Dodd-Frank Trade Reporting isn’t coming … it’s here. February 28, 2013 was the date that Major Swap Participants (MSPs) were required to begin reporting equity, foreign exchange and other commodity swaps. And this is just the beginning of a series of milestones in the regulation that was designed to prevent future “too big to fail scenarios,” such as what occurred during the Global Financial Crisis of 2008. But, there is a bigger story here around regulation and compliance and how IT is used to ensure transparency, accuracy and accountability in reporting.
Regulation, Regulation and more Regulation
While Dodd-Frank is a U.S. regulation under the supervision of the Commodities Futures Trading Commission (CFTC), any financial institution doing business with a U.S. bank will need to comply. Continue reading “The Dodd-Frank Reporting”
Well some of the Big banks granted two-year phase in to meet Dodd-Frank rule to wall off swaps, as the phase 2 commenced from June 10th 2013.
The shift towards OTC clearing is a huge collective undertaking for clearing houses, clearing firms and buy-side clients. The use of a CCP is a mutualised risk model that shifts the market away from what were exclusively bilateral arrangements – under master agreement and credit support annex (CSA) – to one where both the FCM (as a clearing house member) and the client will be required to post margin into the CCP. It is a radical departure. Many are still coming to terms with the concept that all derivative contracts like IRS and CDS (and not only interdealer ones) will now have to be cleared with initial margins and variation margins based on the mark-to-market’s daily fluctuations, just like exchange-traded derivatives. Continue reading “Collateral Management will take Paradigm shift under Dodd Frank & EMIR”
SimCorp Survey -released the findings of a poll conducted in March. Respondents included nearly 60 executives from 34 capital market firms from around the world.Results show that 53% of capital markets respondents are not ready to centrally clear interest rate and credit default swaps.
With regulations like Dodd-Frank and EMIR aiming to increase transparency and market efficiency in over-the-counter (OTC) derivatives trading, the poll asked respondents whether or not their firms are ready to centrally clear interest rate swaps (IRS) and credit default swaps (CDS). While 41% answered yes, a 53% majority answered no. Continue reading “The Capital Markets are not ready for Central Clearing”
Have done a series of post on the US regulations Dodd Frank time now to share some thoughts on the EUROPE region.
The “European Market Infrastructure Regulation,” known as EMIR, was adopted on July 4, 2012, as the Regulation on OTC Derivatives, Central Counterparties and Trade Repositories (EU 648/2012), and took effect in all EU Member States on August 16, 2012. As an EU Regulation, EMIR is effective in EU Member States without the need for national regulations or legislation.
The EMIR regulatory framework is made up of Regulation EU 648/2012 (the “Regulation”) and several European Commission Implementing Regulations and Delegated Regulations which set out technical standards addressing matters of detail under the Regulation. The Implementing Regulations and Delegated Regulations were published in the Official Journal of the European Union on February 23, 2013, and became effective on March 15, 2013. Continue reading “OTC Derivatives Regulations – Focus Europe”
Single Dealer platform a financial forum asked a very logical question to CFTC Has CFTC given too much power to SEFs ?
Last week the CFTC passed the key rules that will govern how OTC derivatives will trade under the new Dodd-Frank regulatory framework.
By so doing, the CFTC has in effect devolved/transferred many important decisions regarding ‘where, and when’ swaps will trade over to the new market infrastructure and trading venues themselves, but will this give too much power to new trading venues?
One of the major rules that was passed, govern when a swap is ‘made available to trade’, or (MAT). This rule will determine which swaps are required to trade on Swap Execution Facilities (SEFs) or Designated Contract Markets (DCM). Continue reading “SEF Swap Execution Facilities or SEFbitrage”