HFT in Japan to face tougher regulations | London could lose right to euro clearing, expert says | Gorman: NYC could take UK derivatives trading
October 19, 2016
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HFT in Japan to face tougher regulations
Japan's Financial Services Agency is planning to require registration by high-frequency traders, and the agency wants to ensure that firms have proper risk-management efforts in place. "It is not appropriate to eliminate all algorithmic fast trading from the Japanese market as it includes the kind that contributes to smooth market transactions," according to the FSA, which noted that such trading could destabilize markets.
Reuters (10/19) 
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London could lose right to euro clearing, expert says
The UK won a 2015 legal dispute with the European Central Bank over the location of euro-denominated clearing, but that might not protect the country's right to clear euro-denominated derivatives. The EU could renew its claim through the European Commission's review of the European Market Infrastructure Regulation, says Simon Puleston Jones, CEO of FIA Europe.
Risk.net (subscription required) (10/18) 
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Gorman: NYC could take UK derivatives trading
N.Y. could gain UK's derivatives trading, Gorman says
Gorman (Neilson Barnard/Getty Images)
New York might pick up London's trading and clearing of derivatives after Brexit because Europe might not be able to handle the increased activity, Morgan Stanley CEO James Gorman says.
Financial Times (tiered subscription model) (10/18) 
LMAX might leave UK for Ireland for EU access
London-based LMAX Exchange plans to obtain a license in Ireland to be regulated as an EU trading facility if the UK loses single-market access. LMAX says it might begin the process in January if the UK government continues to pursue a hard Brexit.
Bloomberg (10/18),  Finance Magnates (10/18) 
How to prepare for 2017 Margin Reform deadlines & beyond
Responding to regulations is a huge operational challenge for banks and dealers. Leveraging data collected from global banks and dealers, this eBook explores how industrializing response processes can help your firm prepare for 2017's margin reform requirements, and beyond. Download Now.
Regulatory Roundup
Piwowar: SEC working on rules for derivatives dealers
Mary Jo White, head of the Securities and Exchange Commission, is angling to get capital and margin requirements for derivatives dealers adopted this year, said Commissioner Michael Piwowar. If the SEC acts quickly enough, dealers could start reporting security-based derivatives trades in 2017.
MLex (subscription required) (10/17) 
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European CCPs ready for extreme event, group says
Europe's central counterparties are resilient enough to survive an "extreme but plausible" event outlined in a resolution-planning proposal by the Financial Stability Board, according to the European Association of CCP Clearing Houses.
Futures & Options World (subscription required) (10/18) 
Industry Developments
Futures-market expansion planned at Nasdaq Dubai
Nasdaq Dubai will add Abu Dhabi Commercial Bank and Union Properties to its equity-futures market next week. The exchange also plans to expand its futures and options market and futures on equity indexes.
Futures & Options World (subscription required) (10/18) 
Financial Technology
Banks, firms, regulators turn to blockchain
Financial institutions, companies and regulators have been testing blockchain and touting its potential for years and now some firms -- including Nasdaq, BHP Billiton and JPMorgan Chase -- are starting to actually use blockchain. For example, a group of eight global financial firms have completed a series of blockchain tests involving smart contracts for over-the-counter equity swaps.
Bloomberg (10/18),  Reuters (10/18),  CoinDesk (U.K.) (10/18),  Risk.net (subscription required) (10/18) 
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Commodities and Managed Futures
Sugar hedging challenges trading houses
Brazilian trading houses are forced to cover larger margin calls on hedging of sugar-price risk as hedge funds continue to take long positions, according to Sucden. "You end up being more selective on further credit lines to mills; that will limit further price fixing," said Luiz Silvestre, chief trader at Sucden.
Reuters (10/18),  Bloomberg Professional (10/17) 
Ag-commodity glut likely to continue
Agriculture in South America, China, the Black Sea region and elsewhere has adopted methods used by US farmers, turning a tight commodity supply from four years ago into a massive glut. Investment in land and technology is compounding the issue, which is unlikely to abate soon.
The Wall Street Journal (tiered subscription model) (10/16) 
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FIA News
Get your single-session or single-day pass for Expo!
FIA is excited to welcome our Expo 2016 attendees to Chicago! There's still time purchase a registration pass and join us. We recommend purchasing a single-day or single-session pass, depending on your needs. Passes are available on-site and give you the opportunity to attend sessions that interest you most. You'll have access to the trade show floor, as well as a ticket for a same-day reception. There is also a limited amount of Trade Show Plus passes left. Today's program includes sessions on blockchain, technology, CCP risk and keynotes from CFTC Chairman Timothy Massad and presidential historian Jon Meacham. This is a must-attend industry event: Choose the best registration-pass option for you and join us at the Hilton Chicago. Register!
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