Tour de Force

The current MiFID II consultation is infamously complex, covering 800 pages and 800 questions to be answered in 8 weeks. If that in itself is not enough of a challenge, ESMA invited all market participants to Paris this week for a two-day Tour de Force, aka public hearing. Be it equity, non-equity, pre- or post-trade transparency, SIs, OTFs, trade reporting, third country regimes,... Read More

Extraterritoriality reality?

Legislators and regulators all around the globe are rushing to meet the G20 commitment of shifting all standardised OTC derivative contracts onto exchanges or electronic trading platforms. Naturally, every country is trying to clean up its own backyard before looking across the fence at its neighbour’s. The disadvantage of this approach is that country-specific rules might... Read More

The horse hasn’t bolted, yet!

The Flash Crash catapulted circuit breakers into the public spotlight and showed how they (or rather the lack of them) can impact financial markets. Since then, in Europe at least, discussions have been relatively quiet. European markets are perhaps less prone than others to such massive price swings for two reasons. Firstly, Europe does not have the trade-through rule and, secondly,... Read More

Deciphering the new map

Two key themes – liquidity and risk – always rise to the surface of any discussion around the implementation of regulation for OTC derivatives trading in Europe and North America. A couple of recent articles in The Economist neatly outline both sides of the argument by discussing risk, potentially increasing transaction volumes and strategic business opportunities arising... Read More

Regulation, regulation, regulation!

As market participants are still reeling from the attack on HFT and technological innovation in the latest draft amendments to MiFID II, let’s take a look at the rapporteur Markus Ferber’s draft changes to the proposed MiFIR EU regulation. The biggest change is that the OTF category, previously proposed in an attempt to regulate OTC trading on broker crossing systems, now looks... Read More

A butterfly effect in the making

In a recent speech, Andrew Haldane (Executive Director, Bank of England) makes a strong and convincing case that the proposed global Legal Entity Identifier (LEI) and the Unique Product Identifier (UPI) will have the largest impact on the financial industry in the current regulatory overhaul. The LEI and UPI are introduced in a recent CPSS IOSCO paper on “OTC derivatives data... Read More

Another kind of movie night

Let’s face it, a meeting of the Committee on Economic and Monetary Affairs (European Parliament) regarding MIFID II and EMIR is hardly a topic suitable for a movie night. So I wasn’t really that excited to watch their latest discussions on Monday evening in Strasbourg via the internet. However, after seeing the new MiFID movie poster, I was inclined to tune in and watch some... Read More

MiFID II Digest

While the 10 key takeaways from MiFID II may have given Steve indigestion, we are busy tucking in to the smörgåsbord of recently published MiFID II documents and snacking on all the published articles on the subject. From my reading so far, most looks as expected from the previous version that was leaked in August, with the following worthy of note: Organised Trading Facilities (OTFs)... Read More

MiFI Leaks!

With reports of a draft of the revised Markets in Financial Instruments Directive circulating in Brussels in recent days, I’d like to bring you up to speed with how we are progressing in the MiFID II back-shop! We are now looking at a marked up copy of Directive 2004/39/EC – the revised Directive a new Regulation (ref tbd) that establishes uniform requirements in relation... Read More

Pension schemes breathe a sigh of relief

Politicians want to provide greater transparency in order to prevent systemic risk. Industry practitioners complained that some of their proposals would mean an increase in the costs of using derivatives as they would have to commit large levels of collateral upfront to secure trades and be forced to clear their derivatives through a central counterparty. Some of us attended... Read More

Do you GoCompare or are you Confused.com?

The Regulation team has great pleasure in bringing you a unique (and somewhat ironic) insight from Robin Strong, Head of Buy-side Market Strategy at Fidessa, in his paper entitled Do you GoCompare or are you Confused.com? One of the most topical issues from the point of view of both politicians and industry practitioners relates to the role of derivatives and fixed income. Robin... Read More

Pension schemes will be exempt from derivatives legislation despite US pressure

Seems there may still be time for more industry lobbying! Extract from article in Financial News “MEP Kay Swinburne, a former investment banker who sits on the Economics and Monetary Affairs Committee of the European Parliament, told a London trading conference that the European Parliament is considering granting pension schemes a full exemption from the new rules. The... Read More

What can MiFID II do to help address excessive commodity price volatility?

The next in my series of PMQs looks at the measures specific to Commodity Derivatives covered in the EC’s Public Consultation paper on the Review of MiFID. A dry subject, perhaps, but I would say one very close to our hearts (and wallets, with pump prices close to £1.40 a litre!) as we witness economics in action. In a climate of unrest in North Africa and the Gulf, super-high... Read More

The pain of ill-fitting shoes!

A card pinned to the notice board at my gym last week read: “If you have seen my brown Uggs could you please return them to reception.” It had me wondering if the Uggs in question were a good fit for whoever found them. In much the same way, I’m wondering why our industry’s regulators are so keen to take a one-size-fits-all approach to the structural changes... Read More

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