Posted on July 24, 2014 by Paul Blank
Regulation is driving change in capital market structure, and as highlighted in the future of investment banking, banks continue to move towards a ‘capital-lite’ business model, as they seek to ‘optimise’ use of and return on capital.
The introduction of mandatory trading and clearing for standardised swaps (SEFs in US and OTF and MTFs in Europe) has resulted in higher capital charges for OTC bilateral trades, and reduced the appetite of banks to warehouse and hold inventory which is moving more banks towards a ‘capital lite’ model.
This is the backdrop to the announcement that JP Morgan (password needed) the setting up a 150 strong fixed income agency execution desk, to run alongside its principal trading operations.
At first sight, it looks as if JP Morgan is simply hedging its bets and backing both agency and principal business models. However,
Filed under: CCP, OTF, Paul Blank, Regulation, SEF, SWAPS, Web trading technology | Leave a comment »
Posted on March 3, 2014 by Paul Blank
Last week I attended the Association for Financial Markets in Europe (AFME) 9th annual European Market Liquidity Conference.
As always with AFME, there had some thoughtful speakers and topical panel discussions, as well as providing good forum for networking opportunities (including providing for the conference iPad’s pre-loaded with delegate names allowing you to reach out to them and make contact).
This year’s agenda focused on the new emerging market structures
- Liquidity in the new regulated market – the changing market structure
- Keynote address -Verena Ross, Exec Dir, ESMA
- Foreign Exchange:
The renminbi and other Asian currencies
Impact of regulation on development of the FX market place
- Fixed Income:
Development of exchange capabilities
Liquidity issue, what liquidity issue?
- Funding European economic growth: the obstacles and opportunities
Below are my notes and some comments from the sessions that I attended: Continue reading
Filed under: CCP, Dodd Frank, FX, OTC, OTF, Paul Blank, Regulation, SEF, SWAPS | Leave a comment »
Posted on December 5, 2013 by Paul Blank
Just finished listing to an interesting webcast on Global OTC market reforms, and where next after the US and SEFs?
Celent analyst Anshuman Jaswal, gave overview of market, SEF volumes to date, and possible differences in regulatory treatment and approach in Europe and Asia.
Some key points form slide deck and a couple of slides below.
SEF and OTFs are critical components in evolution of the market from OTC non-standardised bilaterally cleared to standardised electronically traded and centrally cleared swaps.
Celent slide on shift to standardised swaps
In terms of SEF volumes Continue reading
Filed under: CCP, CFTC, Dodd Frank, OTC, OTF, Paul Blank, SWAPS, Web trading technology | 2 Comments »
Posted on October 30, 2013 by Paul Blank
TradeWeb TW SEF joins Javelin and TrueEX in submitting the list of swaps they wish to Make Available to Trade (MAT).
Last week, Javelin submitted a long list of MAT Swaps, whilst TrueEX submitted a list of actively trade benchmark swaps.
TradeWeb recognising market sensitivity, also goes for the benchmark listing for their MAT determination, stating that:
“It is in a unique position to observe and quantify market participants’ electronic trading behavior. Due to the breadth of institutions participating on our platforms and the metrics that we can capture from the activity on our platforms, we have been able to develop a very clear picture of the electronic execution of swaps, which allows us to quantify the trading experience of both liquidity takers and liquidity providers”. Continue reading
Filed under: CCP, CFTC, Dodd Frank, OTC, Paul Blank, Regulation, SEF, SWAPS | 1 Comment »
Posted on October 21, 2013 by Paul Blank
Last Friday, Javelin one of the 18 newly registered SEFs, become the first SEF to apply to the CFTC for determination of products to be Made Available to Trade.
This mean that the CFTC has up to 90 days to review the application, and make their determination. The application covers GBP, USD and EUR Interest Rate Swaps, and should it be approved, then these products would need to be traded on SEFs by all platforms.
In the 18 page application, Javelin notes that the CFTC recognizes that SEFs have:
“sufficient expertise and experience with respect to swaps trading to make an initial determination and to submit that determination to the Commission under the part 40 procedures.”
The Javelin application further states Continue reading
Filed under: CCP, CFTC, Dodd Frank, OTC, Paul Blank, SEF, SWAPS | 2 Comments »
Posted on October 15, 2013 by Paul Blank
Over at Kevinonthestreet, Kevin McPartland has a very good post on why SEFs volumes really don’t matter at this stage.
Some key points from his post are:
Filed under: CCP, Paul Blank, Regulation, SEF, SWAPS, Web trading technology | 1 Comment »
Posted on September 30, 2013 by Paul Blank
The CFTC continues to push through the remaining few SEFs ahead of the 2nd October deadline, the number of SEFs gaining temporary SEF Status has now risen to 17. With the only major application still pending, being that of the CME.
Whilst SEF registration deadline remains at 2nd October, the CFTC has agreed to delay the implementation of certain enforcement rules for participants until 1 November, following requests from a number of SEFs.
The letter states that the Division of Market Oversight (DMO):
“emphasizes that while this letter relieves SEFs from certain enforcement responsibilities with respect to participants in their markets, this letter does not relieve SEFs from their current regulatory responsibility to establish and maintain the rules, systems and procedures necessary to carry out those enforcement responsibilities full letter here
Here is the list of SEFs that have gained temporary registration:
Filed under: CCP, CFTC, OTC, Paul Blank, Regulation, SEF, SWAPS | 3 Comments »
Posted on September 4, 2013 by Paul Blank
With less than a month to go till the closing date for SEF registration (2nd October), we have another two platforms, both Inter-Dealer Brokers (IDBs) Tullet-Prebon and ICAP submitting their SEF applications. Update with Tradition applying for SEF status on 9th Sept.
This brings the total to date to 15 platforms which are: Continue reading
Filed under: BIS, CCP, CFTC, Dodd Frank, FX, Paul Blank, Regulation, SEF, SWAPS, Web trading technology | 6 Comments »
Posted on July 31, 2013 by Paul Blank
An excellent update to Tabb Group’s SEF barometer has just been published, which was based on a survey of over 150 participants (from dealers, buy-side and vendors).
Key findings are:
- Discontent is high on the final outcome of the swap rules, but consensus is low on the reasons why
- Exchanges are perceived to benefit the most from the new rules, as product standardization drives the swaps market closer to order book trading and accelerates the migration to swap futures Continue reading
Filed under: CCP, CFTC, Dodd Frank, Paul Blank, Regulation, SEF, Single-Dealer Platforms, Survey Results, SWAPS | 1 Comment »
Posted on May 23, 2013 by Paul Blank
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?
Filed under: CCP, CFTC, Dodd Frank, OTC, Paul Blank, Regulation, SEF | 12 Comments »