Banks aim to capitalize on new derivative-clearing rules | Buy-side firms raise concerns about CDS collateral calls | White's lieutenant a leading candidate to head SEC enforcement
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March 8, 2013
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LSE agrees to revised deal to purchase LCH.Clearnet stake
London Stock Exchange Group has agreed to a €536 million acquisition of a majority stake in trans-Atlantic clearinghouse LCH.Clearnet Group. "We will promote greater innovation, choice and competition in the risk-management industry, especially in listed derivatives," LSE CEO Xavier Rolet said. Nasdaq OMX Group also has increased its stake in LCH.Clearnet, and Nasdaq CEO Robert Greifeld will join the clearinghouse's board. Reuters (3/7), Financial News Online (U.K.) (subscription required) (3/7), Financial Times (tiered subscription model) (3/7), The Wall Street Journal (3/7)
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Banks aim to capitalize on new derivative-clearing rules
Banks are prepared for their gatekeeper role when some derivatives trading clearing becomes mandatory Monday. Many big banks have invested in trading platforms built to help clients handle the new regulations. JPMorgan Chase predicts it will bring in as much as $500 million over the next two to three years from derivatives clearing and related services. Reuters (3/7)
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Regulatory Roundup
Buy-side firms raise concerns about CDS collateral calls
Users of credit default swaps are concerned they might face large collateral calls because regulations by the Securities and Exchange Commission do not allow clearing members to offer CDS cross-margining to customers. Some market participants remain hopeful that the SEC will provide a last-minute reprieve, while others say the agency might offer a compromise. (subscription required) (3/8)
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White's lieutenant a leading candidate to head SEC enforcement
Mary Jo White, President Barack Obama's nominee to head the Securities and Exchange Commission, is expected to be confirmed by the Senate early next week. White's nomination has forced her to address concerns about her work for Wall Street. Now, she is looking at a former colleague, Andrew J. Ceresney, to become the SEC's enforcement chief. The New York Times (tiered subscription model)/Dealbook blog (3/6)
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SEC proposes rules aimed at trading platforms
The Securities and Exchange Commission has been working for more than a year on rules intended to ensure trading platforms are better prepared to handle technology glitches, hurricanes and other issues that might cause market disruptions. On Thursday, the SEC proposed rules that would require certain exchanges, clearing agencies and alternative trading systems to develop procedures to ensure security, resilience, integrity and capacity. Reuters (3/7), The Wall Street Journal (3/7)
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Industry Developments
SGX sees Philippine, Thai futures as revenue boosters
Singapore Exchange President Muthukrishnan Ramaswami said the bourse plans to bolster revenue from derivatives by as much as 15% this year. SGX will launch equity-index futures on Thailand and the Philippines, Ramaswami said. "Singapore has become a good facilitator of derivatives transactions," he said. "It's much easier to transact in Singapore than to go directly into each of these individual markets. Investors find that rules don't change overnight." Bloomberg (3/7)
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NYSE Euronext reportedly fails to find buyer for MCX stake
NYSE Euronext sought to sell its entire 4.79% stake in Multi Commodity Exchange of India at the upper end of a share-price band indicated on its term sheet, a source says. However, the exchange group reportedly was unable to find a buyer at that price. The Wall Street Journal (3/7)
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If attractive target materialized, CME might buy it, CFO says
CME Group's chief financial officer, James Parisi, said Wednesday the exchange would be willing to make a sizable acquisition if the right target emerged, the latest sign that the company may reverse its longstanding lack of interest in a merger. "If a great opportunity were to arise where we can create shareholder value through some type of M&A opportunity, we will certainty take a look at it," Parisi said. Reuters (3/6)
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Commodities and Managed Futures
After LME sale, SGX looks to renegotiate licensing deal
Singapore Exchange will renegotiate a deal to trade London Metal Exchange contracts now that the LME is owned by Hong Kong Exchanges and Clearing, according to SGX president Muthukrishnan Ramaswami. "We have the right to trade it but are we going to trade without due cooperation from Hong Kong? No," Ramaswami said. Bloomberg (3/7)
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Commodity derivatives outpaced others in 2012, WFE says
The World Federation of Exchanges reported Thursday that among derivatives, only commodity options and futures had higher trading volume in 2012. Commodity derivatives traded across the globe increased about 19% for a second straight year, the Paris-based WFE said. The group also reported that global trading activity on futures and options exchanges declined 15% in 2012. Reuters (3/7), The Wall Street Journal/Dow Jones Newswires (3/7)
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Hope never abandons you, you abandon it."
-- George Weinberg,
American psychologist, writer and activist
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