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February 1, 2013

Top Stories

Proponents of swaps, futures disagree at CFTC hearing
Commodity traders faced off with swaps brokers at a Commodity Futures Trading Commission hearing on whether new rules for swaps unfairly favor one group over the other. CFTC Chairman Gary Gensler downplayed the disagreement. "Approximately eight-ninths of the derivatives marketplace [is] swaps, and until recently was unregulated. Now we bring regulation to both sides, is it not just natural there might be some realignment?" Gensler said. Reuters (1/31), Financial Times (tiered subscription model) (1/31), Bloomberg Businessweek (1/31)

Judge approves MF Global deal to repay customers
A deal to repay many MF Global customers 93% of their lost money has won court approval. The deal means that the former clients in the U.S. and U.K. will not have to fight a court battle over the remaining money. Reuters (1/31), Bloomberg (1/31), The New York Times (tiered subscription model)/DealBook blog (1/31)

Regulatory Roundup

CFTC's O'Malia suggests SEF rules are near
Rules for swap-execution facilities could be set by the middle of February, Scott O'Malia of the Commodity Futures Trading Commission says. O'Malia says the CFTC has struggled to interpret some language in the Dodd-Frank Act, leading to delays. Risk.net (subscription required) (1/31)

Editorial: A Libor settlement would be better for everyone
Banks accused of manipulating the London Interbank Offered Rate should settle civil lawsuits instead of fighting them in court, Bloomberg's editorial board argues. Settling will be cheaper in the long run and improve their public perception, the board writes. Bloomberg (1/31)

Barnier warns against blocking OTC derivatives rules
EU Internal Market Commissioner Michel Barnier has written European Parliament members to urge them not to block over-the-counter derivatives rules. Lawmakers have said they are hesitant to adopt such rules, saying they could hurt businesses. Barnier says rejecting the rules could harm the EU's credibility and competitiveness. Bloomberg Businessweek (1/31)

NFA execs keep jobs but lose bonuses after Peregrine
The National Futures Association has elected to retain its top four executives following the revelation that they failed to detect fraud at Peregrine Financial Group, but it announced that those executives will not get a bonus for 2012. The NFA said it plans to improve the way it supervises futures industry firms. An independent investigator made several recommendations to the NFA, including updating its auditing activities and overhauling its training and hiring practices for auditors. Reuters (1/31), Crain's Chicago Business (1/31), The Wall Street Journal/Dow Jones Newswires (1/31)

Industry Developments

Insurers consider shifting to swap futures
Insurers are considering swap futures as a way to keep hedging expenses in check, but experts are unsure about whether swap futures can provide insurers with the match they need for long-dated liabilities. Risk.net (subscription required) (1/31)

Wasendorf's sentence: 50 years, $215.5M in restitution
U.S. District Judge Linda Reade sentenced Russell Wasendorf Sr., founder and former CEO of Peregrine Financial Group, to 50 years in prison for stealing hundreds of millions of dollars from clients. The sentence is the maximum allowed by law. Wasendorf was also ordered to pay $215.5 million in restitution. Reuters (1/31), The Des Moines Register (Iowa) (tiered subscription model)/Finance & Insurance blog (1/31), Financial Times (tiered subscription model) (1/31)

Electronic Trading News

Some are unnerved by electronic-trading part of swaps rules
There is concern that moving swaps from bilateral voice transactions to instant, electronic multiple platforms could dry up liquidity, consultants at Sapient Global Markets say. In addition, there is some worry that switching to electronic exchanges could increase execution costs. AdvancedTrading.com (1/31)

New data center is part of HKEx's tech upgrade
South China Morning Post (Hong Kong) (free registration) (2/1)

Commodities and Managed Futures

Deutsche Bank defends return to agricultural commodities
Studies that show that commodities products don't affect the underlying cost of food staples are behind Deutsche Bank's decision to continue to offer agricultural commodities products, co-CEO Juergen Fitschen says. The Wall Street Journal/The Source blog (1/31)

SmartQuote

Never confuse a single defeat with a final defeat."

--F. Scott Fitzgerald,
American writer

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