The OTC Space | Category Archive

CFTC commissioners at odds about cross-border regulation

June 17, 2013 by Tom Riesack 0 Comments

In recent speeches at the Yale Club in NYC (Bart Chilton) and the OpRisk Europe Conference in London (Scott O’Malia) gave a very different view on how they see the cross-border derivatives rules guidance progressing.

Whereas O’Malia wants a prolongation of the exemptive relief until the end of 2013 to ensure proper definition of the final rule, the finalisation of the definition of a US person as well as an agreed harmonisation approach with international regulators, Chilton (in his usual extravagant way of expressing himself) seeks to introduce the final guidance before or on July 12th (the day the exemptive relief expires), albeit with a phase-in period for overseas companies. The coming 4 weeks will keep the financial industry on their toes and the current discussions about potential successors of Gary Gensler and Jill Sommers will not help that matter.

O’Malia also discussed the recently adopted SEF, MAT and swap block rules. And he is ambivalent about the final outcome to say the least. Especially the automatic, arbitrary and not data-founded changes a year hence on the RFQ increase from 2 to 3 and block size threshold make him uncomfortable.

So, forget your summer holidays if you are working in compliance departments of international banks – the heat is on and this is not only because summer has finally arrived…

CFTC, Dodd Frank, English, Extra territoriality, USA

Bart Chilton, Commodity Futures Trading Commission, Dodd Frank, Extraterritoriality, gary gensler, O'Malia, SEF

Obama to nominate Amanda Renteria to replace Gary Gensler as Chair of the CFTC?

June 11, 2013 by Bill Hodgson 0 Comments

A breaking story is the potential nomination for Gary Genslers replacement as Chair of the CFTC.
Amanda will be subject to hearings in front of various banking committees to achieve appointment, but this begins the end of the Gensler agenda at the CFTC.
Full story at the Huffington Post here

CFTC, News

Confirmation timeliness challenges | DerivSource

May 24, 2013 by Maria Leontiou 0 Comments

A great piece by Nick Fry on DerivSource regrading the changes that Industry will go through in its efforts to comply with regulation requirements. Using figures from the recent ISDA Operations Benchmarking Survey (OBS) in May 2012, he makes his point that the market will have to change dramatically in order to comply. Both Buy-Side and Sell-Side will face challenges, mainly in the Front Office area and Operations as the rules drive the OTC confirmation process as we know it to an end and although the OTC documentation has not been a traditional area for industry investment, this will have to change. His key point is that ”firms will have to ensure all legal terms and conditions are agreed upon prior to trading” which essentially means that the pre-trade term sheet and the official legal confirmation will most likely become the same document. Lots of work to be done in this direction…….

More details here (free signup required)

Maria L.

Buy-side, CFTC, DerivSource, Dodd Frank, EMIR, ISDA, News, Regulation

Documentation, Timely Confirmation

CFTC Commissioners Expiry Dates | Not a Job For Life

May 20, 2013 by Bill Hodgson 0 Comments

Being a limey I forgot to think that the 5 CFTC commissioners don’t stay in their jobs for life, here’s when they are due to either retire, or be extended:

Scott O’Malia 15th April 2015
Jill Sommers 13th April 2014 (but is planning to resign early)
Bart Chilton 13th April 2013 (He remains in office until replaced, if at all)
Gary Gensler 13th April 2012 (He remains in office until replaced, if at all)
Mark Wetjen 19th June 2016

So Mr Gensler is up for renewal or replacement at any time – which is a process which takes place within the committees of the House and Senate, and subject to approval by President Obama.

The political split at the moment is:

Democrat: Gensler, Chilton & Wetjen
Republican: O’Malia & Sommers

With the possible resignation of Jill Sommers and the two options on Bart & Gary, there may be intense lobbying around Washington on any replacements to either strengthen the hold of the Democrats, or move the CFTC towards the Republicans and potentially undo some of Dodd Frank perhaps.

Does anyone else know what the current state of play in Washington is for the Commissioners? See link below for background.

Terms of Office – CFTC.

CFTC, News

cftc, chilton, gary gensler, limey, o malia

O’Malia speech – useful synopsis of what’s not yet regulated

May 20, 2013 by Jon Skinner 0 Comments

A way through the fog of CFTC Title VII final rules, exemptive orders and no action letters is offered by Commissioner O’Malia’s speech to Energy Risk 2013. He uses a Rumsfeld-like categorization of known unknowns and unknown unknowns to sum up what’s still to be done and to be discovered as a result on reporting, clearing and SEFs and cross-border application.

I noticed in particular that he’s picked up on Harvard Professor Roe’s draft paper proposing that OTC clearing is no silver bullet for systemic risk – which Ben Larah posted about recently – here.

Jon S.

CFTC, Conference, Dodd Frank

Useful Roundup of SEF rules plus Q&As

May 19, 2013 by Bill Hodgson 0 Comments

All the source materials from the CFTC on the new SEF rules.

CFTC Votes SEF Rules Forward.

CFTC

The echo of CFTC’s approval on Final SEF Rules

May 17, 2013 by Maria Leontiou 0 Comments

Yesterday, the CFTC met to vote on final rules for swap execution facilities (SEFs). The Commission’s five members voted in a public meeting on new platforms for swaps that will bring bilateral trading to an end, and transfer trades to centralized, transparent marketplaces. A lot of criticism on these decisions is already loudly expressed from some of the commissioners themselves, stated at the vote in their prepared statements and also SIFMA that released a statement arguing that the new rules ‘will negatively impact investors and hinder the ability of American businesses to manage risk.’

You can find more details in the links below:

Maria L.

CFTC, Dodd Frank, News, Regulation

cftc, derivatives market, Dodd Frank, SEF, SIFMA, swaps

The CFTC has approved SEF rules, block rules, MAT rules

May 16, 2013 by Tom Riesack 4 Comments

Almost unbelievably, the CFTC has voted in favor of the trade execution rules.

The CFTC voted 3-2 to pass the Swaps Blocks Rule. The CFTC also voted 3-2 to approve the Made Available to trade rule. The agency voted 4-1 to pass the SEF rules. Lastly, the Commissioners voted unanimously to approve the Interpretive Guidance and Policy Statement on Disruptive Practices.

State Street put together two good overviews of what the rules look like here and here.

CFTC, Dodd Frank

cftc, SEF

Clarus Financial Technology Launches SDR View

May 14, 2013 by Amir Khwaja 1 Comment

London, May 14, 2013 – Clarus Financial Technology today announced the release of SDR View, its Swaps Data Repository viewer application.

This is publicly available at http://www.clarusft.com/sdr-view/

The DTCC DDR trade repository has been set-up to publicly disseminate all OTC Derivatives trade activity that is required to be reported to a Swaps Data Repository (SDR) under the Dodd-Frank Act.

Up to now much industry effort has been focused on the need to deliver intra-day trade feeds from Dealers platforms to Swap Data Repositories. Very little thought has gone into what value can be extracted from the data held in these repositories. This is one of the first efforts to make use of this vast dataset.

Amir Khwaja, CEO of Clarus Financial Technology explains, “We wanted to take the csv data files published by DTCC DDR and show the real value in this data. For the first time it is possible for all market participants (sell-side or buy-side), and for all market observers (regulators or researchers), to see the actual trading activity in the OTC Derivatives markets. This is unprecedented in the history of these markets.”

“Our SDR View application, provides simple at a glance metrics of trading activity for a day, a week or a month. It shows key information such as the volumes traded in Interest Rates Derivatives in a given currency and product, the percentage of Cleared trades versus Bi-lateral trades and the actual traded prices and deal sizes. We use dashboards, charts, grids and drill-down capability to allow a user to understand and navigate their way through this data”.

Amir Khwaja, further explains, “We have had a great response in our trial period for SDR View, which we have made publicly available on our website. The feedback from early adopters has been instrumental in our continual improvement of the product and we now hope with the latest features, including intra-day updates and drill-down, we have a product offering that will gain further users. We also hope that it serves to inform and guide market participants and market observers in their day to day business.”