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

Down with opacity and shady deals!

Following the MiFID II roadmap a significant milestone was reached in Brussels last week with the final text of EMIR (European Market Infrastructure Regulation) agreed on 9th February. After 2 years of European Parliament debate this will bring to an end “the era of opacity and shady deals”, according to Michel Bernier the EU commissioner! EMIR is one part of the history-making... 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

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

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 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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