Industry Warns Over Failure to Reach EU-US Deal on Derivatives

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Top Headlines

Industry Warns Over Failure to Reach EU-US Deal on Derivatives – Reuters
Failure by European Union and US regulators to iron out differences in their derivatives rules would prompt “catastrophic” attempts by market users to pull out from American clearing houses, a senior industry official has warned.


Trading Firms Want More Clearing “Skin in Game” – FOW (subscription)
European clearing members have called on clearing houses to increase their default fund contributions or “skin in the game” to take into account the increased risk brought to the system with the addition of new products and classes of clearing members.

No Consensus Over Stopping Clearers Becoming ‘Too Big to Fail’ – Reuters
Banks and mutual funds have no way of comparing the health of clearing houses for derivatives just months before their use becomes mandatory in Europe.

CCP Stress Tests Could Help Buy Side Pick Winners – Risk Magazine (subscription)
Making comparisons between clearing houses is “incredibly difficult”, and standardised stress testing should be enforced to help asset managers make an educated choice in the run-up to mandatory clearing in Europe, according to Stuart Anderson, director of electronic and market structure at BlackRock.

Fintech Upstarts Target Financial Terminal Business – Profit & Loss (subscription)
Technological advancements have led to new vendors attempting to disrupt the financial terminal business.  Will they be able to challenge the incumbents?

Illiquidity Means Some Hedges Are No Longer Possible – Risk Magazine (subscription)
Corporates are finding it harder to find liquidity in the over-the-counter derivatives market, forcing some to cut back on their hedging activities, according to a derivatives lawyer at General Electric.

EU Watchdog Says Too Soon to Intervene on Market Liquidity – Reuters
Several factors affect market liquidity and it was too early to consider regulatory intervention, the European Union’s top securities supervisor said on Tuesday as its US counterpart proposes new rules.

 

Regulatory News

Esma “Determined” to Finalise Mifid II Rules in September – Risk Magazine (subscription)
The head of the European Securities and Markets Authority (Esma) is “determined” to publish a final version of Europe’s revised trading rules by the end of September. Dealers have been expecting the rules to be delayed beyond the end of the month.

CFTC’s Giancarlo to Address P&L Forex Network Chicago on Thursday
J. Christopher Giancarlo, Commissioner at the US Commodity Futures Trading Commission, will be making the keynote address at the 13th Profit & Loss Forex Network Chicago conference on 24 September.

Dudley to Speak on Financial-Market Liquidity – Wall Street Journal (subscription)
Federal Reserve Bank of New York President William Dudley will give a keynote speech September 30 about liquidity in financial markets, according to a Wall Street trade group, in the latest sign that challenges in bond trading are attracting greater attention from regulators and central bankers.

Germany, Belgium Consider Transaction Tax Impact on Economy – Reuters
Germany and several other euro zone states that have pledged to tax financial transactions from 2017 want to curb the impact on savers and on how markets fund the economy, documents showed on Tuesday.

Regulatory and Supervisory Deference in the Context of Australia’s OTC Derivative Trade Reporting and Derivative Trade Repositories Regimes – Journal of Financial Market Infrastructures (subscription)
This technical paper provides an Australian regulatory perspective on the over-the-counter landscape and shows how regulatory deference can play a facilitating role in the cross-border context.

 

Company News

Client List Reveals HFT Dominance on BrokerTec – Risk Magazine (subscription)
A confidential list of the top 10 firms by volume on BrokerTec reveals the extent of high-frequency trading in the Icap-owned interdealer market for US Treasuries – data that is not shared with participants on the platform. The list – obtained by Risk – shows only two of the top 10 firms ranked by volume on BrokerTec over May and June were banks: Barclays and JP Morgan.

CME Gets Green Light for European Swap Futures Clearing – Financial News (subscription)
The European markets regulator has given CME Clearing Europe the go-ahead to clear the Chicago group’s suite of swap futures, ahead of new rules that will make central clearing of interest rate derivatives mandatory.

FactSet Research Agrees to Buy Portware for $265 Million in Cash – Bloomberg
FactSet Research Systems, a provider of data and analytical software to investment managers and banks, has agreed to buy Portware for $265 million in cash..

BATS Rule Could Work “Across Markets”: CEO – FOW (subscription)
BATS Global Markets’ Client Suspension Rule, which is awaiting regulatory approval, could be successfully implemented across all trading markets, according to the exchange group’s chief executive officer.

UBS Chief Says it is OK to Make Mistakes – Financial Times (subscription)
UBS chief executive Sergio Ermotti has told his top managers to tell employees that it is acceptable to take more risks and make mistakes – as long as they are honest ones.

 

Market Savvy  

Canada’s Troubles Are Also The Fed’s – Financial Times (subscription)
What happens in China matters deeply to the US economy, as Federal Reserve Chair Janet Yellen made clear when the central bank took a pass on raising rates last week. The US does not directly trade significantly with China. But it does trade heavily with neighbours Canada and Mexico.

Where Next for Brazil as Real Hits New Record Low? – CNBC
The Brazilian real hit a new all-time low on Tuesday after authorities announced a massive austerity package at a time when the economy is shrinking fast.

Market Mood Takes a Turn for the Worst – Societe Generale
It’s unusual for events in a single company to become a driver of global markets but that’s what is happening now with Volkswagen. The woes of the world’s second-biggest car manufacturer are doing nothing for economic optimism or risk appetite and they are undermining the euro, against both dollar and yen.

 

Press Releases

ParFX Boosts Currency Offering with Addition of Offshore Renminbi
ParFX, the wholesale electronic trading platform, has announced the addition of the offshore renminbi (CNH) as it expands the number of tradeable currencies offered on the platform.

DTCC Confirms Significant Expansion in Europe to Support Critical Financial Sector Role
The Depository Trust & Clearing Corporation (DTCC) has confirmed a significant expansion of its workforce across the firm’s primary European locations in London and Wrexham as it continues to increase its support for financial market participants. DTCC is on target to employ 700 people in the UK by the end of this year.

China Merchants Securities Hong Kong Joins Trading Technologies’ X_Trader ASP Platform
China Merchants Securities (CMS) Hong Kong and its affiliated companies are now participating brokers in Trading Technologies’ X_Trader ASP service, formerly known as MultiBroker. Customers may select and route orders to CMS through TT’s global trading network, which provides direct market access to 45 markets across five continents.

 

 

Industry Events