CME unconcerned over bitcoin exchange outages | CFTC's Giancarlo: Regulators aren't keeping up with fintech | ECB warns banks against eurozone letterbox operations
November 16, 2017
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CME unconcerned over bitcoin exchange outages
Kraken, a cryptocurrency trading exchange that CME Group plans to use to price its bitcoin futures, has been experiencing website problems leading to timeouts and withdrawal delays. CME's Alexandra Rapoport noted that because CME will use multiple exchanges, if "any one participating exchange experiencing a technical issue, our reference rate is designed to draw on pricing data from the multiple other exchanges that are part of [CME CF Bitcoin Real Time Index]."
Bloomberg (free registration) (11/15) 
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CFTC's Giancarlo: Regulators aren't keeping up with fintech
Financial regulators are failing to keep up with changes in the financial system that are being driven by financial-technology innovation, said J. Christopher Giancarlo, chairman of the Commodity Futures Trading Commission. If regulators don't put more effort into understanding new technology, they could lose their ability to safeguard markets, he said.
MLex (subscription required) (11/15) 
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ECB warns banks against eurozone letterbox operations
The European Central Bank has warned that it will not allow banks to open so-called letterbox offices in the eurozone while keeping most of their staff and operations in London after Brexit, stating that they must establish a genuine local presence. The warning comes as an increasing number of banks and financial firms, alarmed by the deadlocked Brexit negotiations, are assuming a worst-case scenario and making positive plans to relocate from London.
Bloomberg (free registration) (11/15),  Financial Times (tiered subscription model) (11/15) 
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Brexit report questions legality of pre-existing contracts
A report from multinational law firm Ashurst questions the legality of pre-existing contracts after Brexit and warns of the risk of a disruption to hedging in derivatives markets. "Whilst simple settlement of existing trades should not give rise to the new conduct of regulated activity, actions such as the unwind of hedges, novations or material amendments to existing transactions could give rise to new regulated activities," according to the report.
Futures & Options World (subscription required) (11/15) 
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BoE: Brexit could trigger rapid increase in interest rates
A supply-chain disruption caused by the UK's withdrawal from the EU could lead to domestic price increases that in turn would force the Bank of England to implement a rapid increase in interest rates, said Ben Broadbent, the Bank of England's deputy governor. A rate hike might be necessary even if the broad economy has gone into a slowdown, he said.
The Independent (London) (tiered subscription model) (11/15),  City A.M. (London) (11/15),  Politico Pro (subscription required) (11/15) 
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Regulatory Roundup
Industry concerned about exposure via SI counterparty data
Industry groups have sent a letter to the European Securities and Markets Authority expressing concern that a Markets in Financial Instruments Directive II requirement under the systematic-internalizer reporting regime publicly exposes trading counterparties. "It is important that when reference data is made public, the identities of the executing counterparties are made anonymous," they wrote.
Futures & Options World (subscription required) (11/15) 
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Industry Developments
Interactive Brokers chairman warns about bitcoin futures
Interactive Brokers Chairman Thomas Peterffy is concerned about bitcoin futures, saying they could "destabilize the real economy." "This letter is to request [the Commodity Futures Trading Commission] require any clearing organization that wishes to clear any cryptocurrency or derivative do so in a separate clearing system isolated from other products," Peterffy wrote in an open letter to CFTC Chairman J. Christopher Giancarlo.
Business Insider (11/15) 
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LSEG cancels meeting with shareholder TCI
LSEG cancels meeting with shareholder TCI
Rolet (Leon Neal/AFP/Getty Images)
London Stock Exchange Group has decided not to meet with TCI Fund Management because the activist shareholder has demanded an extraordinary shareholders' meeting, which reportedly means every investor gets access to the board. TCI wants LSEG to remove Chairman Donald Brydon and to extend the contract of CEO Xavier Rolet, who is set to depart next year.
Sky News (11/15),  Financial Times (tiered subscription model) (11/15) 
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Analysis: LCH's ForexClear dominates cleared NDF market
Total notional outstanding of cleared nondeliverable forwards has topped $750 billion, with LCH's ForexClear dominating the market, accounting for as much as $150 billion in notional volume trading weekly. But CME Group is expected to offer more competition in 2018, having signed seven market participants that plan to clear over-the-counter foreign exchange NDFs.
Clarus Financial Technology (11/15) 
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Competition heats up in risk-constrained compression
TriOptima, Capitalab, LMRKTS and Quantile are vying to lead the way in making riskless compression more efficient and extending it to more currencies. Participants welcome the choice of vendors.
Risk (subscription required) (11/16) 
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