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February 6, 2013

Top Stories

U.S. banks push for increased clearinghouse transparency
A group of U.S. banks is urging clearinghouses to divulge how they'll invest the margins that banks will have to put up under rules for over-the-counter derivatives and how they'll protect their members from defaults. "The ultimate goal is that clearing member banks will not only have the tools and data necessary to better evaluate specific risks that they face, but that in so doing all market participants will better understand the unique and critically important role played by" clearinghouses, according to a report from the group. Reuters (2/5), Bloomberg (2/5), Financial Times (tiered subscription model) (2/5), The Wall Street Journal/Real Time Economics blog (2/5)

Derivatives clearing has unintended consequences, ISDA warns
Regulators' plans to make derivatives markets safer by centralizing clearing might create a need for more than $10 trillion in capital, the International Swaps and Derivatives Association says. Financial Times (tiered subscription model) (2/5)

Regulatory Roundup

Lawyer: Republican tax plan would sacrifice ETN benefit
A tax-code change proposed by Rep. Dave Camp, R-Mich., would remove one of the major factors that drive investors into the $17 billion market for exchange-traded notes, says lawyer Daniel Crowley, formerly of the Investment Company Institute. Bloomberg (2/6)

Industry Developments

Euroclear questions efficacy of liquidity forum
Euroclear is questioning the effectiveness of the Liquidity Alliance, a forum of central securities depositories that addresses concerns about the availability of high-quality liquid assets. Participating CSDs are working together to resolve challenges stemming from regulatory changes. Risk.net (subscription required) (2/5)

NYSE Euronext cites a big drop in profit, says ICE deal is on track
NYSE Euronext says weak trading drove its fourth-quarter profit down 75%, but its takeover by IntercontinentalExchange is still on track to be completed in the second half of the year. "We are focused on building momentum in our business prior to closing the deal with ICE," CEO Duncan Niederauer said. Fox Business (2/5), Reuters (2/5)

CME Group reports lower profits, but CEO cites bright future
CME Group says its fourth-quarter net income sank to $167 million, down from $745.9 million a year earlier, and that its expenses are likely to hit $1.25 billion in 2013 as it works to restore investor confidence in the industry. CME chief executive Phupinder Gill, however, said he's optimistic because of the futurization of swaps plus rules demanding central clearing of contracts -- all of which could benefit CME. Reuters (2/5), Reuters (2/5), The Wall Street Journal/Dow Jones Newswires (2/5), Financial Times (tiered subscription model) (2/5)

Japanese bourse eyes international partnership
Japan Exchange Group is open to an international deal, CEO Atsushi Saito says. "Expansion into clearing is a great trend. JPX will look to capitalize and offer trading through clearing and settlement, and develop our service," Saito said. "We can collaborate or assist with our Asian friends on interest-rate-swaps clearing, although each government will look to establish one [clearinghouse] themselves at first." The company hopes to attract interest from CME Group, Deutsche Boerse, BM&FBovespa or Korea Exchange, he said. Bloomberg (2/5), Financial Times (tiered subscription model) (2/5)

Analysis: SGX and LCH.Clearnet are a good match
London and Singapore have similarities, and that makes a deal between the Singapore Exchange and LCH.Clearnet a smart fit, Jeremy Grant writes. Financial Times (tiered subscription model) (2/5)

Electronic Trading News

Complex trading orders get help from electronic tools
The International Securities Exchange was picked to support MEB Options' Spread Crawler, which scans data from six U.S. options exchanges and notifies users when their particular order can be fulfilled. Such complex orders now make up 40% of ISE's volume, officials say. Futures Industry (1/2013)

Commodities and Managed Futures

Analysis: Fewer second chances for big commodities managers
Many managers say they're finding it harder to launch new hedge fund ventures in the commodities space. "Commodities strategies do not seem particularly in demand with hedge fund investors in 2013," says Anurag Bhardwaj of Barclays. The poor performance of the commodities market in recent years means money is moving elsewhere, leaving hedge fund managers to fight over the shrinking pie, Barani Krishnan writes. Reuters (2/4)

SmartQuote

I've learned that people will forget what you said, people will forget what you did, but people will never forget how you made them feel."

--Maya Angelou,
American author and poet

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