European Regulation

To Delegate, or Not to Delegate?

Q1 2014 has been an extremely eventful time for Europe, not least in terms of regulatory compliance. Finextra: To Delegate, or Not to Delegate?

ESAs Consult on Draft Technical Standards under EMIR

The European Supervisory Authorities (ESAs) launched today a consultation on draft Regulatory Technical Standards (‘RTS’) outlining the framework of the European Market Infrastructure Regulation (EMIR). ESMA: ESAs Consult on Draft Technical Standards under EMIR.

Life under EMIR: New Clearing Houses, New Rules, New Headaches?

Last autumn, 22 clearing houses in the EU filed documents to get the chance to keep fighting for a piece of the pie that clearing houses will compete for under EMIR. This month, a handful of approvals have come through and more are expected in the coming weeks. ISS-MAG: Life under EMIR: New Clearing Houses, New Rules, New Headaches?

Spotting a Spot FX Contract

On 11 April 2014, the EU Commission published a consultation document requesting views on what constitutes an FX “financial instrument” for the purposes of MiFID[1] and what does not, particularly in the context of spot FX. DRS: Spotting a Spot FX Contract.

EC Tries to Close Forex Loophole in Emir

European authorities are trying to harmonise the scope of Emir's reporting rules, which currently allow EU member states to exclude some foreign exchange transactions from the new regime. Risk: EC Tries to Close Forex Loophole in Emir.

EMIR Reporting Launch Was Satisfactory (ESMA Says)

Problems and challenges a natural part of the switch to Europe's new reporting rules, says Esma official. Risk: EMIR Reporting Launch was Satisfactory (ESMA Says).

Small Corporates not Reporting Derivatives Trades: Bafin

A clearing specialist at the German regulator says many smaller corporates are still not set up for reporting, but enforcement of the rules will be eased in gradually. Risk: Small Corporates not Reporting Derivatives Trades: Bafin.

Market Data Debate Reignites at TradeTech

The European Commission’s MiFID II legislation has produced a disappointing outcome for those hoping for a consolidated tape of post-trade data, while exchanges continue to bear the brunt of participants’ anger over the price of market data. Banking Technology: Market Data Debate Reignites at TradeTech.

The MiFID II Monster

The three legislative institutions of the European Union reached agreement on MiFID II / MiFIR on 14th January 2014. Finextra: The MiFID II Monster.

Derivatives Targeted under MiFID II

The proposed amendments to the MIFID I framework which are expected to be implemented in 2016/2017 will bring a larger number of derivatives and derivative market participants within the scope of regulation. SJ Berwin: Derivatives Targeted under MiFID II.

MiFID II to Calm the US HFT Storm?

While the US HFT debate rages and the FBI launches its investigations, Europe is quietly preparing to set a hard-hitting set of new rules for technical standards. RegTechFS: MiFID II to Calm the US HFT Storm?

Europaparlament Verschärft Regulierung von Finanzmärkten

Das Europaparlament hat am Dienstag die Regulierung der Finanzmärkte verschärft. Das Parlament in Straßburg nahm die Mifid II genannten Regeln an, die etwa die Spekulation mit Lebensmitteln stoppen und den Hochfrequenzhandel stärker regulieren sollen, um das Finanzsystem besser vor Krisen abzusichern. Wall Street Journal: Europaparlament Verschärft Regulierung von Finanzmärkten.

Weitere Kernpunkte der Mifid II

Das Gesetzespaket Mifid II modernisiert die geltende Mifid I, ein Herzstück der EU-Finanzmarktregulierung. Neue Zürcher Zeitung: Weitere Kernpunkte der Mifid II.

MiFID II: Was Jetzt auf die Branche Zukommen Wird

„Die neuen Regeln treten ab 2017 europaweit in Kraft“, legte sich Markus Ferber, CSU-Europaparlamentarier und MiFID-Berichterstatter, vor knapp zwei Monaten fest. OnVista: MiFID II: Was Jetzt auf die Branche Zukommen Wird.

Top 10 MiFIR Transaction Reporting Known Unknowns

When MiFIR is implemented in 2016, all of the pain experienced in preparing for EMIR’s transaction reporting regime, which went live earlier this year on 12 February, is likely to be rekindled.  Thankfully, at least this time around the industry has significantly more time to get prepared. RegTechFS: Top 10 MiFIR Transaction Reporting Known Unknowns.

EU Banking Reform: Unity is Strength?

At its last plenary session before electoral recess, the European Parliament has passed three laws cementing the foundations of an EU-wide banking union. DRS: EU Banking Reform: Unity is Strength?

Dokumentation: Beschluss des Europaparlaments zur Bankenunion

Das EU-Parlament hat heute der geänderten Fassung der Bankenunion zugestimmt. Blick Log: Dokumentation: Beschluss des Europaparlaments zur Bankenunion.

US Regulation

Smith and Bodek on Equity Market Reforms: Good, Bad, and Ugly

Fellow Houstonian Cameron Smith (of HFT shop Quantlab) and HFT gadfly Haim Bodek have an oped in the FT that makes recommendations on how to fix the US equity markets. Streetwise Professor: Smith and Bodek on Equity Market Reforms: Good, Bad, and Ugly.

Massad Moves Step Closer to Leading CFTC

President Obama's pick to head the Commodity Futures Trading Commission took a step closer to confirmation Tuesday. The Hill: Massad Moves Step Closer to Leading CFTC.

Traders Warn on Deadline for New Swaps Rules

Swaps dealers have warned a mid-May deadline forcing them to comply with new US rules for over-the-counter trading remains tight, even after a US regulator clarified its positions on some key issues. FT: Traders Warn on Deadline for New Swaps Rules.

New Bill Wades into CFTC Overreach Debate

The Commodity Futures Trading Commission (CFTC) may be limited in its ability to enforce new swaps rules if a bill that has gained early support in the US House of Representatives is passed. The Trade News: New Bill Wades into CFTC Overreach Debate.

International & Mixed Regulation

Derivatives Rules Softened in Victory for Banks

In a victory for banks, global financial regulators revised rules governing how much money must be set aside to cover losses by swaps traders, backing away from guidelines that firms warned would destabilize the $693 trillion derivatives market. Bloomberg: Derivatives Rules Softened in Victory for Banks.

Global Growth Threatened in $693 Trillion Derivatives Review

Global regulators’ failure to align efforts to reform the $693 trillion derivatives market threatens to undermine economic growth, according to the International Swaps & Derivatives Association. Bloomberg: Global Growth Threatened in $693 Trillion Derivatives Review.

Isda Hoping to Detoxify Derivatives

Industry group aiming to counter perception that swaps are "bad, cause problems, and have no real value". Risk: Isda Hoping to Detoxify Derivatives.

World Waits for U.S., EU to Solve Derivatives Spat: Faull

The U.S. and the European Union must resolve a disagreement on cross-border derivatives trading to set an example for other nations seeking clarity on a trans-Atlantic standard, a top official from the European Commission’s financial-markets agency said today. Bloomberg: World Waits for U.S., EU to Solve Derivatives Spat: Faull.

ISDA Margin Survey 2014 | 87% Is The Answer

ISDA released their annual margin survey today, their announcement is below. The OTC Space: ISDA Margin Survey 2014 | 87% Is The Answer.

Collateralisation Jumps by a Fifth – Isda Margin Survey

Annual margin survey shows 90% of uncleared positions are now collateralised, but only a third of corporates have active CSAs in place. Risk: Collateralisation Jumps by a Fifth – Isda Margin Survey.

Section 13 of the ISDA Master in the Spotlight

This month, we are lucky enough to have Richard Firth contribute as a guest to the DRS blog.  Richard discusses the choice of arbitration or litigation within the context of the derivatives markets, suggests a number of practical points for consideration by those involved in this area and identifies where help can be found for those in need. DRS: Section 13 of the ISDA Master in the Spotlight.

ISDA AGM: Swaps Resolution Expected Ahead of G20

Legal impediments hampering steps towards a cross-border resolution regime for financial institutions could be eliminated in the coming months as the Financial Stability Board prepares to present proposals to global leaders for an international approach to a temporary stay on over-the-counter derivatives contracts for a failed counterparty. IFR: ISDA AGM: Swaps Resolution Expected Ahead of G20.

Trading

ISDA AGM: Calls for “Fat Finger” Derivatives Safeguards

The new market structure for trading derivatives on electronic platforms and clearing through central counterparties needs more robust safeguards against operational blunders such as “fat finger” trades, an audience at the ISDA AGM in Munich heard today. IFR: ISDA AGM: Calls for “Fat Finger” Derivatives Safeguards.

ISDA AGM: RFQ Dominates SEF Execution

A regulatory-driven overhaul in the way that over-the-counter derivatives are traded has seen much of the US$693trn swaps market cleared through central counterparties and standardised contracts traded over newly-created swap execution facilities. IFR: ISDA AGM: RFQ Dominates SEF Execution.

SEF Trading Shakeout: Growing Pains & Future Challenges

A look at how SEF volumes have fallen and risen since the Feb 17 start date and the ongoing challenges of cross-border market fragmentation and regulatory reform of derivatives execution. DerivSource: SEF Trading Shakeout: Growing Pains & Future Challenges.

Made-Available-to-Trade Pushes Swaps On, and Off, SEFs

Even as SEF volumes have reached record highs in the wake of the Made-Available-to-Trade determinations, evidence suggests some users are ‘fine-tuning’ contracts in order to continue trading Off-SEF. Tabb Forum: Made-Available-to-Trade Pushes Swaps On, and Off, SEFs.

The Lewis Effect

Michael Lewis’ new best-seller focuses the public’s attention on high-frequency trading. What will change as a result? The Slate Book Review: The Lewis Effect.

EU Clampdown on ‘Flash Boy’ Traders Turns Technical

The battle to rein in high-frequency traders in Europe is about to shift to the arcane world of rule writing, as the EU seeks to give teeth to the world’s toughest clampdown on the sector. FT: EU Clampdown on ‘Flash Boy’ Traders Turns Technical.

Battle Heats Up for e-Trading Supremacy

If imitation is the sincerest form of flattery, equity traders can bask in the reflective glory of the revolution taking place in corporate bond markets. IFR: Battle Heats Up for e-Trading Supremacy.

Cross-Margining Central to Buy-side SEF Trading

Use of collateral optimisation services such as cross-margining will decide where asset managers trade OTC derivatives on new swap execution facilities (SEFs), Sean Owens, director of fixed income at consultancy Woodbine Associates has said. The Trade News: Cross-Margining Central to Buy-side SEF Trading.

Corporate Hedgers Fear OTC Liquidity Drain

Increasing costs could force some end-users to abandon hedging, hurting swap market liquidity and forcing other firms to follow suit. Risk: Corporate Hedgers Fear OTC Liquidity Drain.

Euro Swaps Flee Sefs

The weeks following the start of mandatory Sef trading have seen a 30% slump in euro-denominated swap volumes, according to Isda research. Risk: Euro Swaps Flee Sefs.

Algo Tagging: Where’s the Logic in That?

When the requirement brought about by the German high frequency trading act to tag algorithms comes into force this month, market participants may well feel hamstrung by the complexity of the regime. And while the regulatory goal of improving market surveillance and reducing systemic risk may be valid, some might wonder whether this requirement goes one step too far. Banking Technology: Algo Tagging: Where’s the Logic in That?

Tough Swap Standards Drive Up Trade Costs 92-Fold

New rules aimed at making the world safer from blowups in the $693 trillion derivatives market are poised to drive up costs so much for retirement funds and other users that bankers say they do just the opposite. Bloomberg: Tough Swap Standards Drive Up Trade Costs 92-Fold.

Volatility Could Limit Banks’ Buy-side Support

Industry fears are growing over potential impacts of high volatility on banks' ability to support asset managers’ OTC derivatives trading and clearing. The Trade News: Volatility Could Limit Banks’ Buy-side Support.

CME Europe Launches Deliverable Swap Futures

CME has launched 2, 5 and 10 year DSF contracts on their European trading platform and CCP. The OTC Space: CME Europe Launches Deliverable Swap Futures.