-Frank rollback that made its way into a must-pass $1.1 trillion spending bill at the end of last year.

Ms. Warren (D., Mass.) and Rep. Elijah Cummings (D., Maryland) sent letters to four top Wall Street banks Thursday asking for details about how the firms will alter their derivatives trading operations in the wake of the change. Mr. Cummings is the top Democrat on the House Committee on Oversight and Government reform and Ms. Warren a member of the Senate Banking Committee.

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Banks Must Bear the Risk of Derivatives Losses, CME Paper Says

By Matthew Leising
January 20, 2015, Bloomberg

CME Group Inc., the world’s largest derivatives market, wants its bank members to bear responsibility for ensuring there is enough cash on hand in the case of a default.

The debate over how clearinghouses are managed and the level of resources available has gone back and forth between the Chicago-based exchange owner and its largest bank members such as JPMorgan Chase & Co. CME said in a white paper published today it has set aside the equivalent of 5.25 percent of the money its bank members have put into a collective default fund. In September, JPMorgan said CME’s contribution, referred to as skin in the game, should equal 10 percent.

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Top Democrat Says Regional Banks Key to Wall Street Win on Derivatives

By Amanda Becker and Emily Stephenson
December 16, 2014, Reuters

A top Democrat in the U.S. House of Representatives on Tuesday said unpopular Wall Street banks got a long-sought rollback to Dodd-Frank reforms through Congress last week partly by leveraging the influence of smaller banks that hold greater sway with lawmakers.

"They have been working for a long time, trying different strategies on it," California Representative Maxine Waters said in an interview. "The big banks are in trouble with most legislators... so they put the regional banks in front of them in order to gain more support."

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JPMorgan to HSBC Are Accused of Euribor Rate Rigging by EU

By Gaspard Sebag
Published May 20, 2014 Bloomberg

JPMorgan Chase & Co. (JPM:US), HSBC Holdings Plc (HSBA) and Credit Agricole SA (ACA) were accused today by the European Union’s antitrust arm of colluding to manipulate interbank lending rates.

The trio received antitrust complaints alleging they participated in a cartel to rig Euribor. The so-called statement of objections is the next step in the EU enforcement process after the lenders dropped out of settlement talks last year.

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JP Morgan Puts Derivatives Reg Costs at US$1bn

By Christopher Whittall
Published February 26, 2014 IFR

The new global regulatory framework for derivatives will cost JP Morgan around US$1bn in revenues per year, shaving 5% off its overall markets revenues by 2016.

The figures published in investor presentations yesterday give one of the clearest indications yet of the impact of central clearing, electronic trading, reporting and initial margin rules, which are set to change the face of the derivatives industry.

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JPMorgan's Masters Joins Regulator Advisory Committee

By Douwe Miedema
Published February 6, 2014 Reuters

Blythe Masters, who heads JPMorgan's commodity business, has joined a committee advising the U.S. derivatives regulator, the agency said on Thursday, a move that comes as Masters' bank is shedding part of its physical commodity operations.

The Commodity Futures Trading Commission (CFTC) on Thursday voted on the new composition of its Global Markets Advisory Committee, a group of market participants that meets regularly to discuss a broad range of issues.

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Swaps-Clearing D-Day Set to Trim Dealer Profits: Credit Markets

By Matthew Leising and Silla Brush
Published March 11, 2013 Bloomberg

The $639 trillion over-the-counter derivatives market begins the largest transformation in its 30- year history today with rules intended to contain another financial crisis, trimming profits for Wall Street banks.

Companies from JPMorgan Chase & Co. (JPM) to BlackRock Inc. are now required under the 2010 Dodd-Frank Act to have most of their privately negotiated swaps trades backed by a clearinghouse that’s capitalized by the world’s largest banks. That means dealers and their customers have to post upfront collateral to absorb losses if a firm defaults and settle daily losses.

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Banks to Cash In as U.S. Derivatives Reforms Go Live

By Douwe Miedema
Published March 7, 2013 Reuters

Banks have been complaining bitterly about new laws to sort out their industry, even though they were blamed for playing a part in the credit meltdown. But this time round, new U.S. rules look set to help them.

Starting on Monday, hedge funds and other large investors must guide their trading in derivatives through traffic control centers known as clearinghouses.

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Rates Specialists Face Regulatory Headwinds

By Matt Turner
Published March 5, 2013 Dow Jones

The US bank held its annual investor day in New York last Tuesday, at which Mike Cavanagh and Daniel Pinto, co-chief executives of the corporate and investment bank, spoke about the future of the division.

On page 27 of their 45-page presentation, the duo sought to quantify the financial impact of incoming market structure regulations on the business. They said that as a result of new rules on post-trade transparency, mandatory clearing, new margin rules, and trading on swap-execution facilities, JP Morgan could expect a $1bn to $2bn hit to revenues per year, with the fixed-income, currencies and commodities trading business bearing the brunt.

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LCH.Clearnet Taps Ex-J.P.Morgan Executive Amid U.S. Push

By Katy Burne
Published February 27, 2013 Dow Jones

LCH.Clearnet Group Ltd. announced Wednesday it has hired a chief executive at its new U.S. subsidiary as it gets closer to launching a U.S. derivatives clearinghouse to rival the likes of CME Group Inc. (CME).

David Weisbrod, the new U.S. CEO, recently served as vice chairman of risk management at J.P. Morgan Chase & Co. (JPM). He previously was on the board of clearing specialist Depository Trust & Clearing Corp. and is a current member of the board of directors at foreign-exchange settlement provider CLS Group Holdings AG. 

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