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March 20, 2012
FIA SmartBrief Special Report
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News from the Marketplace 
Farewell from Boca 2012
This year's international futures conference was one of the most heavily attended ever, with more than 1,000 delegates from more than 30 countries participating in three days of discussions on a wide range of topics related to the trading and clearing of derivatives. Experts from exchanges, brokerage firms and official circles exchanged views on ways to strengthen customer protections, implement OTC clearing, and improve market quality. The FIA thanks all of the delegates and sponsoring organizations for their support in making this year's conference such a success, and we look forward to seeing you at other FIA events in the coming months. Please find below a sampling of the news reports filed from Boca 2012.
Regulatory Roundup 
  • Futures-exchange execs discuss need for changes after MF Global
    Executives at some of the largest futures exchanges in the world acknowledged that changes are needed following the collapse of MF Global. Although they defended the basic structure of the system, they are striving to improve methods for protecting customers of futures markets in different jurisdictions. "We need to stick with the segregation-type system and look for ways to make it more effective," said Craig Donohue, chief executive at CME Group. Fox Business/Dow Jones Newswires (3/14) LinkedInFacebookTwitterEmail this Story
  • CFTC takes aim at high-frequency-trading firms, Gensler says
    Gary Gensler, chairman of the Commodity Futures Trading Commission, says the agency plans to expand its daily monitoring of the futures and commodities market with a focus on high-frequency traders. The increased scrutiny was welcomed by some high-speed-trading firms. "We all depend on having market integrity," said Richard Gorelick, CEO of RGM Advisors. "We all need to know that the rules are fair and that they're enforced accordingly." The Wall Street Journal (tiered subscription model) (3/15) LinkedInFacebookTwitterEmail this Story
The Leader in OTC IRS Clearing
SwapClear is LCH.Clearnet's global clearing service for interest rate swaps. We have over 12 years' experience, unparalleled risk management and more clearable IRS products than any other clearing house. No wonder Risk Magazine named LCH.Clearnet Limited Clearing House of the Year. swapclear.com.
Quotable Expo 
  • Seen and heard at Boca 2012
    Boca 2012 was full of lively panel discussions and interaction with industry executives. The following is a sampling of what some industry leaders had to say:

    ICE CEO Jeffrey Sprecher on what went right with MF Global: "All of us took action immediately to move, liquidate and manage customer collateral. There was no systemic risk. In fact, the markets didn't really move. ... The MF Global case actually validates the movement of OTC business into clearinghouses."

    HKEx CEO Charles Li on the evolution of the Chinese market: "The risk for many years for all of us trying to tap into the big, last market in the world -- China -- [was] China moves too slow. I think today, the overall risk is China moves too fast."

    CFTC member Bart Chilton on high-frequency trading: "I think the [high-frequency trading] cheetahs are not only fascinating and remarkable, but have an important role to play in our markets. I just think we haven't done enough as regulators to ensure that we are keeping an eye on what is going on with technology and with cheetahs."

    CBOE Chairman and CEO William Brodsky on the launch of the "VIX of VIX": "This is a natural consequence of the evolution of a good idea that continues to evolve over time. ... These are not just theories. These are not just numbers. These are real things that people are looking at."

    Tradeweb CEO Lee Olesky on market transparency: "There is a need to limit transparency on certain size transactions, otherwise the transaction won't occur because the market can't support it. There's an element of balancing out transparency for the purposes of attracting participants and encouraging liquidity. But then on the other side, if you go too far with too much disclosure, there's no market in the world that can function with complete transparency." LinkedInFacebookTwitterEmail this Story
Regulatory News from Expo 2013 
  • Market participants don't expect overhaul of Dodd-Frank
    Participants in U.S. finance markets say the Dodd-Frank Act is likely here to stay and a major overhaul is unlikely, even if Republicans sweep the November election. "If the Republicans controlled everything, I think they would be very hesitant to just gut the whole thing," said Donald Wilson Jr., CEO of DRW Trading Group. "Maybe you'd see some changes in some of the details of things, but my sense is that the gist of stuff will go forward as planned." Reuters (3/15) LinkedInFacebookTwitterEmail this Story
  • Swaps industry raises idea of changing bankruptcy laws
    Executives in the derivatives industry and representatives from the Commodity Futures Trading Commission discussed the idea of changing the bankruptcy code to protect a failed brokerage's clients. "Why don't we actually look at the code if that's what we want to do?," said Dan Maguire of LCH.Clearnet Group's SwapClear service. "I know it's a very big topic -- act of God, act of Congress." Bloomberg Businessweek (3/15) LinkedInFacebookTwitterEmail this Story
  • Clearing rules put brokerages on a dangerous path, insider says
    Gary DeWaal, general counsel at Newedge USA, says new rules to require derivatives trades to be processed through clearinghouses are a threat to the industry. "We are making concessions that will undercut the system and that's a very dangerous path," said DeWaal, a special adviser to the Futures Industry Association. "To a certain extent, as [a futures commissions merchant], we're insuring moral hazard." Bloomberg (3/13) LinkedInFacebookTwitterEmail this Story
  • Other News
Industry Headlines from Expo 2013 
  • CME chief Donohue to step down at end of 2012
    Craig Donohue, chief executive at CME Group since 2004, has decided to step down when his contract expires at the end of the year. Donohue said the decision was one he'd been thinking about for some time and that the collapse of MF Global wasn't a factor. "These are just two things that coincide, but they're not related to each other. I can't control the timing of that," he said. Bloomberg (3/13) , Financial Times (tiered subscription model) (3/12) , Reuters (3/12) LinkedInFacebookTwitterEmail this Story
  • ICE's Sprecher says exchange tie-up failures reflect market's will
    Jeff Sprecher, CEO at IntercontinentalExchange, said the failure of proposed exchange mergers shows that market participants aren't convinced of the benefits of such deals. "There are a lot of constituents who have a seat at the table," Sprecher said at FIA's annual conference. "Antitrust regulators and authorities listen to the market, trying to as best they can reflect the will of the marketplace, and it's incumbent upon us not to leave out that constituency." Fox Business/Dow Jones Newswires (3/14) LinkedInFacebookTwitterEmail this Story
  • SwapClear's Maguire discusses customer protection, new products
    Dan Maguire, the head of SwapClear U.S., played a key role in the firm's handling of the Lehman Bros. bankruptcy. On the heels of the MF Global collapse, Maguire offers his view on customer protection, and also discusses new products in the marketplace and offers insight into SwapClear's recent union with NYSE Euronext, New York Portfolio Clearing and Depository Trust and Clearing to expand "one-pot" cross-margining. SmartBrief/SmartBlog on Finance (3/20) LinkedInFacebookTwitterEmail this Story
  • Other News
More Resources 
  • FIA PTG and FIA EPTA issue recommendations for Software Development and Change Management
    The FIA Principal Traders Group and the FIA European Principal Traders Association on March 14 issued a set of recommendations to assist trading firms in establishing internal procedures, processes and controls for the development, testing and deployment of trading software. These best practices were developed by representatives from a dozen FIA PTG and FIA EPTA member firms and are the latest in a series of best practices recommendations developed by FIA members for trading firms, brokers and exchanges. Download the recommendations (10MB). LinkedInFacebookTwitterEmail this Story
  • FIA issues Order Handling Recommendations for Executing Brokers
    The Futures Industry Association on March 14 issued a set of recommendations to help executing brokers manage the risks when handling customer orders generated by automated trading systems. The recommendations were developed by experts from executing firms and represent the latest in a series of recommendations developed by FIA members for trading firms, brokers and exchanges. Download the recommendations (16MB). LinkedInFacebookTwitterEmail this Story
  • FIA elects directors and officers
    The Futures Industry Association elected a new slate of directors at its annual meeting in Boca Raton, Fla. Seventeen directors were elected in total at this meeting, including eight regular member directors for two-year terms; four regular member directors for one-year terms; and five associate member directors for two-year terms. Following the election, the new board elected the association's officers and public directors. Read the FIA news release. LinkedInFacebookTwitterEmail this Story
Upcoming Events 
Register now to attend these critical industry events in 2012
L&C 2012 -- 34th Annual Law & Compliance Division Conference on the Regulation of Futures, Derivatives and OTC Products
May 9 to 11
Baltimore

NY Expo
May 17
New York Marriott Marquis

IDX 2012: 5th Annual FIA/FOA International Derivatives Expo
June 26 and 27
The Brewery, London

FIA/IFM Turkish Derivatives Conference
Oct. 1 and 2
Swissôtel | The Bosphorus, Istanbul

FIA Expo 2012 -- 28th Annual Futures & Options Expo
Oct. 30 to Nov. 1
Hilton Chicago

8th Annual FIA Asia Derivatives Conference
Nov. 28 to 30
St. Regis Singapore
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