Basel back-testing guidelines criticized | German official: London to lose financial status | Commodity revival strengthening, strategist says
February 10, 2017
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Basel back-testing guidelines criticized
The Basel Committee on Banking Supervision's attempt to clarify questions on model back testing under the revised market-risk framework has met with a critical response from dealers. Amendments to the committee's guidelines, published in late January, on when trading desks can disregard back-testing breaches that can be attributed to illiquid risk factors have been described as confusing by some, while others contend that banks could face unjustified capital charges. (subscription required) (2/9) 
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German official: London to lose financial status
London will lose its financial status after Brexit even if the EU and the UK have equivalent banking rules, says Andreas Dombret, a board member of Germany's central bank. "The current model of using London as a gateway to Europe is likely to end," Dombret said in a closed-door meeting.
BBC (2/10) 
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Industry News and Trends
Commodity revival strengthening, strategist says
Citigroup commodities strategist Aakash Doshi has compiled data showing a strong rise in passive commodity-index assets held by retail and institutional investors to $391 billion in January, 53% higher than the figure a year earlier. Assets in actively managed funds also rose to $91.5 billion, a two-year high.
The Wall Street Journal (tiered subscription model) (2/9) 
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Survey: Blockchain welcomed but still short of experts
According to a survey of 200 financial and technical senior managers in the US and Europe, the vast majority said they believe in blockchain technology's potential and that it would be in daily use by 2026. However, 70% of respondents say their companies still lack specialist blockchain expertise, according to the survey, which TABB Group conducted for Synechron.
Bitcoin Magazine (2/9), (free content) (2/9),  Financial News (UK) (tiered subscription model) (2/9) 
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Power, natural gas options to launch at Nodal
Nodal Exchange plans to launch in the second quarter power and natural gas options contracts, which will physically settle into a cash-settled futures contract. "The advantage is that customers can cross margin options with their power basis portfolio and other hub contracts that you already have on Nodal Exchange," CEO Paul Cusenza said. (subscription required) (2/9) 
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Nasdaq venture arm reportedly to invest in fintech
Nasdaq plans venture into fintech investment
Friedman (John Lamparski/Getty Images)
Nasdaq is setting up a venture capital arm that will invest in financial-technology companies, with an aim to integrate their products into its own business, sources said. Nasdaq, one of the first to invest in blockchain, is a supporter of innovation, and CEO Adena Friedman has said "areas of focus for us in terms of big projects are all around technology."
Reuters (2/9) 
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CME's Duffy in wait-and-see mode on regulatory changes
CME Group Chairman and CEO Terrence Duffy expects the Trump administration to make only minor changes to the Dodd-Frank Act but says the upside is no additional regulation. "You can't just take Dodd-Frank and throw it away," Duffy said.
Crain's Chicago Business (tiered subscription model) (2/9) 
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Regulatory Roundup
EBA backs uniform derivatives charges for EU, non-EU firms
The European Banking Authority published rules allowing banks to exempt small, nonfinancial firms from derivatives capital charges under criteria that are the same for EU and non-EU companies. Previously, the framework governing exemptions was different for firms outside the EU and those in the EU.
European Banking Authority (2/9),  Politico Pro (subscription required) (2/9) 
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UK banks, brokers accused of FX mis-selling
Small investors are preparing lawsuits against British banks and brokers, saying they were sold not hedges but complex currency derivatives that failed when the pound plunged after the Brexit vote. An official from one company that advises plaintiffs on mis-selling complaints says he is aware of 25 such cases, amounting to potentially hundreds of millions of pounds in claims.
Reuters (2/9) 
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ISDA News and Events
Creating a New CSA Under New York Law: ISDA and IHS Markit Tutorial Series
ISDA and IHS Markit have collaborated to bring together a three-part prerecorded tutorial series to show you how you can create a new CSA under New York law. The tutorials will explore defining the new CSA method, matching questionnaires and creating a new CSA under New York law. View the tutorial series.
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Bank of England's Andrew Gracie speaks at ISDA's 2nd Annual Legal Forum in London
Bank of England's Andrew Gracie speaks at ISDA's 2nd Annual Legal Forum in London
Get up-to-date on all of the latest in legal issues, including Brexit, cross-border impact of regulations and discussions on benchmarks, WGMR, MiFID, clearing and banking reform. REGISTER: ISDA Annual Legal Forum on Feb. 22 in London
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Variation Margin "Big Bang": Are You Ready for March 2017?
In-scope market participants with uncleared swaps must begin exchanging margin March 1. In preparation for this regulatory deadline, ISDA will have conferences in each region focused on helping participants understand what changes are coming, determine which rules apply to their counterparty relationships, specific requirements in different jurisdictions and provide an in-depth look at the ISDA 2016 Variation Margin Protocol, designed to help market participants establish regulatory compliant documents with their counterparties. Registration open:
New York: Feb. 22 Agenda Register
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