House to vote on bill exempting foreign banks from CFTC swap trading rules
The House of Representatives is scheduled to vote today on a bill designed to exempt foreign banks from certain Commodity Futures Trading Commission swap trading rules, provided that their home countries have similar regulations, and to force the CFTC and Securities and Exchange Commission to coordinate their regulatory approaches on the issue. The bill is not expected to be taken up by the Senate, and is opposed by President Barack Obama. The bill "is intended to send a message that Congress would like them to delay in order to achieve greater harmonization in the approach to cross-border regulation with the SEC," former SEC member Annette Nazareth said. Bloomberg (6/12)

Regulatory Roundup

SEC fines CBOE $6 million for oversight failures
The Securities and Exchange Commission announced Tuesday that it has fined the Chicago Board Options Exchange $6 million. The SEC said CBOE, the biggest options exchange in the U.S., did not "enforce or even fully comprehend rules to prevent abusive short selling." This is the first time the SEC has penalized an exchange in connection with its oversight function. CNNMoney (6/11), The Wall Street Journal/MoneyBeat blog (6/11), CNBC/NetNet blog (6/11)

Obama expected to name Amanda Renteria to head CFTC
President Barack Obama will nominate Amanda Renteria to replace Gary Gensler as leader of the Commodity Futures Trading Commission, administration officials said. Renteria served as chief of staff to Senate Agriculture Committee Chairwoman Debbie Stabenow, D-Mich., but has little experience with financial regulation. Renteria was at one point considered to replace CFTC member Bart Chilton, whose term recently expired. Former CFTC general counsel Dan Berkovitz is now considered a possible replacement for Chilton, if Chilton is not renominated. The Huffington Post (6/11)

CFTC order opens door to acceptance of pre-legal identity identifiers
The Commodity Futures Trading Commission issued in an amended order listing the conditions under which it would accept pre-legal entity identifiers that haven't been issued by SWIFT or the Depository Trust and Clearing Corp. as part of its swaps-reporting requirements. The commission said in its revised guidance that if the European Securities and Markets Authority takes certain actions, it will accept the general entity identifier issued by WM Datenservice, a German firm. WatersTechnology.com (6/11)

7 U.S. banks get 2-year extension on swaps push-out rule
The Office of the Comptroller of the Currency gave seven large U.S. banks extra time to comply with a swaps rule. The agency decided to give the financial firms, which include Bank of America and Citigroup, a two-year extension to move their swaps operations into separate affiliates. Less than a week ago, the Federal Reserve granted the same extension to foreign banks doing business in the U.S. San Francisco Chronicle (free content)/Bloomberg (6/11), The Wall Street Journal (6/11)

Registration delay at ESMA holds up derivatives reporting
The European Securities and Markets Authority has postponed derivatives reporting until at least November. However, observers say reporting under the European Market Infrastructure Regulation most likely will start in 2014. While four firms have sought to become trade repositories, ESMA does not expect the first one to be registered until August. "My gut feeling is that it will be delayed beyond the end of the year," said Nicolas Boatwright of REGIS-TR, which has applied to be a trade repository. The Trade News (U.K.) (6/11)

Industry Developments

CME tests London futures market, eyes September launch
CME Group has started testing trading systems with customers in anticipation of opening a futures market Sept. 9 in London. The market, CME Europe, is awaiting U.K. regulatory approval. Currency futures will be the first offering, with contracts tied to commodities, equities and interest rates on deck. Financial Times (tiered subscription model) (6/11), The Wall Street Journal/MoneyBeat blog (6/11)

Bovespa to test trading system with sophisticated margin calculator
Brazil's BM&FBovespa will test a trade-clearing system that takes account of trading positions across four clearinghouses to calculate margins. Financial Times (tiered subscription model) (6/11)

ASX to meet capital rules with rights issue
Citing Basel III rules and growth initiatives, the Australian Securities Exchange is planning an AU$553 million rights issue to be underwritten by UBS. Financial Times (tiered subscription model) (6/11)

Other News

Electronic Trading News

Rules for electronic trading of derivatives still need clarifying
The Commodity Futures Trading Commission's final rules covering derivatives traded on electronic platforms have some in the financial industry scratching their heads, according to this blog post. Although the rules were adopted in May, several provisions are still unclear. Among them: which trades must be traded electronically, how far disclosures must go to convey the risks associated with swaps and when market participants will have to start complying with the rules. Reuters/Financial Regulatory Forum blog (6/11)

Commodities and Managed Futures

Indonesia seeks CME help to widen commodity trading
CME Group is helping Indonesia increase commodity trading. The nation is the world's largest producer of palm oil and tin and the third-largest grower of coffee. Gold, tin and palm oil are traded on the Indonesia Commodity & Derivatives Exchange, but the country wants to expand trading to match increased production and development. Bloomberg (6/11)

Rising rates favor the commodities market, data shows
Historical analysis shows commodities frequently do well in times when interest rates are on the rise. With a U.S. recovery seemingly underway, commodities could be a strong choice if the Federal Reserve decides to wind down its quantitative easing program. Forbes (6/11)

SmartQuote

Here is the world. Beautiful and terrible things will happen. Don't be afraid." -- Frederick Buechner, American writer and theologian Share: