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Articles tagged by swaps

HKEX Subsidiary Gets Approval for Cross Currency Swaps Clearing OTC Clearing Hong Kong Limited (OTC Clear), a subsidiary of Hong Kong Exchanges and Clearing Limited (HKEX), has received regulatory approval to clear cross currency swaps. Following the approval, granted by the Securities and Futures Commission, OTC Clear says that ...
TrueEX Launches BRL Execution Tool Interest rate swap trading platform TrueEx has added Brazilian real (BRL) interest rate swaps execution with clearing through CME, to its platform. The new offering allows BRL swaps traders to clear, execute new risk, terminate or compact positions and process ...
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 ...
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.
CFTC Hands SocGen Fine for FX Reporting Failure The US Commodity Futures Trading Commission (CFTC) has fined Société Générale $450,000 for failures in the reporting of certain FX transactions. The CFTC says that the French bank failed to properly report certain NDF transactions to a swap data repository (SDR), and failed to report to an SDR a large number of FX swap, FX forward, and NDF transactions in a timely manner, in violation of the Commodity Exchange Act (CEA) and CFTC Regulations. herefore, the CFTC announced an order today requiring Société Générale to pay a $450,000 civil monetary penalty and to cease and desist from committing further violations of the CEA and CFTC Regulations.
The Future of OTC Market Structure Scott Fitzpatrick, CEO of Tradition SEF, talks to Profit & Loss about the ways in which the swaps market structure has – and hasn’t – evolved since the introduction of Swap Execution Facilities (SEFs). Profit & Loss: Has the launch of SEFs three years ago actually precipitated any major changes in the structure of the swaps market? Scott Fitzpatrick: From an infrastructure perspective, you could argue that an increased level of efficiency has been introduced into the post-trade processing of swaps transactions. Whether it’s the centralization of processing through SEFs adopting a straight-to-clearing model or the direct reporting to the Swap Data Repositories (SDRs), and provision of daily trading activity files, there is a transparency and fluidity in the post-trade environment that did not exist prior to the introduction of the SEF regulations and the creation of the accompanying infrastructure.
Dodd-Frank Act: Is Change Coming? Bill Shields, chief compliance officer at GFI Swaps Exchange, talks to Profit & Loss about how swaps regulations could change in 2017. Profit & Loss: Are you expecting significant changes to swaps market regulations under a Trump administration? Bill Shields: In large part this will depend on who is leading the Commodity Futures Trading Commission (CFTC). Commissioner Christopher Giancarlo could be named as the long-term head of the agency, and he put out whitepaper outlining a lot the SEF rules that he would like to change or eliminate. If these changes were enacted it could get rid of many of the artificial barriers to trading that the CFTC put in place that weren’t necessarily required by Dodd-Frank. In addition, Commissioner Giancarlo, has spoken about the need to modernize the CFTC’s regulatory regime.
Buy Side Calls for Swaps Trading Innovation Representatives of buy side firms called for greater innovation and flexibility around swaps execution at the SefCon VII event in New York on January 18, hosted by the Wholesale Markets Brokers’ Association, Americas, and organised by Profit & Loss. Speakers at the event explained that swaps trading has not changed much for the buy side since the introduction of Swap Execution Facilities (SEFs), with most buy side firms executing their swaps transactions via a request for quote (RFQ) format. The only difference now, they said, is that the RFQ occurs on an electronic platform rather than via the phone.
FX Turnover Slows Further in October Data from the world’s FX committees reinforces the sense that April was a minor outlier in FX turnover, with all but one centre reporting a slowdown in activity from April 2016 to October 2016. In April 2016 – coincidentally the month of the Bank for International Settlements’ (BIS) Triennial Survey of FX Turnover – there was a late spike in activity as the Bank of Japan surprised markets through its inactivity on monetary policy, leading to yen volumes soaring. This spike has largely been reversed in the latest surveys.
CLS Volumes Up for March The average daily traded volume (ADV) submitted to CLS was $1.6 trillion in March, up 6.7% from February. This figure also represents a 9.6% increase from the $1.46 trillion ADV recorded for the same period a year ago. At $462 billion in ADV, spot volumes were up 8.1% month-on-month, but down 1.3% year-on-year for March. In contrast, swap volumes in March reached $1.04 trillion ADV, a 14% increase from the year before and a 6.2% increase from February. Meanwhile forward volumes, at an ADV of $95 billion, were up 3.3% month-on-month and up 17.3% year-on-year, in March.
CLS Data Shows Dip in FX Volumes The average daily volume (ADV) submitted to CLS in April was $1.52 trillion, down 5% from the ADV of $1.6 trillion that it reported in March. The ADV of spot FX trades submitted to CLS was $435 billion in April 2017, down 5.8% month-on-month and down 8% year-on-year. The ADV of swaps trades submitted to CLS was $988 billion in April, down 4.9% from the previous month, but up 1.2% compared to April 2016. Similarly, the ADV of forwards trades submitted to CLS was down month-on-month, but up year-on-year. CLS reported an ADV of $93 billion for forwards products in April, down 2.1% from March, but up 24% compared to April 2016.
Davie to Head Rates at LCH Michael Davie has been appointed global head of rates for LCH Group, effective immediately. Daniel Maguire is currently the global head of rates and FX derivatives, but was recently announced as the new COO of LCH, in addition to these roles. Maguire will now transition the role of global head of rates to Davie, with Paddy Boyle continuing as global head of ForexClear. In his new role Davie will report into Maguire and Martin Pluves, CEO of LCH. He re-joins LCH after more than 18 months as head of rates services at London Stock Exchange Group (LSEG), which owns LCH. At LSEG Davie was tasked with developing the group’s approach to rates products and overseeing the launch of CurveGlobal, where he will remain on as chairman. Prior to that, Davie spent five years at LCH in a variety of senior roles.
CLS Volumes Tick Up in May The average daily traded volume submitted to CLS was $1.55 trillion in May, up 2% from the previous month and up 10% year-on-year. The CLS data shows FX spot ADV of $454 billion in May, up 4.4% compared to April and up 4.8% from May 2016. Swap ADV, meanwhile, was $989 billion in May, which was flat on the previous month, but up 9% in comparison to the same month last year. Although by far still the smallest product segment submitted to CLS in terms of ADV, FX forwards saw the biggest month-on-month and year-on-year increases in May.
CLS Volumes Up in June The average daily volume (ADV) of trades submitted to CLS was $1.64 trillion in June, up 6% from $1.55 trillion in May, and up 1.64% year-on-year. The main driver of this growth appears to have been an increase in swaps and forward activity. Swaps accounted for $1.08 trillion of the ADV submitted to CLS in June, up 9.3% month-on-month and 7.5% year-on-year. The ADV of $108 billion in FX forwards in June represented a 3.8% increase from the previous month and a 20% growth from June 2016, when an ADV of $90 billion was recorded.
CLS Volumes Dip Slightly in July The average daily volume (ADV) submitted to CLS was $1.6 trillion in July, down 2% month-on-month, but up 11.9% year-on-year. CLS recorded an ADV of $1.04 trillion in swaps in July, down from $1.08 trillion the previous month. Spot ADV submitted to CLS in July was $453 billion, basically flat from the $455 billion recorded in June. The ADV of forwards products submitted to CLS last month was $101 billion, down from $108 billion in June. However, year-on-year, forwards ADV in July was up 46%, while spot ADV was up 13.9%. By contrast, the spot ADV submitted to CLS in July 2016 was $446 billion, only 1.6% less than July 2017.
CLS Volumes Flat in August Average daily volume (ADV) submitted to CLS was $1.58 trillion in August, down 1% from July. CLS recorded an ADV of $1.05 trillion in swaps in August, up from $1.04 trillion the previous month. Spot ADV submitted to CLS in July was $433 billion, down marginally from the $453 billion recorded in July. The ADV of forwards products submitted to CLS last month was $96 billion, down from $101 billion in July. Despite this month-on-month decrease, CLS volumes were up 14.8% year-on-year.
Kulkin Named Director of CFTC Division The US Commodity Futures Trading Commission (CFTC) chairman Christopher Giancarlo has appointed Matthew Kulkin to serve as director of the CFTC’s Division of Swap Dealer and Intermediary Oversight (DSIO). Kulkin comes to the CFTC from the law firm Steptoe & Johnson, where, as a partner, he advised financial market participants on legislative and regulatory issues. “I am pleased to welcome Matt to the commission,” says Giancarlo. “He comes with a wealth of knowledge on Dodd-Frank Act regulation and our derivatives market that will serve us well.”
Thomson Reuters Also Enjoying September Uptick Thomson Reuters (TR) is the latest FX platform to post strong September trading volumes, with figures released today showing that the average daily volume (ADV) of FX trading across all its platforms was $411 billion.  This represents a 12% month-on-month (MoM) and a 12.6% year-on-year (YoY) increase in volumes.  This total reflects trading volumes on Thomson Reuters Matching and FXall in all transaction types, including spot, forwards, swaps, options and non-deliverable forwards (NDFs).  The volumes data on TR’s website only stretches back to January 2013, but this represents the highest overall ADV across all of its platforms since then. 
CLS Volumes Up Double Digits in September The average daily traded volume submitted to CLS was $1.75 trillion in September, up 10.7% from $1.58 trillion in August 2017. This increase is consistent with data that has already been reported by various FX platforms, which all showed a substantial increase in trading activity last month. The ADV of swap activity submitted to CLS was $1.14 trillion in September, up 8% from August and up 16% compared to September 2016. The average daily traded volume submitted to CLS was $1.75 trillion in September, up 10.7% from $1.58 trillion in August 2017. This increase is consistent with data that has already been reported by various FX platforms, which all showed a substantial increase in trading activity last month. The ADV of swap activity submitted to CLS was $1.14 trillion in September, up 8% from August and up 16% compared to September 2016.
Is the Stage Finally Set for FX Clearing? Galen Stops takes a look at whether the predictions of FX moving towards a centrally cleared model might finally be coming true.  Central clearing for FX has endured a number of false dawns in recent years. As long ago as 2011, Profit & Loss published an article, “FX Clearing – Are You Ready?” in which it was argued that Dodd-Frank was likely to drive FX options and NDFs products into clearing. Then back in the first quarter 2014, staff at the US Commodity Futures Trading Commission (CFTC) indicated that the guidelines for the mandatory clearing of FX derivatives products, which included NDFs could be finalised within weeks. Indeed, Profit & Loss reported in mid-June 2014 that the CFTC was poised to fire the starting gun for mandatory FX clearing.
LCH Processes Its First Cross-Currency Basis Swap LCH SwapAgent, a service for the non-cleared derivatives market, has processed its first cross-currency basis swap.  The first trade was conducted between Credit Suisse and Deutsche Bank and was a EUR/USD cross-currency basis swap. The trade was brokered by Icap and processed through MarkitSERV. This represents the first non-cleared trade to be transacted as LCH STM, SwapAgent’s settlement-to-market legal and operational framework. LCH STM facilitates full and final daily NPV settlement, rather than collateralisation by way of exchange of variation margin, and the netting of such settlement and contractual trade cashflows. 
CBOE Launches SEF NDF Trading CBOE Global Markets (CBOE) has announced the launch of NDF trading on its Swap Execution Facility (Sef), CBOE SEF. CBOE Sef will offer a fully anonymous central limit order book with firm all-to-all trading available to all market participants, configurable firm and non-firm streaming quotes for tailored liquidity needs and curated liquidity pools to help meet participants’ execution criteria. The Sef will also offer pre-trade Net Open Position (NOP) credit checks and real-time risk management. CBOE claims that there will be a diverse network of participants resting passive liquidity and a wide distribution network for market makers on the platform.
CLS Volumes Tick Up in November The average daily volume (ADV) of trades submitted to CLS was $1.677 trillion in November, up 3.8% from the previous month and up 9.2% year-on-year. This increase in volumes was largely driven by swaps trading. CLS reports an ADV of $1.149 trillion in swaps submitted last month, which represents a 5.4% increase from the $1.09 trillion submitted in October and a 22.6% increase on the $937 billion submitted in November 2016. Meanwhile, the ADV for FX spot submitted to CLS was $439 billion in November, up 2.8% from the previous month, but down 14.6% year-on-year. Forwards represented $89 billion of the total ADV submitted to CLS in November, down 10% from October but up 4.7% compared to November 2016.
CFTC Announces New IRS Market Measurement Commodity Futures Trading Commission (CFTC) chairman, Christopher Giancarlo, has released a new paradigm for measuring the size of the global swaps markets. In a speech delivered at a conference in New York, Giancarlo declared that “swaps have a problem of large numbers”, adding: “We have known it for a long time. Sizing the global swaps markets in hundreds of trillions of dollars has done nothing to bring clarity to newspaper accounts, policy discussions in Congress, or regulatory policy setting in the decade since the financial crisis. Rather, it more often confuses the issue and hinders dispassionate consideration and sound policy setting.” As a result, Giancarlo said that the CFTC must bring some clarity regarding how to accurately size contemporary swaps markets.
Built to Become Big Galen Stops takes a look at how and why Aston Capital Management is planning to scale up following its recent $100m investment.  Aston Capital Management recently received an injection of $100 million in AUM and an additional $5 million in seed operating capital from private investors.  Following this investment, the firm’s CEO Isaac Lieberman is, perhaps unsurprisingly, bullish about its future. “We have a goal through our strategic mandate and product development timeline to have capacity to be managing $2 billion in AUM within two years and I can actually see us achieving this goal quickly as this business accelerates,” he says. To help achieve this goal, Lieberman has deliberately been structuring the firm so that it can easily scale up in the future. For starters, the firm has been getting a whole slew of regulatory and accountancy registrations in place.