Panelists see Sept. cliff-edge for UK CCPs | Analysis: Initial margin jumped in Q1 | Gold up 20% this year nearing 2011 record
July 9, 2020
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The London Metal Exchange says its open-outcry trading floor will remain closed due to COVID-19 social distancing restrictions. "Having fully assessed the updated UK government guidance that came into effect on 4 July, our position remains not to reopen the ring," LME said.
Full Story: Reuters (7/8),  Metal Bulletin (tiered subscription model) (7/8) 
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UK clearinghouses need clarity from EU regulators on equivalence to prevent European firms from facing capital increases, experts told an FIA seminar on cross border clearing and market access. Panelists said that if there is no EU equivalence by September, then UK central counterparties face a "cliff-edge" through the end of the year.
Full Story: MarketVoice (7/9),  Reuters (7/8),  Global Investor (subscription required) (7/8),  Markets Media (7/8) 
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Industry Developments
Data indicates that initial margin requirements in Q1 increased 23% for interest rate swaps, 46% for credit default swaps and 66% for futures and options. The "differences in relative increases between products and clearing services are surprising," writes Clarus Financial Technology CEO Amir Khwaja.
Full Story: Risk (subscription required) (7/8) 
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Gold futures continued to rise this week to more than $1,820 a troy ounce, bringing the price up 20% for the year and heading toward the August 2011 high of $1,891.90. Gold-backed exchange-traded funds have seen a nearly $40 billion inflow during the same period.
Full Story: The Wall Street Journal (tiered subscription model) (7/8),  Financial Times (subscription required) (7/8) 
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Intercontinental Exchange's energy markets were busy during June, with natural gas futures reaching a record 18.9 million lots on June 25. ICE's total energy open interest rose to 32.5 million contracts, a 19% increase over a year ago.
Full Story: Futures & Options World (subscription required) (7/8) 
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Regulation and Enforcement
The Commodity Futures Trading Commission will make establishing comprehensive regulation of digital assets a strategic objective over the next four years. "We will develop a holistic framework to promote responsible innovation in digital assets," the agency's 2020-2024 strategic plan says.
Full Story: Cointelegraph (7/8) 
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Some market participants are pushing for the transparency regime of Europe's revised Markets in Financial Instruments Directive to be improved through amendments when MiFID II is reviewed by the European Securities and Markets Authority. Some firms see a revamp as a way to have more trade data disclosed sooner, while banks say there should be an effort to make current data more usable.
Full Story: Risk (subscription required) (7/9) 
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Experts say that the new leverage ratio computation methodology under the standardized approach to counterparty credit risk could result in leverage ratio exposures from clearing of FX swaps and forwards to be cut by up to 90%. The new system would replace the counterparty credit risk current exposure method.
Full Story: Risk (subscription required) (7/8) 
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With the coronavirus pandemic continuing to disrupt markets and draw attention away from many projects, banks are in doubt about the right way to pursue compliance with the Fundamental Review of the Trading Book, Thomas Helm writes. Some have ordered information technology freezes, bringing work on FRTB compliance to a standstill, but Helm contends this is inadvisable.
Full Story: Practice Insight (7/8) 
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Deutsche Boerse has introduced its online analytics platform, A7, which will give traders access to market data from Eurex and Xetra. Deutsche Boerse head of market data and services Alexandra Hachmeister said the platform "offers market participants nanosecond-precise market data without the burden of their own data warehousing."
Full Story: The Trade (UK) (7/8) 
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FIA News
Join the FIA Law & Compliance Division on July 23 for a discussion of and observations on the trend towards data-driven enforcement investigations by the CFTC. In addition to discussing the data tools that CFTC enforcement is using to enhance their own enforcement program, we will look at the implications for trading firms as they continue to develop and refine recordkeeping, trade surveillance and compliance monitoring capabilities. We will also discuss how the growth of data-driven enforcement means can impact a trading firm that is involved in a trading conduct investigation. Register now!
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