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May 14, 2014

Weekly Roundup | Trading & Post-Trade Processing | 14 May 2014

Post-Trade Processing

Clearstream Acquires Citco Fund Services Subsidiary

Acquisition grants Clearstream access to €40 billion of assets under custody. Risk: Clearstream Acquires Citco Fund Services Subsidiary.

 

Recordkeeping Requirement Irks OTC Industry

The derivatives industry is pushing back against a proposal by the Commodity Futures Trading Commission that would require all participants on a swap execution facility or a derivatives exchange to record all pre-execution trade information. Markets Media: Recordkeeping Requirement Irks OTC Industry.

 

Recordkeeping Woes Approach Buyside

A set of onerous recordkeeping requirements connected to over-the-counter swap transactions are set to hit asset managers on May 1 unless the CFTC extends relief or modifies the rule as industry participants have requested. IFR: Recordkeeping Woes Approach Buyside.

 

BNP Paribas Unveils CCP Outsourcing Service

BNP Paribas Securities Services is offering to manage collateral and central security depository (CSD) connectivity for clearing houses in Europe, ahead of incoming OTC derivatives rules. The Trade News: BNP Paribas Unveils CCP Outsourcing Service.

 

Trade Reporting Uncertainty Raises “Multiple Problems”

Nearly three months after the European Commission’s 12 February deadline for trade reporting, market participants are still not ready to report their derivative trades and serious problems remain with understanding the rules. Banking Technology: Trade Reporting Uncertainty Raises “Multiple Problems”.

 

Trade Reporting: The Lack of Standards is Hurting the Industry’s Efforts to Comply

Two months in and the industry is still struggling to comply. FOW: Trade Reporting: The Lack of Standards is Hurting the Industry’s Efforts to Comply.

 

 

Trading

Capco Viewpoint: Buy Side Needs Better SEF Data

Buy-side firms and commercial clients need transparent trading and liquidity data from swap execution facilities in order to make informed decisions and navigate the new OTC swap trading landscape. But the lack of industry-wide standards on reporting SEF volumes is hindering firms from formulating an effective, efficient SEF strategy. Tabb Forum: Capco Viewpoint: Buy Side Needs Better SEF Data.

 

File Under “Dog Bites Man”: Exchange Monopolies and Dark Pools

An exchange chairman believes that all trading should take place on exchanges. In commenting on securities market structure, CME Group Chairman Terry Duffy criticizes fragmentation-especially the existence of dark pools-and touts the lack of fragmentation in futures trading. Streetwise Professor: File Under “Dog Bites Man”: Exchange Monopolies and Dark Pools.

 

What You’ve All Been Waiting For: The Commodity Trading White Paper

I have been working since last year on a whitepaper (sponsored by Trafigura) on The Economics of Commodity Trading Firms. After about a month of limited theatrical release, the paper is now publicly available at the link.

 

Blitzjungs, die den ganzen Markt bewegen

Mit Computerprogrammen verschaffen sich Insider in Millisekunden Millionen – auf Kosten gewöhnlicher Anleger. Erfolgsautor Michael Lewis wirft den "Flash Boys" in seinem neuen Buch Manipulation vor. Doch was alle übersehen: Der High-Speed-Handel hat seine besten Tage längst hinter sich. Süddeutsche.de: Blitzjungs, die den ganzen Markt bewegen.

 

CME Said to Have Shelved Inflation Futures Plan

Dealer resource constraints and an apparent lack of demand from the buy side have derailed CME Group's efforts to launch two new US inflation futures contracts, according to market participants. Risk: CME Said to Have Shelved Inflation Futures Plan.

 

SEFs: Through the Looking Glass

Swap execution facilities are required by law to maintain an order book, yet only a few have chosen to make that order book accessible electronically. Markets Media: SEFs: Through the Looking Glass.

 

SEFs are Off to a Slow Start, MarketAxess CEO Says

MarketAxess Holdings Inc. Chairman and CEO Richard McVey said his company is still committed to offering a swap execution facility even though the business has not met expectations. SNL: SEFs are Off to a Slow Start, MarketAxess CEO Says.

 

Optimism for SEF Volumes

Volume on swap execution facilities (SEFs) may be depressed, but the market is optimistically looking towards the next 18 months. The Trade News: Optimism for SEF Volumes.

 

SEFs Extend Reach Beyond U.S.

As U.S.-based swap execution facilities look to expand overseas, they are being confronted with a myriad of regulatory issues, including access, reporting, and cross-border requirements. Markets Media: SEFs Extend Reach Beyond U.S.

 

Slow Start to Swaps Trading Revolution

A revolution in swaps trading mandated by US regulators has had a slow start. However, the pace should quicken from next month when new rules expand trading opportunities. FT: Slow Start to Swaps Trading Revolution.

 

Drive for Multi-Asset Trading Continues

Asset managers are talking up the benefits of multi-asset class trading systems, among them the ability to trade systematically across all regions of the globe. Markets Media: Drive for Multi-Asset Trading Continues.

 

The Market Structure Debate: A Manifesto for Anarchic Markets

Our markets are dysfunctional, but systematic traders and market makers are not the culprits. Rather, a monstrous web of rules and regulations makes our markets ever-more fragile. Tabb Forum: The Market Structure Debate: A Manifesto for Anarchic Markets.

 

Deutsche Boerse Sees No Threat From High-Frequency Trades

Deutsche Boerse AG, operator of the Frankfurt stock exchange and the Eurex futures market, dismissed concerns that greater regulatory scrutiny of high-frequency trading in Europe or a financial-transaction tax will hurt the company. Bloomberg: Deutsche Boerse Sees No Threat From High-Frequency Trades.

 

Derivatives Trading in Europe Remains Two-horse Race

(Reuters) – Deutsche Boerse's Eurex (DB1Gn.DE) and U.S. rival IntercontinentalExchange (ICE.N) will withstand challenges from rival bourses and be the dominant forces in on-exchange derivatives trading in Europe, a Eurex official said on Tuesday. Reuters: Derivatives Trading in Europe Remains Two-horse Race.

 

HFT, Dark Pools, Third Markets, and the Second Best

In his Atlanta Fed paper, Stiglitz uses second best considerations in his argument against HFT. My basic response is that second best considerations cut both ways. Streetwise Professor: HFT, Dark Pools, Third Markets, and the Second Best.

 

Dark Pool Operators Face Up to New Regulatory Attention

Even dark pools have not escaped the regulatory spotlight – and financial supervisors in the EU and elsewhere are now facing up to the question of whether they provide value to the market as a whole, and how (or if) their activities should be limited. Risk: Dark Pool Operators Face Up to New Regulatory Attention.

 

LSEG Looking to Compete with CME Deliverable Swap Futures

A story over at FOW Intelligence suggests that Bill Templar has been hired to boost efforts within LSE Group to bring a product/service to market to allow combining OTC Swaps (in SwapClear) with Exchange Traded Futures in a single margin pot. The OTC Space: LSEG Looking to Compete with CME Deliverable Swap Futures.

 

 


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