CFTC moves toward digital transformation | Disputes arise over IFRS 9 risk modeling | Deutsche Boerse CEO says M&A no longer focus
May 18, 2017
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CFTC moves toward digital transformation
The Commodity Futures Trading Commission has launched LabCFTC, a financial-technology initiative aimed at upgrading regulation of the US futures and swaps markets in the digital age, as well as better engaging with the fintech sector without impeding innovation. "LabCFTC is intended to help us bridge the gap from where we are today to where we need to be: 21st-century regulation for today's digital markets," said acting CFTC Chairman J. Christopher Giancarlo.
Reuters (5/17),  CoinDesk (UK) (5/17),  Futures & Options World (subscription required) (5/17),  The Wall Street Journal (tiered subscription model) (5/17) 
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Disputes arise over IFRS 9 risk modeling
Some risk managers and bank accounting departments are reportedly at odds over how to build credit models to comply with International Financial Reporting Standard 9. Some banks have chosen to develop entirely new versions not based on existing Basel III internal ratings-based capital models.
Risk (subscription required) (5/18) 
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Industry News and Trends
Deutsche Boerse CEO says M&A no longer focus
Deutsche Boerse CEO Carsten Kengeter said at the company's annual general meeting he has focused on foreign exchange, energy, raw materials and other commodity trading, rather than big mergers, since the failed London Stock Exchange Group merger. "But that does not mean acquisitions, partnerships and investments are no longer possible," he said.
Reuters (5/17) 
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Europe turns more positive on blockchain, bitcoin
European lawmakers' attitudes on emerging financial technologies such as blockchain and bitcoin are thought to be growing more supportive, moving away from their formerly suspicious view. The changing mood is reflected in a blockchain seminar last week at the European Parliament headquarters in Brussels, which was reportedly positive in its tone, and a European Commission plan to launch a blockchain observatory.
Finance Magnates (5/17),  Politico Pro (subscription required) (5/17) 
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AI catching on with Japan's financial industry
Japanese brokerages are embracing artificial-intelligence-based technologies as a way to make better use of manpower and improve back-office operations. Japan Exchange Group's regulatory arm is also using AI to better track high-frequency trading transactions to stem market manipulation.
Nikkei Asian Review (Japan) (tiered subscription model) (5/18) 
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Regulatory Roundup
CFTC proposal could aid compliance chiefs
The Commodity Futures Trading Commission might modify rules to harmonize with the Securities and Exchange Commission, a move that could make life easier for chief compliance officers. "While there isn't too much to these particular proposed amendments, hopefully this represents an initial installment for the guidance from the CFTC which CCOs have long been waiting for," said Tim Selby of law firm Alston & Bird.
Bloomberg Professional Services (5/16) 
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Basel G-SIB adjustment could cost some banks
A proposed adjustment to the Basel Committee on Banking Supervision's assessment methodology for global systemically important banks, which would remove a substitutability cap of 500 basis points, could increase capital requirements for banks with large asset-custodian businesses.
Risk (subscription required) (5/17) 
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FINRA sees drop in "layering" alerts
The Financial Industry Regulatory Authority has seen 68% fewer alerts for "layering" since issuance of report cards started last year to rate bad behavior by brokers, CEO Robert Cook says. "It's demonstrating to us that giving people information early can have potentially helpful effect for the markets," he said.
The Wall Street Journal (tiered subscription model) (5/17) 
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ISDA News and Events
An Evening with Industry Experts and Public Authorities: What does MiFID II Mean for Commodity Market Participants? -- June 14 in London
An Evening with Industry Experts and Public Authorities: What does MiFID II Mean for Commodity Market Participants? -- June 14 in London
Six months ahead of the full application of MiFID II, ISDA is pleased to host an event that allows a discussion between the industry and high-level officials from the European Commission, the European Parliament, ESMA and national regulators on the implementation of this entirely new European regime. REGISTER: An Evening with Industry Experts and Public Authorities: What does MiFID II Mean for Commodity Market Participants? -- June 14 in London
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