CFTC approves CME swaps-data routing despite opposition | Eurex clearing service targets U.K. customers | Many are interested in building consolidated audit trail
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March 7, 2013
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U.S. legislation would let banks delve deeper into swaps
Legislation has been introduced in Congress to repeal the "push-out" section of the Dodd-Frank Act that limits banks' swaps-trading activity. Under the legislation, opportunities would be opened for banks with federal insurance. This measure is "going to allow [banks] to maintain inventory of the swaps that their customers need to buy from them, just the same way when you go to buy a car from a car dealer," said Rep. Jim Himes, D-Conn. Bloomberg (3/6)
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CFTC approves CME swaps-data routing despite opposition
The Commodity Futures Trading Commission has voted 4-0 to allow CME Group to have swaps information routed to its own database. Many banks and Depository Trust & Clearing have protested the decision. DTCC, which says it might sue, says the outcome "is anti-competitive and compromises regulators and market participants' ability to understand, assess and manage systemic risk effectively." Republican CFTC Commissioner Scott O'Malia abstained from voting. Bloomberg (3/6), Reuters (3/6)
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Industry News and Trends
Eurex clearing service targets U.K. customers
Deutsche Boerse's Eurex is striving to capitalize on regulatory changes by offering a derivatives clearing service focused on customers in Britain. Eurex has created an "omnibus model" designed to comply with U.K. regulations. The new model segregates clients' accounts and complements existing models. Financial Times (tiered subscription model) (3/7), (3/6)
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Many are interested in building consolidated audit trail
Nasdaq OMX Group, NYSE Euronext unit NYSE Technologies, BATS Global Markets, Google and IBM are among 31 companies that expect to submit a bid to set up and run the consolidated audit trail, a comprehensive way to monitor options and equity trading. Separately, four potential bidders are part of a group that will select the winning bid. Reuters (3/6), The Washington Post (3/6)
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NYSE Euronext aims to cut LCH.Clearnet stake, sell MCX holding
NYSE Euronext is selling noncore assets, including a 4.79% holding of Multi Commodity Exchange of India and part of a 9% stake in LCH.Clearnet Group. Chief Financial Officer Michael Geltzeiler says NYSE Euronext is taking steps to increase savings and lower investment costs. The Wall Street Journal (3/6)
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Newedge aims to expand OTC clearing business to Asia
Newedge plans to take its clearing business for over-the-counter interest-rate swaps to Asia, senior executive Ramir Cimafranca says. "We will continue to expand our proven prime-clearing infrastructure and our agency-broker model to service major OTC players in the region," he said. In February, the company cleared an OTC interest-rate swaps trade on the Chicago Mercantile Exchange, becoming the first nontraditional swaps dealer to do so. (subscription required) (3/6)
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Transaction tax could raise hedging costs, energy firms say
Energy companies say Europe's proposed financial-transaction tax would increase hedging costs and could drive them toward less transparent bilateral deals, instead of counterparties, which regulators want them to use. (subscription required) (3/6)
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Regulatory Roundup
Council of the EU moves toward deal on OTFs in MiFID II
Organized trading facilities, part of the revised Markets in Financial Instruments Directive, continue to be a sticking point for policymakers, but the Council of the EU appears to be making progress. The council has reached an agreement on the venue category, saying it should be used for all asset classes, sources say. The Trade News (U.K.) (3/6)
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Officials warn about effects of Europe's transaction tax
Officials tasked with managing the public debt of France and Italy have warned about Europe's proposed tax on financial transactions, saying it could damage the sovereign-bond market. Maria Cannata, who heads Italy's debt agency, says policymakers must consider the "importance of not damaging the government-bond markets." The Telegraph (London) (tiered subscription model) (3/6)
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European banks welcome possible exemption to CVA charge
Officials in Europe are moving toward granting banks a three-pronged exemption to Basel III's capital charge for credit-valuation adjustment, sources say. The exemption would cover trades with sovereigns, pension funds and corporates. However, it could cause a rift between Europe and other jurisdictions, which have gone with a blanket CVA charge. (subscription required) (3/6)
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The saddest aspect of life right now is that science gathers knowledge faster than society gathers wisdom."
-- Isaac Asimov,
Russian-born American author and biochemist
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