MarketPrism on the value of SDPs

Posted on June 14, 2013 by Paul Blank

Ralph Achkar, of MarketPrizm makes some very good points in an article from Futures & Options World, that the death of Single Dealer Platforms has been greatly exaggerated.

His comments echo many of the posts here regarding the value of single dealer platforms in a cleared world.

Ralph comments that,.. Going forward, more of the traded instruments will be available on electronic platforms, and a large section will be required for clearing.

By enabling trading across asset classes using web-based interfaces, sell-side firms that use SDPs provide their clients with a more comprehensive view into the market, a better opportunity to maximise profitability and the assurance of best execution. In recent months, we have seen more and more banks building an infrastructure to service a wider set of client needs. (more…)

Filed under: Paul Blank, Regulation, SEF, Single-Dealer Platforms | Leave a Comment »

Has CFTC given too much power to SEFs?

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?

(more…)

Filed under: CCP, CFTC, Dodd Frank, OTC, Paul Blank, Regulation, SEF | 7 Comments »

CFTC Passes SEF Rules

Posted on May 16, 2013 by Paul Blank

Today the CFTC voted on and passed the rules that will govern how OTC derivatives will trade under the new Dodd-Frank regulatory framework.

The key votes were on:

  • Block Trade Rule: Minimum Block Sizes for Large Notional Off-Facility Swaps and Block Trades (Swaps Block Rule) Q&A - passed by 3-2 votes
  • available to Trade Rule: Process for a Designated Contract Market or Swap Execution Facility to Make a Swap Available to Trade under Section 2(h)(8) of the Commodity Exchange Act (CEA); Swap Transaction Compliance and Implementation Schedule; Trade Execution Requirement Under Section 2(h) of the CEA Q&A   passed by 3-2 votes
  • SEF Core Rules: Core Principles and Other Requirements for Swap Execution Facilities (SEFs) Q&A  passed by 4-1 votes
  • Anti-disruptive Practices Authority – Interpretive Guidance and Policy Statement Q&A passed by 5-0 votes

Regarding the SEF core rules, the RFQ5 rule has been watered down to RFQ3 (although this will start with RFQ2, and be phased in to RFQ3 over a 15mth period)

CFTC Chairman Gary Gensler said in an opening statement that: (more…)

Filed under: CFTC, Paul Blank, Regulation, SEF, SWAPS | 1 Comment »

CFTC to finalise SEF rules this week?

Posted on May 13, 2013 by Paul Blank

Nearly three years after the introduction of the Dodd-Frank Act (DFA), the CFTC has finally announced that this week (Thursday 16th May) it will vote on how OTC derivatives will trade under the new regulatory framework.

The DFA was designed to bring greater transparency and competition into the OTC derivatives markets, and some of the key rules that will be finalised are:

  • Block Trade Rule: Minimum Block Sizes for Large Notional Off-Facility Swaps and Block Trades (Swaps Block Rule)
  • available to Trade Rule: Process for a Designated Contract Market or Swap Execution Facility to Make a Swap Available to Trade under Section 2(h)(8) of the Commodity Exchange Act (CEA); Swap Transaction Compliance and Implementation Schedule; Trade Execution Requirement Under Section 2(h) of the CEA
  • SEF Core Rules: Core Principles and Other Requirements for Swap Execution Facilities (SEFs)
  • Anti-disruptive Practices Authority – Interpretive Guidance and Policy Statement

Among the more contentious rules is the so-called RFQ5 rule (more…)

Filed under: CFTC, OTC, Paul Blank, Regulation, SEF, SWAPS, Web trading technology | 1 Comment »

TradeWeb grabs CDS market from IDBs

Posted on April 16, 2013 by Paul Blank

Risk.Net article about TradeWeb’s new Derivatives platform for Credit Default Swaps (CDS) indices, which has captured as much as 80% of the Inter Dealer Broker market (IDB).

The platform was launched in February in advance of the new SEF derivatives regulations has quickly captured much of the traditional IDB market.

According to an unnamed US Credit Trader:

“Tradeweb launched dealer-to-dealer index CDS trading in the fourth quarter of 2012 and quickly attracted about 80% of the interdealer broker-executed traded CDX volume to its platform.

I would characterise Tradeweb as the dominant dealer-to-dealer trading platform for CDS indexes over the last six months,” says one New York-based credit trader.

Bloomberg has also launched their OTC platform. According to Ben Macdonald, Global Head of Fixed Income at Bloomberg, the company is building a cross asset class SEF, which will generate revenue by ‘driving terminal sales’, which will offset the high regulatory cost of becoming a SEF.

Full Risk.Net story here  behind pay wall, or try this link and select first story

Thanks also to OTC Space for alerting me to story!

Filed under: OTC, Paul Blank, SEF, SWAPS | Leave a Comment »

Banks work on global standard for SEFs and OTC markets

Posted on March 27, 2013 by Paul Blank

A group of banks, together with Etrading Software are developing an open standards protocol for technical integration between broker dealers permissioning systems and swap execution facilities (SEFs).

It is hoped that the Trading Enablement Standardisation Initiative (TESI), could improve operational transparency and control on the financial markets if it attracts enough users and conforms with the US Commodity Futures Trading Commission (CFTC) final rules governing SEFs, which were introduced this quarter.

The first goal of the working group is (more…)

Filed under: CCP, CFTC, OTC, Paul Blank, SEF, SWAPS | Leave a Comment »

CFTC cannot cope with SDR data

Posted on March 21, 2013 by Scott McLeod

In their efforts to implement Dodd-Frank, it would appear that the CTFC are guilty of not thinking about the data they would receive as part of the SDR requirements. Commissioner Scott O’Malia gave a speech to the SIFMA Compliance and Legal Society on March 19 where he said:

“Since the beginning of 2013, certain market participants have been required to report their interest rate and credit index swap trades to an SDR.

Unfortunately, I must report that the Commission’s progress in understanding and utilizing the data in its current form and with its current technology is not going well.

Specifically, the data submitted to SDRs and, in turn, to the Commission is not usable in its current form. The problem is so bad that staff have indicated that they currently cannot find the London Whale in the current data files. Why is that? (more…)

Filed under: CCP, CFTC, Dodd Frank, OTC, Regulation, Scott McLeod, SEF, Web trading technology | Leave a Comment »

Buy-Side concern over CFTC SEF rules for RFQs

Posted on March 6, 2013 by Paul Blank

As the CFTC moves closer to finalising the Swap Execution Facility (SEF) rules, SIFMA’s Asset Management Group (SIFMA -AMG) has released results of a Buy-Side only survey on the impact of the requirement to go out to five or more liquidity providers for a request-for-quote (RFQ) platform to qualify as a SEF.

Participants of the survey were mainly asset managers that manage mutual funds, hedge funds and other institutional accounts, representing over $12.1 trillion of assets under management.

According to  Robert Pickel, ISDA Chief Executive Officer, the conclusions of the survey were (more…)

Filed under: CFTC, Dodd Frank, Paul Blank, SEF | 1 Comment »

Watering down SEF rules?

Posted on March 4, 2013 by Paul Blank

The FT ran a story late last week that the CFTC could be poised to weaken its position on SEF trading rules.

Mark Wetjen, seen as the swing vote on the five-person Commodity Futures Trading Commission, recommended in a confidential agency memorandum that the CFTC alter its proposed rule regarding derivatives marketplaces, or “swap execution facilities”, according to people who have seen the document. (more…)

Filed under: CFTC, Paul Blank, Regulation, SEF, SWAPS | 1 Comment »

UBS to route client IRS trades through toTrueEX

Posted on February 26, 2013 by Paul Blank

Single-Dealer Platforms continue building SEF aggregation and client routing capabilities for mandated products.

UBS are in discussions to route client IRS orders through to new SEF compliant IRS platform TrueEX.

(more…)

Filed under: CFTC, Dodd Frank, Paul Blank, SEF, Single-Dealer Platforms | Leave a Comment »

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