Eurex clearing service targets U.K. customers | Confirmation system helps prevent fraud, NFA chairman says | U.S. bill would let banks delve deeper into swaps
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March 7, 2013
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CFTC approves CME swaps-data routing despite opposition
The Commodity Futures Trading Commission voted 4-0 to allow CME Group to have swaps information routed to its own database. Many banks and the Depository Trust and Clearing protested the CFTC's decision. DTCC, which said 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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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), AutomatedTrader.net (3/6)
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Regulatory Roundup
Confirmation system helps prevent fraud, NFA chairman says
Chris Hehmeyer, chairman of the National Futures Association and chief executive officer at HTG Capital Partners, explains how an electronic bank account confirmation system will help prevent fraud similar to that uncovered at Peregrine Financial Group. The system reconciles the amount of client funds that futures commission merchants report with the amount banks say the FCMs have. MarketsWiki.tv (3/5)
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U.S. bill would let banks delve deeper into swaps
Legislators in the U.S. Senate and House have introduced a bill repealing the "push-out" section in the Dodd-Frank Act that limited 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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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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Chinese regulator expands RQFII program
The China Securities Regulatory Commission is letting more financial institutions participate in the Renminbi Qualified Foreign Institutional Investor program. Under amended rules, Hong Kong divisions of Chinese insurers and banks, as well as Hong Kong-based financial institutions, are allowed to participate. Also, participants can invest in stock-index futures, in addition to bonds and equities. Bloomberg (3/7), The Wall Street Journal/Dow Jones Newswires (3/6)
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Industry Developments
Citadel Securities consolidates teams, cuts jobs
Katie Spring, a spokeswoman for Citadel Securities, confirmed that the company is cutting as many as 30 jobs. Matt Cushman, a senior managing director, is among those who lost their positions. The job losses come as Citadel consolidates teams tied to the firm's computerized trading operations, a source said. Bloomberg (3/6), Reuters (3/6), Financial Times (tiered subscription model) (3/6)
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Many firms interested in building Consolidated Audit Trail
Nasdaq OMX, the NYSE Technologies division of NYSE Euronext, BATS Global Markets, Google and International Business Machines are among the 31 firms that have said they expect to submit bids to set up and run the Consolidated Audit Trail, or CAT, a comprehensive way to monitor options and equity trading. However, four of the potential bidders are also participating in the selection of 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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Commodities and Managed Futures
Energy firms says FTT could raise their hedging costs
Energy companies say Europe's financial-transaction tax will increase their hedging costs and could drive them toward less transparent bilateral deals instead of the counterparties regulators want them to use. Risk.net (subscription required) (3/6)
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SmartQuote
Scientific progress makes moral progress a necessity; for if man's power is increased, the checks that restrain him from abusing it must be strengthened."
-- Anne Louise Germaine de Staël,
Swiss author
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