UK official: Derivatives clearing should stay in London | EU-US equivalence at risk from ESMA proposal | CCPs: FCMs won't be hurt by direct clearing models
October 20, 2016
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UK official: Derivatives clearing should stay in London
Letting clearing of euro-denominated derivatives move from London to New York would leave the UK and Europe in a bad place, UK Economic Secretary to the Treasury Simon Kirby told lawmakers. Kirby says keeping that service in London should be a significant consideration in Brexit negotiations but is unlikely a top priority.
The Business Times (Singapore) (free content)/Reuters (10/19),  Financial News Online (U.K.) (tiered subscription model) (10/19) 
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EU-US equivalence at risk from ESMA proposal
The European Securities and Markets Authority's proposed initial trading obligation is too narrow and threatens derivatives-trading equivalence between the US and the EU, experts say. "I would say equivalence with the US will be much more difficult to achieve, as the question would arise as to why there are material differences for the same currency and product," Clarus Financial Technology CEO Amir Khwaja said. (subscription required) (10/20) 
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Industry News and Trends
CCPs: FCMs won't be hurt by direct clearing models
Clearinghouses say that having buy-side firms post their margins directly at central counterparties won't lead to the disintermediation of futures commission merchants. "We have zero plans nor desire to disintermediate the FCMs," says Phupinder Gill, CEO of CME Group. (subscription required) (10/20) 
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Regulatory Roundup
Collection of FTT expected to cost millions
Ten countries in the EU are looking to add a financial-transactions tax to bonds, stocks and derivatives transactions, but collection costs in Germany alone could hit €8 million due to high trading volume. Costs could range significantly, according to an EU document, with Slovenia estimating €1.5 million to €2 million and Austria estimating implementation costs at less than €1 million.
Reuters (10/19) 
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Industry debates Libor-Sonia swaps payment date
The Bank of England's proposed changes to the Sterling Overnight Index Average are getting mixed reviews from market participants regarding the payment date of floating legs of London Interbank Offered Rate-Sonia swaps. (subscription required) (10/20) 
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Sprecher: Brexit could force MiFID II changes
Europe's revised Markets in Financial Instruments Directive is "a terrible piece of legislation" and Brexit could prompt changes, Intercontinental Exchange CEO Jeff Sprecher said at a conference. "My advice to the UK is that if they adopt logical [Group of 20] financial-services regulation and have a low-tax environment, people like me -- in fact, all of us on the stage -- we will find a way to do business there," Sprecher said.
The Wall Street Journal (tiered subscription model) (10/19),  Futures & Options World (subscription required) (10/19) 
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Commentary: Hard Brexit likely means more regulations
A hard Brexit, which would mean that the UK gives up its access to the EU's single market, would make regulations more critical than ever for trade, writes Alan Beattie.
Financial Times (tiered subscription model) (10/18) 
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