EMIR

EMIR: The Glorious World of Challenges and Uncertainties, Part 1

The European Market Infrastructure Regulation has been more than four years in the making and promises to reshape the global financial services landscape. Yet the industry is still grappling with the new requirements, including timely confirmations, portfolio reconciliation and trade reporting. This is part 1 of a two-part series on the surprises, challenges and uncertainties of EMIR. Tabb Forum: EMIR: The Glorious World of Challenges and Uncertainties, Part 1

Still Haunted by EMIR? Could a Social Media-Based Utility Put to Rest Your Risk Mitigation Ghouls?

European banks are currently living in a grey area when it comes to EMIR enforcement.  By ESMA’s account, all institutions should by now have classified their counterparties to derivatives trades.  However, the first tentative steps towards new utilities have yet to take root – so what kind of solutions will the industry opt for? RegTech FS: Still haunted by EMIR? Could a social media-based utility put to rest your risk mitigation ghouls?

New ISDA EMIR Counterparty Classification Tool Launched Today

On 28 October 2013, ISDA and Markit launched the EMIR Counterparty Classification Tool, a free online service via ISDA Amend. Regulatory Reform blog: New ISDA EMIR Counterparty Classification Tool Launched Today.

ESMA Publishes 19 Responses to EMIR Consultation

The European Securities and Markets Authority (ESMA) has published the responses received to its consultation on the draft regulatory technical standards implementing the provisions of the European Markets Infrastructure Regulation (EMIR) related to over-the-counter (OTC) derivative transactions by non-EU counterparties aimed at preventing attempts by non-EU counterparties to evade EMIR’s provisions. Finextra blog: ESMA publishes 19 responses to EMIR consultation.

EMIR Trade Reporting Deadline: Manning the Panic Stations?

A lot of firms have absolutely no idea how the unique transaction identifier (UTI) issuance process will be conducted, and they are not alone. The regulatory and trade repository communities are also scratching their heads. Aite Group blog: EMIR Trade Reporting Deadline: Manning the Panic Stations? 

Delegated Reporting Under EMIR: Towards a Set of Standards?

With trade repositories expected to be registered by ESMA soon, the date at which trade reporting becomes mandatory is not far off. However, many parties to derivatives trades are still unsure about the finer details of how they will meet this mandate. RegTechFS: Delegated reporting under EMIR: Towards a set of standards?

TriOptima Launches UTI Pairing Functionality for OTC Derivative Trades to Meet EMIR Trade Reporting Obligations

TriOptima announces that it has launched a UTI (Unique Trade ID) pairing functionality to assist firms preparing for the European trade repository reporting effective February 2014. The service accommodates paper-confirmed trades and foreign exchange (FX) trades without a common match ID. DerivSource: TriOptima Launches UTI Pairing Functionality for OTC Derivative Trades to Meet EMIR Trade Reporting Obligations.

FCA EMIR Factsheet…Tumbleweed

The FCA has published two reviews undertaken between June and September 2013, assessing the challenges of EMIR compliance for both FCs and NFCs.  The results are in the form of two “factsheets”, for NFCs the focus is on hedging definition and clearing thresholds, for FCs the review considers compliance with EMIR reporting and risk mitigation requirements. Regulatory Reform blog: FCA EMIR factsheet…tumbleweed.

Pooled Fund Clearing Questions Vex CVA Desks

Dealers are struggling to price trades with pooled funds – often used by pension funds to transact over-the-counter derivatives more cheaply – because they do not know whether they will be subject to the clearing requirements laid out in EMIR. Risk: Pooled fund clearing questions vex CVA desks.

MiFID

Michel Barnier letter slams Mifid’s derivatives trading rules

The European Union’s top financial regulator has written to Members of the European Parliament to voice his concern on the direction of new derivatives trading rules being debated by the region’s policymakers. Financial News: Michel Barnier letter slams Mifid’s derivatives trading rules.

Time is of the Essence

Last weekend heralded the official end of summertime as the EU put its clocks back one hour. Since most electronic clocks are updated automatically many of us hardly notice the difference, but others may be forgiven for waking up somewhat confused as to what time it really is. I guess that must have occurred to the legislators in Brussels when discussing the possibility of imposing a requirement in MiFID II for trading firms and exchanges to synchronise their business clocks. Fidessa Regulation blog: Time is of the essence.

The CFTC & Dodd Frank

Am I a US person? The known unknowns of who’s who for Dodd-Frank OTC

Though it seemed for a while that the US/EU’s ‘path forward’ agreement on substituted compliance might have simplified OTC compliance for the markets, when it came to writing the rules the SEC and CFTC have somehow managed to make the definition murkier than ever. OTC Space: Am I a US person? The known unknowns of who’s who for Dodd-Frank OTC.

Citigroup Currency Staff Work Into Night in London on Dodd-Frank

For the foreign-exchange sales team in Citigroup Inc. (C)’s London office, Dodd-Frank regulations mean extra hours at work. Bloomberg: Citigroup Currency Staff Work Into Night in London on Dodd-Frank.

Regulation Reflections: US Reporting – Is systemic risk being de-prioritized?

It is not clear whether CFTC yet has meaningful systemic risk information from the end of day / historic SDR reporting which has been live for several months. OTC Space: Regulation Reflections: US Reporting – Is systemic risk being de-prioritized?

White House opposes House GOP financial regulation bills, says they would weaken rules

The White House says it opposes legislation in the Republican-controlled House that would exempt certain financial transactions used by banks from falling under the provisions of a 3-year-old law passed in response to the 2008-2009 financial crisis. Washington Post: White House opposes House GOP financial regulation bills, says they would weaken rules.

House Approves Derivatives Pushout Bill Amending Dodd-Frank

Legislation to undo a Dodd-Frank Act measure requiring banks such as JPMorgan Chase & Co. (JPM) and Citigroup Inc. to separate swaps trading from deposit-taking units was advanced by the U.S. House with bipartisan support. Bloomberg: House Approves Derivatives Pushout Bill Amending Dodd-Frank.

CFTC Announces Mutual Acceptance of Approved Legal Entity Identifiers

The U.S. Commodity Futures Trading Commission (CFTC) announced in a Notice posted on the CFTC website on October 30, 2013, that registered entities and swap counterparties subject to CFTC swap data recordkeeping and reporting regulations concerning Legal Entity Identifiers (LEIs) can now comply with those regulations by using any LEI issued by an LEI provider endorsed by the Regulatory Oversight Committee (ROC) of the global LEI system. This includes the CFTC Interim Compliant Identifiers (CICIs) issued by the CICI Utility operated by DTCC-SWIFT, the provider of LEIs designated by CFTC. CFTC Press Release: CFTC Announces Mutual Acceptance of Approved Legal Entity Identifiers.

CFTC Approves Limited Purpose Swap Dealer Designations for Cargill and an Affiliate

Washington, DC – The Commodity Futures Trading Commission (CFTC) today approved an Order granting limited purpose swap dealer (SD) designations to Cargill, Incorporated and an affiliate, Cargill Financial Services International, Inc., marking the first time that limited purpose SD designations have been granted. CFTC Press Release: CFTC Approves Limited Purpose Swap Dealer Designations for Cargill and an Affiliate

Dissenting Statement of Commissioner Scott D. O’Malia, Enhancing Protections Afforded Customers and Customer Funds Held by Futures Commission Merchants and Derivatives Clearing Organizations

"I respectfully dissent from the Commission’s approval today of the final Customer Protection Rules. I supported the proposed rules because I wanted to solicit public comment and engage market participants in an open discussion about how the Commission should improve its customer protection regulatory oversight." CFTC Press Release: Dissenting Statement of Commissioner Scott D. O’Malia.

CFTC Hit by Budget Constraints

The Commodity Futures Trading Commission may have to forgo or delay certain investigations because of budget constraints as the agency works on setting priorities for the new fiscal year, agency officials said. FT: CFTC hit by budget constraints.

CFTC Backs Down on FCM Residual Interest Rule

In light of industry criticism, the US Commodity Futures Trading Commission (CFTC) has watered down a key plank of its post-MF Global reforms to the treatment of segregated customer funds held by futures brokers. Risk: CFTC backs down on FCM residual interest rule.

Other Regulation

Merkel, SPD Agree on Transaction Tax in Coalition Talks

Angela Merkel's conservatives and the Social Democrats (SPD) said they had agreed in coalition talks on Monday to push for a financial transaction tax but needed to consult further on the key issue of a European banking union. Reuters: Merkel, SPD agree on transaction tax in coalition talks.

EBA Asset Encumbrance Rules Add to the Data Headache

On 30 October 2013, the European Banking Authority (EBA) published final implementing technical standards (ITS) on asset encumbrance reporting under Article 100 of the Capital Requirements Regulation (CRR). Regulatory Reform blog: EBA Asset Encumbrance Rules Add to the Data Headache.

EU’s Swaps Rule Plan May Breach G20 Accords, Barnier Warns

The European Union’s financial services chief told legislators that a planned overhaul of the bloc’s rules for trading swaps may breach international agreements, threatening EU access to overseas markets. Bloomberg: EU’s Swaps Rule Plan May Breach G-20 Accords, Barnier Warns.

Extraterritoriality and the Rebalancing of the Global Economy

The derivatives sector in Asia has been vocal over the past 18 months about the extraterritorial aspect of the respective US and European approaches to increasing oversight of the over-the-counter derivatives market, but for Ashley Alder, chair of Hong Kong's Securities and Futures Commission (SFC), such concern could well be the tip of a regulatory iceberg. Risk: Extraterritoriality and the rebalancing of the global economy.

Regulators Propose Tougher Measures on Capital Requirements

Global regulators are cracking down on banks that try to bend capital rules for their trading businesses by proposing new standards for the way lenders assess risk. The Basel Committee on Banking Supervision yesterday published a consultation paper that analysts said could have significant repercussions for the way banks run their trading operations. FT: Regulators propose tougher measures on capital requirements.

Back Office Feeling Heat of Regulation

To comply with intensifying regulatory requirements, firms will be forced either to invest substantially in their back-office infrastructure systems, personnel, policies and procedures, or to increase their oversight of third-party administrators. If they don’t, firms will pay a hefty price for non-compliance. Tabb Forum: Back Office Feeling Heat of Regulation.

Derivatives Reform Kicks Off Competitive Struggle

The real story in the derivatives market – one that is playing out mostly behind the scenes and that still is being written – is the competitive struggle that has been kicked off by regulatory reforms. Here are some of the drivers shaping the competitive landscape. Tabb Forum: Derivatives Reform Kicks Off Competitive Struggle.