BGC puts recently acquired Trayport up for sale | Exchanges win dismissal of U.S. HFT lawsuits | SEC revisits cross-border swaps rules
April 30, 2015
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BGC puts recently acquired Trayport up for sale
BGC Partners plans to sell Trayport, an electronic trading venue that the broker-dealer inherited with its recent takeover of GFI Group. "We expect numerous parties to be interested in acquiring this business at a valuation that reflects its high margins, growth rate, leading technology, and strategic importance in the global energy and commodities markets," said BGC CEO Howard Lutnick. (free content) (4/29), Financial Times (tiered subscription model) (4/29), FOW magazine online (subscription required) (4/29)
Exchanges win dismissal of U.S. HFT lawsuits
U.S. District Judge Katherine Forrest dismissed lawsuits against the New York Stock Exchange, BATS Exchange, the Nasdaq Stock Market and other exchanges that accused them of selling high-frequency traders early access to market data. The judge said the Securities and Exchange Commission must first review the claims. Reuters (4/29), The Wall Street Journal (tiered subscription model) (4/29)
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Regulatory Roundup
SEC revisits cross-border swaps rules
The Securities and Exchange Commission is reproposing rules governing U.S. and foreign swap dealers that operate in the U.S. and trade with foreign firms and book the deals overseas with the banks' foreign affiliates. Making the trades in the U.S. while booking them overseas creates a loophole, critics say. Others say establishing U.S. oversight is an overreach. Reuters (4/29)
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European regulators' competition reviews prompt concerns
Britain's Financial Conduct Authority and other regulators in Europe are looking into investment banking competition. However, bank executives say that postcrisis changes have exacerbated the issues that prompt the most concern, such as concentration risks, product bundling and barriers to entry. (subscription required) (4/29)
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Industry Developments
BIS offers insight in OTC derivatives markets
The Bank for International Settlements said the notional amount of outstanding contracts in the over-the-counter derivatives markets dropped 9% from the end of the first half of last year to the end of the second half. However, an increase in the gross market value of outstanding contracts was seen in the second half. Over the same period, the share of outstanding credit default swap contracts cleared through clearinghouses increased to 29%. Bank for International Settlements (4/30)
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FX draws renewed interest from banks after 2-year slump
Banks appear to be interested in returning to foreign-exchange markets after two years of regulatory changes and other setbacks. Senior executives at firms involved in the FX markets say they expect to start hiring again. Reuters (4/29)
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South Korean firms see decline in derivatives trading
South Korea's Financial Supervisory Service said the combined derivatives trading volume fell from more than 50,000 trillion won in 2013 to about 43,600 trillion won in 2014. Yonhap News Agency (South Korea) (free content) (4/30)
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Commodities and Managed Futures
EEX electricity futures contract surges
Trading of the European Energy Exchange's flagship electricity futures contract nearly doubled in the first quarter, the bourse said Wednesday. Reuters (4/29)
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ICE's global ambitions for cotton contract blocked by old law
A 1916 U.S. law requiring items listed in the U.S. to be inspected and graded by federal agriculture officials has blocked Intercontinental Exchange's attempt to expand its global cotton trading business. ICE had planned to list another cotton contract with fiber coming from abroad. Ben Jackson, president and chief operating officer of ICE Futures U.S., said the inspection doesn't make sense for such a product. Bloomberg (4/28)
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Nasdaq Commodities CCP to stop accepting nonbacked bank guarantees
Nasdaq Commodities' clearinghouse, responding to the European Market Infrastructure Regulation, will halt the practice next year of accepting as collateral nonbacked bank guarantees, eliminating a support used in the Nordic power market. To reduce market risk, EMIR requires use of fully backed guarantees to trade derivatives in power and gas. Reuters (4/29)
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