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Articles tagged by Regulation

Post-Brexit Uncertainty Dominates Markets Continued market uncertainty following the UK’s vote to leave the European Union vote has led to a flight to safe haven currencies and raised questions about the future of financial regulation, although corporates appear to be coping well with ...
Abide, Corvil Partner for Transaction Reporting Regulatory reporting firm Abide Financial and real-time data analytics company Corvil are launching a partnership to deliver end-to-end transaction reporting and reconciliation solutions. The joint effort offers market participants a “complete solution from collection of trade transaction data, normalisation and ...
Thomson Reuters and CME to Integrate Messaging Networks Thomson Reuters and CME Group will connect their instant messaging networks, allowing more than 300,000 market participants to communicate across their platforms. From late Q3 2016 users of Thomson Reuters’ Eikon Messenger and CME’s Pivot Instant Messaging will be able to ...
Shift to Reformed Euribor Expected in H1 2017, FSB Says Implementation of a reformed Euro Interbank Offered Rate (Euribor) is expected to happen in the first half of 2017, according to the Financial Stability Board (FSB). The FSB – which groups G20 financial authorities - has published an update on the process ...
FEMR Implementation Report Sees “Significant Progress” The past year has seen “significant progress” in the implementation of the Fair and Effective Markets Review (FEMR) recommendations; however, “the job is far from being done” as a “lack of trust in financial markets” remains and the focus is ...
UK Financial Regulation Faces Post-Brexit Equivalence Dilemma Financial regulations, particularly for benchmarks, are likely to be materially aligned in the UK and rest of Europe by the time Brexit is completed, however obtaining “equivalence” status for the UK might not be quite as straightforward, a number of ...
CFTC Report Provides Little Clarity on Swaps Rules The Commodity Futures Trading Commission (CFTC) has issued its final report on the de minimis threshold for swap dealer registration, yet it remains unclear whether the Commission will make changes to this threshold. The current de minimis threshold for swap ...
US Court Dismisses Fraud Claims Against FXCM A US court has granted a motion to dismiss the legal complaints aimed at FXCM, and certain members of its senior staff, in which the plaintiff alleged that they were mislead about the risks associated with the firms’ agency business ...
Basel Committee Highlights Implementation Progress The Basel Committee on Banking Supervision has issued a report stating that overall progress is being made in introducing the Basel III requirements, although it notes that some jurisdictions are facing “challenges” to meet implementation deadlines. In its seventh report ...
FSB: G20 Reform Progress “Steady But Uneven” The Financial Stability Board’s (FSB) second annual report on the Implementation and Effects of the G20 Financial Regulatory Reforms, in which it concludes that implementation progress “remains steady but uneven”.
And Another Thing... I have a lot of respect for the Federal Reserve and the people that work there, but I have to ask: is it just another example of a dysfunctional regulatory framework?
CFTC Approves System Safeguards, Japanese Swaps Rules The US Commodity Futures Trading Commission (CFTC) has approved two final rules for system safeguards testing requirements, as well as a comparability determination for Japan’s margin requirements for uncleared swaps. By a unanimous vote, CFTC Commissioners approved final rules for system safeguards testing requirements for designated contract markets, swap execution facilities, swap data repositories, and derivatives clearing organisations. “Cybersecurity is a top concern for American companies, especially financial firms. These rules are a good step forward in addressing these concerns,” said Commissioner Sharon Bowen in a statement today.
ISDA Calls for Infrastructure Standardisation The International Swaps and Derivatives Association (ISDA) has published a whitepaper calling for greater standardisation and automation of derivatives market infrastructures. The new paper, The Future of Derivatives Processing and Market Infrastructure, highlights a number of challenges with existing structures and processes, and recommends several steps the derivatives industry can take to create efficiencies – in particular, by embracing opportunities for further standardisation. "The derivatives industry has become reliant on legacy infrastructures and processes that have been layered on top of each other over time. That might be the result of historical acquisitions, where the respective systems haven't been fully integrated. More recently, the sheer pace of regulatory change has meant firms have been under pressure to tackle the next pressing deadline. The result is a derivatives infrastructure that is duplicative and based on incompatible operating standards, and this isn't sustainable," says Scott O'Malia, CEO of ISDA.
An Incomplete Picture: Spotting the Spoofer in FX The incarceration of a trader convicted of spoofing has heightened awareness of the practice, but how hard is it to spot and how prevalent is it in FX? Colin Lambert investigates. “You have to be pretty desperate to resort to spoofing markets – especially on exchanges where it’s nigh on impossible to shield your activities,” argues a senior electronic trader in London. “Even in OTC markets it’s not easy to get away with given the MIS capabilities of firms today.”
FX Trader Arrest: Do Not Pass Go, Do Not Collect $8m Two UK-based FX traders have been charged with wire fraud by the US Department of Justice, one of which has been arrested in New York. Galen Stops reports on the case. On July 19, Mark Johnson, the head of global FX cash trading at HSBC, was arrested at New York’s JFK airport in connection with an ongoing investigation by the US Department of Justice (DoJ) into currency rigging. Two days later, the DoJ officially brought charges against Johnson and Stuart Scott, former head of FX cash trading for EMEA at HSBC, for wire fraud.
CFTC Drops Deutsche Bank FX Investigation The US Commodity Futures Trading Commission (CFTC) has closed its investigation into Deutsche Bank’s FX business, the bank revealed in its Q3 results today. In May 2015, a number of major banks were fined more than $5.8 billion for practices relating to alleged collusion and manipulation of the spot FX market around the 4pm London Fix, by a number of regulatory authorities, including the CFTC. Deutsche was not one of the firms named in those settlements, but remained under investigation by the CFTC for its FX market practices.
OTC Reform Pre-empts Expected Exchange Invasion Data from the Bank for International Settlements show financial reform has not led to a greater proportion of derivatives trading on exchanges. Colin Lambert finds out why. As the world’s regulators, led by a very aggressive Gary Gensler-led Commodity Futures Trading Commission (CFTC), sought to reform financial markets post-global financial crisis, the outcome seemed at the time to be the inevitable growth of trading on exchanges. “The world is moving to Chicago” was used as an analogy to express this sentiment – that city being closely associated with the exchange model of course.
Will Trump Fight the US Treasury Over Currency Manipulation Claims? Donald Trump’s position on the currency manipulation provisions in US trade deals could lead him into direct conflict with US Treasury once he assumes the presidency, according Dick Cunningham, a senior international trade partner at Steptoe & Johnson’s Washington office. Speaking on a webinar examining some of the implications of this week’s US presidential election, Cunningham noted that Trump has vowed to kill the proposed Transatlantic Trade and Investment Partnership (TTIP). One reason why Trump has criticised the TTIP in the past, said Cunningham, was because although it contains a currency manipulation provision, the provision is not enforceable.
Why FX Needs a Unique Regulatory Approach Matt Kulkin, a partner at Steptoe and Johnson, explains to Profit & Loss deputy editor, Galen Stops, why a “copy and paste” approach to regulation won’t work for FX. FX is often referred to as an “unregulated” or “self-regulated” market, and yet in recent years bans have been fined billions of dollars by regulators for alleged infractions in this market, while criminal charges are being brought against FX traders in the US courts. Kulkin explains this disparity by pointing out that the entities involved this market are regulated and therefore subject to oversight by a various national authorities. However, unlike the securities markets or the OTC derivatives markets, there aren’t concrete regulations regarding the market place, he says.
FX Regulation: What Traders Need to Know As 2016 comes to a close the regulatory agenda shows no signs of slowing. While the FX market itself has largely not been directly addressed by new regulations, it has been swept up in many of the broader OTC market reforms. March 1 will mark the implementation of the variation margin requirements for non-cleared derivatives, meaning that thousands of counterparties – including asset managers, pension funds, insurance companies and hedge funds – will need to change their existing collateral support agreements, or set up new ones, before this date.
Is Regulation Causing Flash Crashes? New regulations imposed on banks since the financial crisis could be contributing to “flash crashes”, according to Christopher Giancarlo, a Commissioner at the Commodity Futures Trading Commission (CFTC). Speaking at ISDA’s Trade Execution Legal Forum, Giancarlo said that when the British pound suddenly dropped 6% against the US dollar in October, this flash crash was exacerbated by a lack of market liquidity. He continued: “In fact, there have been at least 12 major flash crashes since the passage of the Dodd-Frank Act. The growing incidence of these events shakes confidence in world financial markets.
FX Industry to Face Deadline Challenges in 2017 FX market participants face numerous challenges next year in adhering to regulatory deadlines, according to experts on a recent Profit & Loss webinar. One of the more immediate regulatory deadlines that firms are currently preparing for is on March 1, 2017, when the new variation margin requirements for non-cleared derivatives come into force. But as Gabriel Rosenberg, a partner at Davis Polk pointed out, there are a number of factors within these requirements that are making them difficult for firms to comply with, even in instances where they are already exchanging variation margin with their counterparties.
Massad Officially Resigns as CFTC Chair Timothy Massad has tendered his resignation as Chairman of the US Commodity Trading Commission (CFTC) to President Barack Obama, effective on January 20, 2017. “For the past two-and-a-half years, I’ve had the privilege of working alongside the very talented CFTC staff, and I thank them for their dedication on behalf of the American people. I also want to express my appreciation to my fellow Commissioners, Sharon Bowen and Chris Giancarlo, for the constructive and collaborative engagement we have had throughout my tenure. I am also very grateful to President Obama for giving me the opportunity to lead this important agency,” said Massad in a statement issued today.
Heads Will Roll: First Individual Pleads Guilty to FX Manipulation Jason Katz, who formerly worked as an FX dealer at Standard Bank, Barclays, BNP Paribas and ANZ, has become the first individual to plead guilty to participating in a price-fixing conspiracy in the FX market, the US Department of Justice (DoJ) announced today. According to the relevant court documents, Katz was a dealer of Central and Eastern European, Middle Eastern and African (CEEMEA) currencies on the New York FX desks of three successive financial institutions, and from approximately January 2007 until July 2013, he conspired with FX dealers at competing institutions to “suppress and eliminate competition” by fixing prices in CEEMEA currencies, in violation of US law, according to the DoJ.
Former MF Global CEO Handed $5m Fine Former MF Global CEO, Jon Corzine, has been fined $5 million and banned from working as a Futures Commission Merchant (FCM). The US Commodity Futures Trading Commission (CFTC) announced today that it has obtained a federal court consent order against Corzine requiring him to pay a $5 million civil monetary penalty for his role in MF Global’s unlawful use of customer funds totaling nearly $1 billion and for his failure to diligently supervise the handling of customer funds. Under the terms of the order, Corzine cannot seek or accept, directly or indirectly, reimbursement or indemnification from any insurance policy with regard to the penalty amount.