Two for one

If nothing else, we know the new regime in the US likes a good punchy sound bite. As many of us predicted, President Trump and his team have their sights firmly set on loosening the burden of Dodd-Frank and other regulatory sets that they feel make for a hostile business climate. The tagline of Trump’s executive order for regulatory reform is “two for one” –... Read More

What’s in a name?

Recent regulations in the US and EU have been driving the adoption of identifiers to make it easier to spot the forest from the trees. But as we move forward it is becoming increasingly obvious the same labels are being tasked to determine risk, enhance transparency and create accountability. One need not look much further than the global legal entity identifiers (LEI). The LEI... Read More

What role for OTFs?

Last week the CFTC published another no-action letter with respect to trading swaps on a European MTF. At the heart of the discussion is the question of whether European MTFs can be considered as equivalent to US SEFs. Given that a number of banks within the scope of Dodd-Frank also need to trade swaps within Europe, this is an important issue. In Europe, the discussion around swaps... Read More

SEF and agency make a perfect MATch

From next Tuesday, February 18th, US market participants will be required to trade fixed-floating interest rate swaps denominated in dollars or euros for standard benchmark tenors on a SEF. Long part of Dodd-Frank’s Title VII statute, this trade execution mandate now comes about and follows the CFTC’s certification of Javelin’s MAT submission last month. During... Read More

Keeping SEF doors open

The CFTC has come out strongly in defence of the open, impartial nature of SEFs, as envisioned by Dodd-Frank. In a letter issued last Thursday it warns SEFs not to use “enablement mechanisms” to control access to their markets, or to control which participants interact with one another on their platforms. It also warns against engaging in “prohibited discriminatory... Read More

Swaps regulation arrives – with a bang and a whimper

The swaps industry has for some time been fixated on October 2nd, the final date for compliance with SEF rules. But really the key date for market participants is when MAT (the “made available to trade” rule) kicks in and that, according to the industry consensus, is not likely to be before February 2014. With many of the 19 new SEFs only submitting their applications... Read More

Looking through the CFTC’s prism

The CFTC’s recent Concept Release on Risk Controls and System Safeguards for Automated Trading Environments represents a watershed moment for US derivatives markets, setting the stage for a new regulatory approach to electronic trading. The CFTC’s role and powers have already been greatly enhanced, post-Dodd-Frank, through a combination of the new market abuse powers,... Read More

Next Stop St. Petersburg

Back in 2009, in the wake of the financial Armageddon, world leaders pledged in their G20 commitment in Pittsburgh that all standardised OTC derivative contracts should be traded on a platform and centrally cleared by the end of 2012. Fast forward four years and the next G20 summit takes place in St. Petersburg, Russia at the end of this week – the first meeting since the... Read More

Uncertainty abides amidst a flurry of CFTC activity

It’s a busy – not to mention dramatic and uncertain – time for U.S. derivatives regulation. Consider the milestone of final SEF rules and yesterday’s “Category 2″ clearing deadline. Consider, too, the on-going uncertainty as to the pending expiration of the exemptive relief on Dodd-Frank’s cross border rules (also known as ‘extra-territoriality,... Read More

Half a job

MiFID, the mother of all European financial regulation, rumbles on and on. The European Commission’s MiFID II consultation in 2011, the Ferber Report in March 2012, and the European Parliament vote in October 2012 were all highly anticipated and widely reported on. But despite the fact that the Council of Ministers has published more than 20 different drafts during the Cyprus... Read More

Time to get comfortable with SEFs

The CFTC’s 29th meeting on Dodd-Frank rules, held in Washington, D.C. on May 16th, has been widely covered in the financial press. Final SEF (Swap Execution Facility) rules – including the so-called “Made Available to Trade” (MAT) rule – and minimum block sizes for swaps (among other rules) were approved by the Commission. Despite controversy, it’s... Read More

Swap your workflow

We’ve discussed the current course of regulatory change, specifically Dodd-Frank here in the States, and alluded to the “total set of changes the derivatives industry is going to go through”. But one thing is clear, the interrelationships between buy-sides, sell-sides (FCMs and swaps dealers, executing and clearing brokers) and CCPs is going to get increasingly... Read More

Stop/start for Dodd-Frank’s swaps rules

The Dodd-Frank Act, nearly three years old this summer, continues its slow, inexorable pace of implementation. In some respects, the financial landscape has changed unequivocally; in others, the final results of change remain to be seen, as the industry awaits additional rulemaking. Most of the current regulatory milestones impact only participants in the OTC swaps markets, but... Read More

Here comes the CFTC: the regulators keep coming back for more

The latest batch of rules from the US Commodity Futures Trading Commission (CFTC), which come into effect on December 31, 2012, will require many firms currently outside the CFTC’s supervision to register as Commodity Pool Operators (CPOs). A new exemption test – the de minimis test – will need to be applied by firms daily to check their levels of commodity interest against... Read More

Sensible timeframes please!

The final text of EMIR (European Market Infrastructure Regulation) entered into force on 16th August and the next milestone for ESMA, to complete the Level 2 text by the end of September, is fast approaching. ESMA’s consultation on the draft technical standards received over 130 responses before the 5th August deadline. Whilst there is general support for the key aims of EMIR,... Read More

Dodd-Frank: Implications of the latest swap definition rule

Following the CFTC’s recent approval of a swap definition lawyers and the OTC derivatives industry are busy digesting the 600 page ruling. In effect, this kicks into motion an October 2012 timeline around the implications of two very significant previously defined rules for the regulation of OTC derivatives: Swaps defined by this rule must be cleared; and Swaps defined... Read More

Third-country confusion!

Reported last week on FT.com, a coalition of trade associations has commissioned lawyers to study the viability of a mutual recognition regime between the EU and US regulators. This is to clarify ‘third-country’ requirements in EMIR (European Market Infrastructure Regulation – reforms for OTC derivatives) and MiFID II regarding financial services businesses in... Read More

The long road ahead

With the arrival of the new year we have updated the MiFID II Roadmap to reflect the latest anticipated timeline for the regulatory changes. The top row of the Roadmap depicts the progress of MiFID II from Public Consultation last December, via draft legislation issued in October 2011, to likely agreement on legislation expected by late 2012. It is proposed that ESMA will develop... Read More

Reshaping the OTC derivatives market

Many thanks to our colleague David Petersons for the following interesting observations: While much remains to be resolved through rule-making, this Capco article discusses the impact of the Dodd-Frank Act on OTC derivatives, outlines the key elements of the Act affecting OTC derivatives trading and provides an update on where the rule-making stands. The predictions about four possible... Read More

Letter from America

The Dodd-Frank Wall Street Reform and Consumer Protection Act was signed into law by President Obama on July 21, 2010 and the US is in the midst of a rule-making process. You may have read in the press that the US Securities and Exchange Commission (SEC) is in the process of delaying the implementation of the Dodd-Frank financial changes. Last week it was also reported that... Read More

Banks push FIX for fixed income trading

Regulatory changes in the form of MiFID II and Dodd-Frank are cited as drivers behind a new initiative by some of the world’s biggest sell-side banks to promote FIX connectivity for the trading of fixed income instruments, according to a recent article on Finextra.  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

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