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 (more…)
Filed under: CCP, CFTC, Dodd Frank, OTC, OTF, Paul Blank, SWAPS, Web trading technology | Leave a Comment »
Posted on November 19, 2013 by Paul Blank
Speaking at SEFCon IV conference in NY this week, Gary Gensler, Chairman of the CFTC said that Bloomberg, TradeWeb and MarketAxess are failing to provide impartial access as required under SEF rules.
The three main platforms, are giving the banks too much control over who their customers buy and sell with, in an attempt to preserve the existing dealer-client structure, and that they need to come inline with the CFTC equal access rules.
“What they are doing right now is a violation of Dodd-Frank and our rules,” he said at an event in New York. “They need to come into compliance,” he said. The limits at Tradeweb, MarketAxess and Bloomberg LP give an advantage to the dealers who created the swaps market in the 1980s, Gensler said. “They’re trying to keep exclusive to the dealers.”
More here on Bloomberg and Risk.Net and of course from Kevinonthestreet
Filed under: CFTC, Dodd Frank, OTC, Paul Blank, Regulation, SEF, SWAPS | Leave a Comment »
Posted on November 4, 2013 by Paul Blank
Whilst Javelin and TrueEX as ‘new kids on the block’, may have been the first to register their made available to trade (MAT) products, it’s clear that SEF volumes are for now remaining on the established platforms which are already widely used by market participants.
According to data from Clarus the top SEFs by volume for each product class last week were:
- CREDIT: Bloomberg continues to post the most impressive scores in this asset class, consistently accounting for 70-80% of the daily volumes and 79% for the week overall. GFI is the strongest IDB.
- FX: ICAP has the largest FX numbers. The other 4 IDB’s join Reuters & 360T for a close battle between 2nd through 7th place.
- IRD: ICAP and Tullet take turns in the lead, with BGC in another photo-finish for 3rd. The strength of ICAP’s and Tullet’s numbers appear to hinge on the weekly FRA reset volumes (RESET vs TP Match, respectively).
Whilst, Ben Macdonald, Bloomberg’s Head of Product and President of Bloomberg’s SEF announced that:
“In the first month of SEF trading, more than $280 billion in cross asset volume has been executed on our SEF and over 220 global firms. We will continue to work closely with our clients, who have used our trading platforms for years, to help them transition to today’s new regulatory environment.” more
Full Clarus report on last weeks SEF volumes is here.
Filed under: Dodd Frank, OTC, Paul Blank, SEF, SWAPS, Web trading technology | Leave a Comment »
Posted on November 4, 2013 by Paul Blank
Last Friday the CFTC issued a ‘no action letter’ extending until 29th November the ‘time-limited’ relief from certain Swap Data Reporting Requirements for FX Swaps, the products in focus being NDFs and FX Options.
The extension comes on the back of representations, including a very compelling letter from James Kemp, MD of The Global Foreign Exchange Division, setting out the reasons for requesting the extension. Reading the arguments, you can see how ill prepared the majority of SEFs are to assume their obligations, and why market participants are reluctant to migrate trading onto SEFs.
According to the letter:
Key risks which have materialized for the NDF and Options markets since October 2nd including:
- Reduced Legal Certainty for FX Trades Executed on SEFs.
In contrast to the practices developed and implemented by market participants over the past fifteen years to provide legal certainty (more…)
Filed under: CFTC, Dodd Frank, FX, OTC, Paul Blank, Regulation, SEF, SWAPS | Leave a Comment »
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”. (more…)
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 (more…)
Filed under: CCP, CFTC, Dodd Frank, OTC, Paul Blank, SEF, SWAPS | Leave a Comment »
Posted on September 23, 2013 by Paul Blank
The number of firms registering for SEF status ahead of the 2nd October deadline has now reached 18, with 13 being granted temporary SEF status.
Full list is below:
Filed under: CFTC, Dodd Frank, Paul Blank, SEF, SWAPS, Web trading technology | Leave a Comment »
Posted on September 11, 2013 by Paul Blank
Interesting (although not unsurprising) front page article in FT today.
Ken Griffin, founder of Citadel one of the largest hedge funds speaks about the benefits of the new regulations, citing…,
Derivatives trading has improved dramatically, becoming safer and more efficient… and power has shifted from bank “dealers” to investors.
“Dealers spoke about fire and brimstone, that markets would cease to work, products would become illiquid, costs would go up dramatically, clients would endure adverse consequences”
He said that, in reality:
“Spreads had narrowed, there was a material reduction in counterparty credit risk, and dramatic reduction in operational risk”
From my perspective as a client, this brave new world of Dodd-Frank for ‘cleared’ derivatives has been fantastic. Fantastic”
Personal comment: Perhaps for the very large firms like Citadel, who are already set-up for posting margin this may well be the case. But for small firms who for the first time are having to put in place facilities to pledge collateral for initial and variation margin, the changes needed will have been large. And of course for the banks themselves, the cost and effort required to prepare for the new regulatory environment has been enormous.
Full article here:
Filed under: Dodd Frank, Paul Blank, Regulation, SWAPS | Leave a Comment »
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: (more…)
Filed under: BIS, CCP, CFTC, Dodd Frank, FX, Paul Blank, Regulation, SEF, SWAPS, Web trading technology | 4 Comments »
Posted on August 5, 2013 by Paul Blank
Another interesting development in the adoption of the SEF rules which come into force today.
In addition to listing mandated products (that are mandated to trade on a SEF and be cleared via a CCP), a SEF may list products that are not mandated to trade (or clear). Such transactions would be termed ‘Permitted Transactions’. Which on the face of it doesn’t sound a bad thing.
Filed under: Dodd Frank, FX, Paul Blank, Regulation, SEF, Single-Dealer Platforms, SWAPS | 3 Comments »