The International Swaps and Derivatives Association (ISDA) has announced the launch of the latest version of the Standard Initial Margin Model (SIMM), which incorporates a number of enhancements to further develop the methodology.
The ISDA SIMM is a common methodology for calculating initial margin requirements on non-cleared derivatives, and launched in September 2016 in response to new margin rules. An industry governance committee monitors and assesses the model and oversees the process of updates and recalibrations. As part of this process, the governance committee conducts an annual recalibration of the ISDA SIMM parameters and an annual methodology review to consider recommendations from users of the model.
Liquidnet has published the high level findings of a recent survey of asset management firms that probed their views of best execution requirements under MiFID II.
The study finds that just 6% of those surveyed believed they are currently ready to meet best execution requirements, and 61% of respondents recognised their need to provide more granular detail to their policies, with a third planning to make changes to trading workflow. In addition, over a quarter are specifically investing in technology to ensure a more systematic approach to best execution.
The derivatives industry can breathe a sigh of relief regarding new variation margin (VM) requirements, as it now looks like majority of market participants will be ready for them, according to the International Swaps and Derivatives Association (ISDA).
In a posting on the ISDA website, the association’s CEO, Scott O’Malia, notes that as recently as six months ago “the industry was facing the possibility of real disruption”.
“With the variation margin ‘big bang’ set for implementation on March 1, but with only a fraction of the necessary changes to documentation completed, there was a very material risk that a large part of the market wouldn’t be able to trade,” he comments.
The US Commodity Futures Trading Commission (CFTC) today issued an order filing and settling charges against The Bank of Tokyo-Mitsubishi UFJ (BTMU) for engaging in multiple acts of spoofing in a variety of futures contracts.
Specifically, the CFTC finds that BTMU was responsible for spoofing contracts traded on the Chicago Mercantile Exchange (CME) and the Chicago Board of Trade (CBOT), including futures contracts based on United States treasury notes and eurodollars.
BTMU is now required to pay a $600,000 civil monetary penalty and to cease and desist from violating the Commodity Exchange Act’s prohibition against spoofing. The CFTC became aware of the conduct through BTMU’s voluntary self-reporting of the wrongdoing.
NEX Optimisation has enhanced its existing messaging services to help clients prepare for the introduction of MiFID II on 3 January 2018.
The firm says it has extended Traiana’s Harmony messaging network to enable participants to exchange additional information to assist with meeting a number of regulatory obligations under MiFID II.
This includes support for data elements associated with transparency, transaction reporting, venue execution, instrument and entity identifiers, timestamps, OTC post-trade indicators and unbundling of research as well as execution fees.
Although much is said about the rising cost of regulation in financial markets, there have been few attempts to empirically demonstrate the impact.
A new Staff Working Paper published by the Bank of England, entitled Dealer intermediation, market liquidity and the impact of regulatory reform, and written by Yuliya Baranova, Zijun Liu and Tamarah Shakir, seeks to assess the impact and finds that while the cost of regulation is higher in stable market conditions, in periods of stress benefits accrue.
The US Commodity Futures Trading Commission (CFTC) says it is to launch a “comprehensive review” of its swap data reporting regulations.
CFTC says it will focus on changes to the existing regulations and guidance with two goals at the forefront: ensuring that it receives accurate, complete, and high quality data on swaps transactions for its regulatory oversight role; and to streamline reporting, reduce messages that must be reported. It also says it wants to “right-size the number of data elements that are reported to meet the agency’s priority use-cases for swaps data”.
The Financial Stability Board (FSB) has published a progress report for G20 leaders on its work plan to reduce misconduct in the financial sector.
The work plan was established in May 2015 following what the FSB terms “significant and widespread incidents of misconduct in recent years, and given the potential of misconduct to harm institutions and customers and impair trust in the financial system”.
The latest report details the recent actions taken and recommended by the FSB and the standard-setting bodies.
The Basel Committee on Banking Supervision (BCBS) has published a report for the G20 leaders at their Summit in Hamburg on 7-8 July updating the leaders on the implementation of Basel III regulatory reforms since the Committee's last progress report in August 2016.
Overall, the report finds that further progress has been made in implementing Basel III standards. “The implementation of capital and liquidity standards has generally been timely and consistent, and banks continue to build higher and better capital and liquidity buffers,” BCBS says.
Following an announcement from the European Securities and Markets Authority (ESMA) that it is considering exercising its product intervention powers to address its concerns over the use of contracts for difference (CFD), rolling spot FX and binary options contracts by retail traders, the UK’s Financial Conduct Authority (FCA) says it will delay its own rules on the products.
In a statement, ESMA says it has been concerned about the provision of speculative products such as CFDs, rolling spot FX and binary options to retail investors for a “considerable period of time” and has conducted ongoing monitoring and supervisory convergence work in this area.