The future of OTC trading/clearing and the impact of regulations. John Wilson
|
|
- Charles Russell
- 8 years ago
- Views:
Transcription
1 The future of OTC trading/clearing and the impact of regulations John Wilson
2 Contents Drivers for OTC market evolution The Future of Trading and Clearing Risk implications of the reforms
3 Drivers for OTC market evolution
4 Financial Crisis Financial Crisis in 2008/9 highlighted structural weaknesses including Absence of regulatory transparency on positions or activity in OTC markets Lack of collateralisation in some notable instances Inter-connectedness of financial institutions Policy makers have also claimed Dealers were making unreasonable profits from opaque markets OTC OTC derivative prices and capital charges did not fairly reflect their social cost Casino banking is a material threat to retail banking arms Markets were distorted by the proprietary trading arms of banks Actions of financial speculators caused harm to the real economy Counterparty risks present systemic risks to the financial system
5 Regulatory landscape G20 Group Meeting in Pittsburgh in Sep 2009 All standardised OTC derivative contracts should be traded on exchanges or electronic trading platforms, where appropriate, and cleared through central counterparties by end-2012 at the latest. OTC derivative contracts should be reported to trade repositories. Non-centrally cleared contracts should be subject to higher capital requirements Regulatory framework agenda to meet these objectives US Dodd Frank Wall Street Reform and Consumer Protection Act [ DFA ] EU European Market Infrastructure Regulation [ EMIR ] & MIFID2 Basel III [EU implementation - CRD IV] Japan has enacted legislation requiring clearing by end 2012 Singapore to mandate clearing but not Exchange trading Other regions/countries developing their regulatory proposals including Hong Kong, Australia & Canada
6 Capital requirements Policy makers are determined to increase the cost of using OTC derivatives RWA levels incentivise cleared over bilateral exposures, notwithstanding some products cannot be cleared Capital costs for clearing members will increasingly prompt re-evaluation of business case and cause a polarisation of the clearing market Default fund Market risk charge on accounts failing to pay margin same day Capital linked to initial margin New capital charges reduce bank capacity and widen spreads, but encourage new entrants unfettered by capital charges Banks will be motivated to unwind existing stocks as part of deleveraging efforts
7 Trading & Clearing obligations Mandatory clearing will apply to Trades between financial institutions, EU has granted exemption to Pension Funds trading with EU counterparties for up to 6 years and to intra-group trades within EU Corporate groups in EU which exceed usage thresholds Third country sovereigns Key factors in an instrument being capable of being cleared Standardisation [product, legal, process] Liquidity Risk management/modelling A mandatory clearing obligation will normally create a mandatory trading obligation (with the exception of block trades in the US)
8 Instrument scope for clearing Regulations have yet to prescribe specific instruments Clearing exemption in the US for FX Swaps and FX Forward, EU position yet to be determined Expect the following instruments to be cleared Plain vanilla IRS, Inflation swaps, Cross Currency Swaps, Swaptions Index CDS [index tranche less likely] Some single name CDS [high-grade, rather than high yield] FX Options* [CCP must guarantee settlement of gross amounts to all parties] Non-deliverable FX forwards OTC Equity options Commodities
9 The Future of Trading and Clearing
10 Trade universe The relative dimensions of the quadrants will vary by asset class and product, as well as by turnover v tickets Party exercises exemption from clearing but chooses to use SEF SEF & Not Cleared SEF & Cleared Bilateral & Not cleared Product can t be cleared; or No requirement to clear; or Party exercises their exemption from clearing and SEF Product requirement to clear & use SEF; or Party disregards their exemption from clearing to both use SEF and clear Bilateral & mandatory cleared Bilateral & voluntarily cleared Product obliged to clear but either no SEF or not mandatory to use a SEF e.g. block trade Product can be cleared but not mandatory to use clearing or a SEF; or Party voluntarily clears but trades bilaterally
11 Trading Few products will be suitable for clearing and hence for exchange-trading Clearing is a credit leveller all counterparties face the CCP and not each other shortly after execution and enable pre & post trade anonymity Pre & post trade transparency like equity & futures markets, but expected to impact liquidity and discourage firms from making markets in size Growth in traded notional and transaction volumes, with electronic trading also widening market participation Fragmentation of liquidity across myriad of venues and across CCPs, with multiple market models operating in parallel including voice Regional trading & clearing arrangements due to regulatory barriers Capital costs of bilateral trades drives down volumes for non-cleared trades Significant change in the business model and organisation structure for Dealers, notably agency sales and smart aggregation/routing tools
12 Clearing There will initially be many CCPs competing around the globe, but regulations will hamper global CCPs Few CCPs will achieve critical mass, prompting consolidation but progress will be slow and inter-operability will take many years to come to fruition CCPs will compete on Cost Lowest initial margins, offset by larger default funds Widest range of eligible collateral and liquidity facilities Segregation facilities Cross product offsets for margin purposes e.g. listed v otc Huge tension with members over default funds, due to likely capital costs Convergence of CCP risk models through regulation and member pressure Onboarding the industry represents a massive challenge, whilst capacity constraints may initially exist
13 Implications of the reforms The regulatory reforms will have risk implications in many respects. Three such areas are Counterparty Risk implications Operational Funding
14 Implications of the reforms Counterparty Risk implications Operational Funding
15 Counterparty exposures Category Default treatment Collateral treatment (A) - Historic trades Offset with (C) No initial margin regulatory requirement, only mark-tomarket on the basis of existing Credit Support Annex terms. Netting of variation margin requirement with (C) (B) - Cleared trades (C) New noncleared trades Remain as a separate netting set per CCP and per product. Credit exposure treatment between end user and clearer depends on agreements Offset with (A) Would attract initial margin requirement from the CCP and have a cash variation margin requirement, purely on cleared trades, with separate netting sets per CCP and product Would attract initial margin requirement. Netting of variation margin requirement with (A) New rules on netting sets are likely to exacerbate counterparty exposures and hamper exposure management eg in/out swaps
16 CCPs The Financial Nuclear Power Station
17 CCP Default - Too big to Fail? Paul Tucker, deputy governor of the Bank of England and Head of FSB group on CCPs, said the issue needed attention because clearing houses had become centres of systemic risk in their own right, with potentially huge consequences in the event of failure. Speaking at a European Commission conference in Belgium recently, he said: "There is a big gap in the regimes for central counterparties (CCPs). "What happens if they go bust? I can tell you the simple answer: mayhem. As bad as, conceivably worse than, the failure of large and complex banks." 18
18 Default of the CCP There have been examples of CCP failure - HK Futures Exchange 1987, Caisse de Liquidation 1974, the Kuala Lumpur Commodities CCP 1983 Main causes of a CCP failure Default of members that exhausts its capital Lack of liquidity to settle VM following a default Investment losses Ramifications Crystalisation of systemic risk and crash of market confidence All members and clients affected, positions immobilised Collateral may be subject to loss depending upon segregation arrangements Potential losses as unsecured creditors Inability to use cleared products if alternate CCPs unavailable Potential liabilities to clients if offering clearing Mitigating measures? Reduce positions Segregation, but its effectiveness is questionable Careful selection of CCPs balanced against where liquidity resides
19 Implications of the reforms Counterparty Risk implications Operational Funding
20 Collateral wars Clearing will absorb significant high grade collateral $2.5tn CCPs will compete on eligible collateral scope, but perversely the loosest CCP will receive rubbish akin to ECB operation Higher collateral requirements on non-cleared trades than cleared trades US is seeking to impose initial margin for all firms within a US group EU will similarly adopt initial margin requirements Could absorb a further $3tn of collateral Governments will seek to influence collateral policy More firms will be obliged to participate/borrow in repo and stock lending markets to meet their collateral needs Liquidity requirements will also mean banks have to hoard liquid assets Increased demands for collateral may create a squeeze on certain assets Firms will need to devote considerable effort to optimising their collateral use with recognition of collateral as a tradable asset class Custodians will benefit greatly from increased demand for collateral and new requirements to provide independent segregation
21 Implications of the reforms Counterparty Risk implications Operational Funding
22 Operational risk Comprehending and complying with the magnitude of the regulatory reforms will challenge all organisations New requirements on trading, clearing, segregation and increased use of collateral will be onerous to manage/absorb System and process re-configuration, coupled with notable static data revision, will entail considerable regression and development testing Implementation lead-times once rules are finalised are relatively short i.e. few months in many cases Cross border barriers will require significant re-configuration of organisations and their activities e.g. booking models Extra-territorial reach of regulations will catch many 3 rd country firms out who will be unaware of being ensnared
OTC derivatives reforming EU market structures. Ash Saluja, Partner CMS Cameron McKenna LLP
OTC derivatives reforming EU market structures Ash Saluja, Partner CMS Cameron McKenna LLP The OTC derivatives market - a brief reminder. Scope $605 trillion notional amount / $25 trillion gross market
More informationTHE IMPACT OF EMIR ON FINANCIAL COUNTERPARTIES
March 15, 2013 THE IMPACT OF EMIR ON FINANCIAL COUNTERPARTIES To Our Clients and Friends: On 16 August 2012, The European Market Infrastructure Regulation ( EMIR ) 1 came into force with immediate and
More informationTitle VII: Derivatives (Wall Street Transparency and Accountability Act of 2010)
Title VII: Derivatives (Wall Street Transparency and Accountability Act of 2010) Summary: Regulates the previously unregulated, over-the-counter (OTC) derivatives market Requires registration of swap dealers,
More informationSea of Change Regulatory reforms charting a new course. Regulation of OTC derivatives markets. A comparison of EU and US initiatives.
Regulation of OTC derivatives markets A comparison of EU and US initiatives September 2012 Contents Overview Scope Core rules Clearing Trading Margin requirements for uncleared trades Reporting Other rules
More informationHong Kong Proposes Margin and Risk Mitigation Standards for Non-Centrally Cleared OTC Derivatives
30 December 2015 Hong Kong Proposes Margin and Risk Mitigation Standards for Non-Centrally Cleared OTC Derivatives Introduction On 3 December 2015, the Hong Kong Monetary Authority ( HKMA ) issued a consultation
More informationMiFID/MiFIR: The OTF and SI regime for OTC derivatives
MiFID/MiFIR: The OTF and SI regime for OTC derivatives The International Swaps and Derivatives Association (ISDA) would like to take this opportunity to set out its views on the elements of European Commission
More informationOTC Derivatives Market Reforms - Focusing on International Discussion-
OTC Derivatives Market Reforms - Focusing on International Discussion- June 12, 2015 Shunsuke Shirakawa Financial Services Agency Government of Japan * This presentation represents the presenter s own
More informationFinfraG / EMIR. Your partner to navigate the challenges in investment and risk management. Current Status What you need to know. 23 rd September 2014
Your partner to navigate the challenges in investment and risk management. FinfraG / EMIR ROSENWEG 3 GARTENSTRASSE 19 CH-6340 BAAR/ZUG CH-8002 ZURICH SWITZERLAND SWITZERLAND INFO@INCUBEGROUP.COM INCUBEGROUP.COM
More information24 th Year of Publication. A monthly publication from South Indian Bank. To kindle interest in economic affairs... To empower the student community...
Experience Next Generation Banking To kindle interest in economic affairs... To empower the student community... www.sib.co.in ho2099@sib.co.in A monthly publication from South Indian Bank 24 th Year of
More informationTrends, Risks and Opportunities in Collateral Management
Trends, Risks and Opportunities in Collateral Management A Collateral Management White Paper January 2014 Introduction Collateral is viewed as both a solution to and a trigger of massive financial losses
More informationThe ABI s response to the European Commission s Consultation Document on Foreign Exchange Financial Instruments
The ABI s response to the European Commission s Consultation Document on Foreign Exchange Financial Instruments The ABI The UK Insurance Industry The UK insurance industry is the third largest in the world
More informationEMIR Key business impacts for asset managers
External perspective EMIR Key business impacts for asset managers Brian Jackson Partner Audit Deloitte Niamh Geraghty Director Audit Deloitte Patrick Rooney Manager Investment Management Activity Deloitte
More informationRegulatory Practice Letter
Financial Services Regulatory Practice Regulatory Practice Letter RPL Number 10-13 ADVISORY Dodd-Frank Act: Regulation of Over-the-Counter Derivatives (Title VII) Executive Summary On July 21, 2010, the
More informationFinal European Standards for Derivatives Collateralisation
Client Alert 17 March 2016 Final European Standards for Derivatives Collateralisation On 8 March 2016, the three European Supervisory Authorities (ESAs) 1 published their final draft regulatory technical
More informationMiFID II Level 2 and energy trading:
MiFID II Level 2 and energy trading: How to further specify the ancillary activity exemption in Article 2? 17 April 2015 1. Introduction The undersigned associations believe that open, robust, liquid,
More informationKey Points. Ref.:EBF_007865E. Brussels, 09 May 2014
Ref.:EBF_007865E Brussels, 09 May 2014 Launched in 1960, the European Banking Federation is the voice of the European banking sector from the European Union and European Free Trade Association countries.
More informationStandardisation and Exchange Trading of OTC Derivatives
The Committe of European Securities Regulators 11-13 avenue de Friedland 75008 Paris France 16 th August 2010 Standardisation and Exchange Trading of OTC Derivatives CFA Institute is pleased to comment
More informationOTC Derivatives Clearing in Practice. Reto Ziltener, Head Sales Prime Services 23 rd September 2014
OTC Derivatives in Practice Reto Ziltener, Head Sales Prime Services 23 rd September 2014 Agenda Terms OTC Derivatives - Transformation of the OTC derivatives market Mandatory clearing and collateralisation
More informationCPSS IOSCO Principles for financial market infrastructures: vectors of international convergence
CPSS IOSCO Principles for financial market infrastructures: vectors of international convergence Daniela RUSSO Director General of the Directorate General Payments and Market Infrastructure European Central
More informationCONSULTATION DOCUMENT
EUROPEAN COMMISSION Directorate General Internal Market and Services FINANCIAL MARKETS Securities Markets Brussels, 10 April 2014 Disclaimer CONSULTATION DOCUMENT FX FINANCIAL INSTRUMENTS This document
More informationPlease find below our responses to the questions raised in the consultation document.
9 May 2014 To: Unit G3 Securities Markets DG Internal Market and Services European Commission Via e-mail to MARKT-G3@ec.europa.eu Re: Consultation Document FX Financial Instruments Dear Sir, Dear Madam,
More informationFESE RESPONSE CESR consultation paper on Standardisation and exchange trading of OTC Derivatives Ref.: CESR/10 610
FESE AISBL Avenue de Cortenbergh, 52 B-1000 Brussels VAT: BE0878.308.670 Tel.: +32 2 551 01 80 Fax : +32 2 512 49 05 FESE RESPONSE CESR consultation paper on Standardisation and exchange trading of OTC
More informationCollateral Fundamentals
COLLATERAL INITIATIVES COORDINATION FORUM Collateral Fundamentals A Dictionary Definition of Collateral: Something pledged as security for repayment of a loan, to be forfeited in the event of a default
More informationOctober 2014. Guide to the Financial Market Infrastructure Act
October 2014 Guide to the Financial Market Infrastructure Act 1. Executive Summary The Financial Market Infrastructure Act (FMIA) (Bundesgesetz über die Finanzmarktinfrastrukturen und das Marktverhalten
More informationSWAPS AND DERIVATIVES
PRACTICE NOTE ON SWAPS AND DERIVATIVES PN/01J2014 (Issued under section 7(1) of the Financial Services Act 2007) Issued on 01 October 2014 CONTENTS Introduction... 2 PART I: Explanatory Notes: Swaps and
More informationICAP Execution Policy
ICAP Execution Policy August 2013 This Execution Policy is applicable to broker services provided to you by ICAP Group and/or any of its relevant group companies, as notified to you from time to time (
More informationComments on the Basel Committee on Banking Supervision s Consultative Document: Supervisory framework for measuring and controlling large exposures
June 28, 2013 Comments on the Basel Committee on Banking Supervision s Consultative Document: Supervisory framework for measuring and controlling large exposures Japanese Bankers Association We, the Japanese
More informationA Quick Start Guide to EMIR: What you need to do and when
Legal Update January 2013 A Quick Start Guide to EMIR: What you need to do and when On 19 December 2012 the Commission adopted the majority of the subordinate legislation necessary to implement Regulation
More informationBasel Committee on Banking Supervision
Basel Committee on Banking Supervision Frequently asked questions on the Basel III leverage ratio framework October 2014 This publication is available on the BIS website (www.bis.org). Bank for International
More informationSingapore Consults on OTC Derivatives Regulation.
February 2012 Singapore Consults on OTC Derivatives Regulation. On 13 February 2012, the Monetary Authority of Singapore ( MAS ) released its Consultation Paper on Proposed Regulation of OTC Derivatives
More informationTechnology Implications and Costs of Dodd-Frank on Financial Markets. Larry Tabb Founder & CEO TABB Group
Technology Implications and Costs of Dodd-Frank on Financial Markets Larry Tabb Founder & CEO TABB Group CFTC TAC Washington DC March 1, 2011 Contents Workflows High Level Existing High Level Proposed
More informationRegulatory Compliance for Energy and Commodity Companies
TRIPLE POINT SOLUTION BRIEF Regulatory Compliance for Energy and Commodity Companies COMMODITY XL MEET REQUIREMENTS FOR DODD-FRANK AND EUROPEAN UNION LEGISLATION TRIPLE POINT TECHNOLOGY TPT.COM MARKET
More informationU.S. DERIVATIVES REFORM (DODD-FRANK ACT, TITLE VII)
FREQUENTLY ASKED QUESTIONS U.S. DERIVATIVES REFORM (DODD-FRANK ACT, TITLE VII) INTERNAL USE ONLY Comprehensive information for Relationship Managers and other staff of Julius Baer Group September 2015
More informationCONSULTATION PAPER P003-2012 Feb 2012. Proposed Regulation of OTC Derivatives
CONSULTATION PAPER P003-2012 Feb 2012 Proposed Regulation of OTC Derivatives PREFACE Following the global financial crisis, the G20 committed to improve the regulation and supervision of over-the-counter
More informationEuropean Commission proposed regulation on OTC derivatives, central counterparties and trade repositories
European Commission proposed regulation on OTC derivatives, central counterparties and trade repositories Briefing note: Treatment of FX instruments under EMIR Introduction This note sets out the position
More informationCONSULTATION PAPER ON INTRODUCING MANDATORY CLEARING AND EXPANDING MANADATORY REPORTING
Financial Stability Surveillance Division Hong Kong Monetary Authority 55/F Two International Finance Centre 8 Finance Street, Central Hong Kong Supervision of Markets Division The Securities and Futures
More informationCREDITEX BROKERAGE LLP BEST EXECUTION POLICY
CREDITEX BROKERAGE LLP BEST EXECUTION POLICY Version 1.1 The Execution Policy is applicable to broker services provided by Creditex Brokerage LLP ( CBL ). Introduction When providing brokerage services
More informationDARRELL DUFFIE GRADUATE SCHOOL OF BUSINESS, STANFORD UNIVERSITY
ON THE CLEARING OF FOREIGN EXCHANGE DERIVATIVES DARRELL DUFFIE GRADUATE SCHOOL OF BUSINESS, STANFORD UNIVERSITY This note discusses the case for exempting foreign exchange derivatives from recent regulatory
More informationIOSCO BN01-11 Consultative Report
IOSCO BN01-11 10 March 2011 Cover note to the consultative report 1 Overview of the report The consultative report on Principles for Financial Market Infrastructures (consultative report) was prepared
More informationThe Monetary Authority of Singapore (MAS) 26 March 2012 10, Shenton Way Singapore 079117
The Monetary Authority of Singapore (MAS) 26 March 2012 10, Shenton Way Singapore 079117 Dear Sir, MAS Consultation Paper on Proposed Regulation of OTC Derivatives The Alternative Investment Management
More informationEuropean Market Infrastructure Regulation (EMIR): Pension fund exemption on central clearing
European Market Infrastructure Regulation (EMIR): Pension fund exemption on central clearing Finding a solution for cash variation margin remains the main concern Executive Summary The fundamental issue
More informationSWIFT Response To the IOSCO Consultation on Risk Mitigation Standards for Non- Centrally Cleared OTC Derivatives
SWIFT Response To the IOSCO Consultation on Risk Mitigation Standards for Non- Centrally Cleared OTC Derivatives 16 October 2014 Foreword SWIFT thanks IOSCO for the opportunity to respond to the Consultation
More informationCross-Border Fragmentation of Global OTC Derivatives: An Empirical Analysis
Research Note Cross-Border Fragmentation of Global OTC Derivatives: An Empirical Analysis January 214 Summary In December 2, ISDA published Footnote 88 and Market Fragmentation: An ISDA Survey ( the Survey
More informationFX Week conference "State of play, state of flux: a regulator's perspective"
FX Week conference "State of play, state of flux: a regulator's perspective" Introduction 1. Ladies and Gentleman, thank you for the invitation to present to you this afternoon. 2. Looking around the room,
More informationRe: Consultation Paper on the proposed regulatory regime for the over the counter derivatives market in Hong Kong
30 November 2011 The Market Development Division Hong Kong Monetary Authority 55 th Floor Two International Finance Centre 8 Finance Street Central Hong Kong Submitted via email to: mdd@hkma.gov.hk Supervision
More informationRe: Notice and Request for Comments - Determinations of Foreign Exchange Swaps and Forwards (75 Fed. Reg. 66829)
ISDA International Swaps and Derivatives Association, Inc. 360 Madison Avenue, 16th Floor New York, NY 10017 United States of America Telephone: 1 (212) 901-6000 Facsimile: 1 (212) 901-6001 email: isda@isda.org
More informationAPEX COLLATERAL Innovative solutions for enterprise-wide collateral management and optimization
APEX COLLATERAL Innovative solutions for enterprise-wide collateral management and optimization Post-crisis reform is driving a critical need for advanced collateral management. The parallel implementation
More informationRisk Management Consultants. Initial Margin: A commentary on issues for centrally cleared and non-cleared business. October 2013.
Initial Margin: A commentary on issues for centrally cleared and non-cleared business October 2013 Sponsored by: Table of Contents Introduction... 3 Background and regulatory drivers... 3 Calculation and
More informationImpact of Treasury s OTC Derivatives Legislation on the Foreign Exchange Market. Corporations participate in the foreign exchange market to:
ISDA International Swaps and Derivatives Association, Inc. 360 Madison Avenue, 16th Floor New York, NY 10017 United States of America Telephone: 1 (212) 901-6000 Facsimile: 1 (212) 901-6001 email: isda@isda.org
More informationGaps and Duplicative Requirements, August 30, 2013, available at http://www.cftc.gov/ucm/groups/public/@newsroom/documents/file/odrgreport.pdf.
Report of the OTC Derivatives Regulators Group (ODRG) 1 on Cross-Border Implementation Issues March 2014 At the St. Petersburg summit in September 2013, the G20 leaders welcomed the set of understandings
More informationBest Execution Policy
Black Pearl Securities Limited "the Firm" Best Execution Policy This Best Execution Policy is applicable to Matched Principle Broker (MPB) services provided to you by the Firm and it should be read in
More informationCICERO BRIEFING: MONETARY AUTHORITY OF SINGAPORE REVIEWS REGULATION OF THE DERIVATIVES MARKET IN SINGAPORE
CICERO BRIEFING: MONETARY AUTHORITY OF SINGAPORE REVIEWS REGULATION OF THE DERIVATIVES MARKET IN SINGAPORE Introduction On February 13 the Monetary Authority of Singapore announced it is conducting a review
More informationby William A. Scott, Stikeman Elliott LLP
Recent regulatory developments in the Canadian OTC derivatives market by William A. Scott, Stikeman Elliott LLP As the Canadian federal government seemingly never tires of reminding us, the Canadian financial
More informationINTRODUCTION HOW DTCC S MARGIN TRANSIT WILL HELP THE INDUSTRY MANAGE A HIGHER VOLUME OF MARGIN CALLS WHO IS THE MARGIN TRANSIT SERVICE FOR?
DTCC MARGIN TRANSIT INTRODUCTION Derivatives regulations and new capital and liquidity requirements for financial institutions remain the key drivers of new collateral demands. Recent estimates based
More informationCESR Consultation Paper Standardisation and exchange trading of OTC derivatives FBF S RESPONSE
16th August 2010 CESR Consultation Paper Standardisation and exchange trading of OTC derivatives FBF S RESPONSE General remarks: The French Banking Federation (FBF) represents the interests of the banking
More informationA Comparison of US and EU Derivative Market Reforms
A Comparison of US and EU Derivative Market Reforms How will key Dodd-Frank and EMIR provisions differ in substance and timing? 18 September 2012 [10.00h EDT and 16.00h CET] Introduction Hume Brophy -
More informationImplementing OTC Derivatives Market Reforms
Implementing OTC Derivatives Market Reforms 25 October 2010 Foreword In September 2009, G-20 Leaders agreed in Pittsburgh that: All standardised OTC derivative contracts should be traded on exchanges
More informationFootnote 88 and Market Fragmentation: An ISDA Survey December 2013
Research Note Footnote 88 and Market Fragmentation: An ISDA Survey December 2013 Summary Earlier this year, the US Commodities Futures Trading Commission (CFTC) required that swap execution facilities
More informationW H I T E P A P E R : C O L L A T E R A L O P T I M I S A T I O N I N A C E N T R A L L Y C L E A R E D W O R L D
4 S I G H T F I N A N C I A L S O F T W A R E W H I T E P A P E R : C O L L A T E R A L O P T I M I S A T I O N I N A C E N T R A L L Y C L E A R E D W O R L D 1 Introduction Collateral management has
More informationOTC Derivatives Market Reforms. Eighth Progress Report on Implementation
OTC Derivatives Market Reforms Eighth Progress Report on Implementation 7 November 2014 Contents Page 1. Executive Summary... 1 2. Progress in jurisdictional and market reform implementation... 7 2.1 Trade
More informationInternational Swaps and Derivatives Association, Inc.
Comments by the International Swaps and Derivatives Association, Inc. (ISDA) on the Consultation Paper on Proposed Regulation of OTC Derivatives issued by the Monetary Authority of Singapore 26 March 2012
More informationEuropean Securities Forum
European Securities Forum Submission to the Basel Committee on Banking Supervision The New Basel Capital Accord The European Securities Forum (ESF) is an organisation established by the major users of
More informationThe Value of Derivatives
The Value of Derivatives International Swaps and Derivatives Association, Inc. WHO USES DERIVATIVES AND WHY? MANUFACTURING INTERNATIONAL TRADE TRANSPORTATION FINANCING COSTS EXCHANGE RATES FUEL COSTS MANUFACTURERS
More informationFX & MIFID ECB FX Contact Group
FX & MIFID ECB FX Contact Group Richard Haynes Fixed Income Sales & Trading Compliance Department Citigroup 21 November 2007 FX & MIFID Introduction MiFID Overview What FX instruments are within scope
More informationReforming OTC derivatives markets Observable changes and open issues
Current Issues Global financial markets August 7, 2013 Author Orcun Kaya +49 69 910-31732 orcun.kaya@db.com Editor Bernhard Speyer Deutsche Bank AG DB Research Frankfurt am Main Germany E-mail: marketing.dbr@db.com
More informationTransparency in the context of Secondary Markets Bond Trading
MiFID II Transparency in the context of Secondary Markets Bond Trading February 2015 Latham & Watkins operates worldwide as a limited liability partnership organized under the laws of the State of Delaware
More informationImplications for derivatives and hedge accounting under the Dodd-Frank Act
Implications for derivatives and hedge accounting under the Dodd-Frank Act In July 2010, Congress passed the Dodd-Frank Wall Street Reform and Consumer Protection Act 1 (the Act ) to increase government
More informationCMU and a review of the regulatory initiatives affecting the international securities markets ICMA/NCMF Bond Market Seminar, Helsinki Martin Scheck,
CMU and a review of the regulatory initiatives affecting the international securities markets ICMA/NCMF Bond Market Seminar, Helsinki Martin Scheck, 22 January 2015 Contents Introduction current status
More informationCode of Conduct for Securities Dealers. governing securities transactions
Code of Conduct for Securities Dealers 008 governing securities transactions Contents Preamble... 3 A General guidelines to the Code of Conduct... 4 Art. Legal basis... 4 Art. Scope... 5 B Duty of disclosure...
More informationDACT autumn diner workshop. Risk management, valuation and accounting
DACT autumn diner workshop Risk management, valuation and accounting Agenda 1. Risk management - mitigate risk Cost of hedging Risk mitigants Risk management policy 2. Valuation & accounting - mitigate
More informationLeverage OTC Clearing & Interdealer Risk Management
OTC Clearing, Volcker Rule and Transaction Strategy: Changing market dynamics & liquidity for Corporate Treasurers Presented by Larry Tabb (Founder & CEO) PRMIA Global Risk Conference New York, NY May
More informationBasel Committee on Banking Supervision
Basel Committee on Banking Supervision Frequently asked questions on the Basel III leverage ratio framework April 2016 (update of FAQs published in July 2015) This publication is available on the BIS website
More informationBolstering secured Markets through innovation: Agency Cash Management (ACM) Euroclear Collateral Conference 11-12 th March 2013.
Bolstering secured Markets through innovation: Agency Cash Management (ACM) Euroclear Collateral Conference 11-12 th March 2013 March 12 th March Table of Contents Subject Slide Structure 3 Chronology
More informationDerivative transaction reporting
REGULATORY GUIDE 251 Derivative transaction reporting February 2015 About this guide This guide is for reporting entities that are subject to the reporting obligations under the ASIC Derivative Transaction
More informationCOMMISSION DELEGATED REGULATION (EU) /... of 10.6.2016
EUROPEAN COMMISSION Brussels, 10.6.2016 C(2016) 3446 final COMMISSION DELEGATED REGULATION (EU) /... of 10.6.2016 supplementing Regulation (EU) No 648/2012 of the European Parliament and of the Council
More information6. Finance: Over-the-Counter Derivatives
6. Finance: Over-the-Counter Derivatives Commitment [#90]: [We also firmly recommitted to work in an internationally consistent and nondiscriminatory manner to strengthen regulation and supervision on]
More informationRegulatory Reform of OTC Derivatives and Its Implications for Sovereign Debt Management Practices
Please cite this paper as: OECD (2011), Regulatory Reform of OTC Derivatives and Its Implications for Sovereign Debt Management Practices, OECD Working Papers on Sovereign Borrowing and Public Debt Management,
More informationThe Equity Securities Lending Market
Jonathan Carroll and Ashwin Clarke* An equity securities loan is an arrangement in which one party (the lender) agrees to transfer an equity security to another party (the borrower) temporarily, usually
More informationFeasibility*of*taxing*derivatives*trading*
Feasibility*of*taxing*derivatives*trading* Rodney Schmidt The North-South Institute rschmidt@nsi-ins.ca 24 September 2012 Feasibility*challenges*of*taxing*derivatives*trading* Applying a financial transaction
More informationTreatment of segregated margin in the calculation of centrally cleared derivatives exposures under the Basel III Leverage Ratio
Basel Committee on Banking Supervision Bank for International Settlements Centralbahnplatz 2, CH-4002 Basel, SWITZERLAND Re: Treatment of segregated margin in the calculation of centrally cleared derivatives
More informationClearing and settlement of exchange traded derivatives
Clearing and settlement of exchange traded derivatives by John W. McPartland, consultant, Financial Markets Group Derivatives are a class of financial instruments that derive their value from some underlying
More informationn Economic Commentaries
n Economic Commentaries The OTC derivatives market fulfils an important function in the financial system. Consequently, risk management must be good and transparency high in this market. An EU regulation
More informationOTC Derivatives Market Reforms. Ninth Progress Report on Implementation
OTC Derivatives Market Reforms Ninth Progress Report on Implementation 24 July 205 Contents Page. Introduction and Executive Summary... 2. Progress in jurisdictional and market reform implementation...
More informationThe Foreign Exchange Market and Central Counterparties
The Foreign Exchange Market and Central Counterparties Mark Manning, Alex Heath and James Whitelaw* The financial crisis has led to considerable efforts to improve risk management practices in financial
More informationFlash News. European Parliament adopts MiFID II. 1. Background. 2. MiFID II for banks, investment firms and asset managers
www.pwc.lu/regulatory-compliance Flash News European Parliament adopts MiFID II 23 April 2014 Following the political agreement reached on 14 January 2014 by the European Parliament, the Council and the
More informationThe extraterritorial effect of the EU regulation of OTC derivatives
June 2014 The extraterritorial effect of the EU regulation of OTC derivatives 1. On 10 April 2014 some of the legislation that provides for the extraterritorial effect of the European Markets Infrastructure
More informationCommodity Markets Intelligence Series
Commodity Markets Intelligence Series How to master (OTC) Clearing for Energy Companies October, 2012 Introduction The move to clearing of standardised over-the-counter (OTC) derivatives represents a significant
More informationThe Ratio of Leverage. When you combine ignorance and leverage, you get some pretty interesting results. Warren Buffett
The Ratio of Leverage When you combine ignorance and leverage, you get some pretty interesting results. Warren Buffett 1 What is leverage? definition of leverage: debt to equity ratio Basel Commitee: One
More informationHow Regulation Will Reshape FX and Rates Markets: Part 3
Deutsche Bank Markets Research Global Cross-Discipline Special Report Date 24 July 2014 How Regulation Will Reshape FX and Rates Markets: Part 3 The process of reforming OTC derivative markets has moved
More informationTrade Repository Service White Paper December 2013
Trade Repository Service White Paper December 2013 Copyright IntercontinentalExchange, Inc. 2013. All Rights Reserved. Table of Contents DEFINITIONS... 3 EXECUTIVE SUMMARY... 5 OVERVIEW: TRADE REPOSITORIES...
More informationTransparency and financial stability
Rodrigo Buenaventura Head of the Markets Division European Securities and Markets Authority Verena Ross Executive Director European Securities and Markets Authority Insufficient transparency was one of
More informationCorporate concerns about OTC derivative regulation
Corporate concerns about OTC derivative regulation Summary: page 1 Regulation of OTC derivatives: page 2 Explanatory Notes: page 4 BIS data on OTC derivatives: page 6 Contacts page 7 Summary The EACT s
More informationThe new ACI Diploma. Unit 2 Fixed Income & Money Markets. Effective October 2014
The new ACI Diploma Unit 2 Fixed Income & Money Markets Effective October 2014 8 Rue du Mail, 75002 Paris - France T: +33 1 42975115 - F: +33 1 42975116 - www.aciforex.org The new ACI Diploma Objective
More informationEMIR and REMIT: Wholesale Energy Trading on the Docket. How to Prepare Your Business for the New Paradigm. www.allegrodev.com
www.allegrodev.com EMIR and REMIT: Wholesale Energy Trading on the Docket How to Prepare Your Business for the New Paradigm 2013 Allegro Development. All rights reserved. Introduction At a Glance EMIR
More informationCFTC Poised to Fire the Starting Gun for Mandatory FX Clearing
ISSN: 1467-2650 2014 P&L Services Ltd. All Rights Reserved. This article first appeared in: Profit & Loss Magazine, June 2014 issue 152 vol. 15 CFTC Poised to Fire the Starting Gun for Mandatory FX Clearing
More informationEC consultation on FX Financial Instruments. ECO-INV-14-079 Date: 9 May 2014. Contact person: Ecofin department E-mail: mihai@insuranceeurope.
Response to consultation on FX Financial Instruments Position Paper Our reference: Referring to: ECO-INV-14-079 Date: 9 May 2014 EC consultation on FX Financial Instruments Contact person: Ecofin department
More informationMiFID II implications for Commodity Derivatives March 2015
The Authors increase competition, transparency and investor protection. MiFID II expands the scope to include commodity derivatives dealing. Romal Almazo MiFID II (legislation) and MiFIR (regulation) impact
More informationThe Shifting Environment in the Global FX Market: The Futurization of FX
The Shifting Environment in the Global FX Market: The Futurization of FX Derek L. Sammann Senior Managing Director FX Products, Metals, and Options Solutions March 28, 2014 A Quantitative Perspective of
More informationGlobal Foreign Exchange Division St Michael s House 1 George Yard London EC3V 9DH
TO: Alberta Securities Commission Autorité des marchés financiers British Columbia Securities Commission Financial and Consumer Services Commission (New Brunswick) Financial and Consumer Affairs Authority
More informationCommodity Futures Trading Commission Office of Public Affairs Three Lafayette Centre 1155 21st Street, NW Washington, DC 20581 www.cftc.
Commodity Futures Trading Commission Office of Public Affairs Three Lafayette Centre 1155 21st Street, NW Washington, DC 20581 www.cftc.gov Interpretive Guidance and Policy Statement Regarding Compliance
More information