Dodd Frank | SingleDealerPlatforms.Org

Buyside confused over OTC regulation

Posted on March 5, 2012 by Mike Hill

Interesting article by Phil Davis in the FT today (registration required) about asset managers being required by Dodd-Frank to clear trades through a central counterparty. The article quotes David Field of Rule Financial. Rule have apparently conducted a buy-side survey which confirms several of the consensus opinions of the Clearing and Settlement Working Group (CAS-WG) (which I blogged about last week).

Field said:

The buyside is very confused about the timelines. We conducted a survey on this and answers ranged from September 2012 to December 2014. One even said December 2015.

The article concludes that the buy side is unaware of the timeline and is also unprepared for having to post collateral on deals for the first time.

Interesting read.

Filed under: Dodd Frank, Mike Hill, News, OTC, Regulation, Web trading technology | Tagged: Dodd Frank, OTC, regulation, SEF, Swap Execution Facility | Leave a comment »

Inaugural Clearing and Settlement Working Group meeting

Posted on March 1, 2012 by Mike Hill

Paul Blank and I spent yesterday afternoon in the comfortable surroundings of the BT Centre auditorium in Newgate Street at the inaugural meeting of the Clearing and Settlement Working Group (CAS-WG).

Conceived by Chris Skinner of the Financial Services Club, Chris Pickles of BT and the directors of the Realization Group, this is an attempt to start something similar to the successful MiFID joint working group but for clearing and settlement. We went along, not because we thought we had anything to contribute, but believing we could learn something about what happens after someone clicks a “buy” or “sell” button on one of our clients’ single-dealer platforms.

UPDATE: A detailed write-up of the meeting, with photographs, is now available on the Financial Services Club blog.

Dealing with the regulatory fire-hose Continue reading →

Filed under: Dodd Frank, Mike Hill, OTC, OTF, Regulation, Web trading technology | Tagged: CAS-WG, Dodd Frank, OTC, regulation, SEFs | 1 Comment »

New bill may restore sanity to SEF regulations

Posted on July 20, 2011 by Paul Blank

Just noticed this announcement:

Chairman of Financial Services Subcommittee on Capital Markets Scott Garrett, is introducing a bill (H.R. 2586) “the Swap Execution Facility Clarification Act”, which will require the Commodity Futures Trading Commission (CFTC) and the Securities and Exchange Commission (SEC) to finalize swap execution facilities (SEFs) rules that allow the swaps market to naturally evolve towards Continue reading →

Filed under: Dodd Frank, MiFid, Regulation, SEF, SWAPS, Web trading technology | Tagged: Dodd Frank, SEF, Swap Execution Facility | 3 Comments »

Making Swap Execution Facilities (SEFs) successful (CFTC roundtable)

Posted on June 16, 2011 by Paul Blank

I know it’s a bit late, but back in March the CFTC (Scott O’Malia) held public meetings to explore the ‘attributes necessary to make swap execution facilities (SEFs) successful’.

The round table discussions were fascinating to watch, as market participants attempted to explain to the CFTC the subtle (and very often inverse) relationships (read trade-off) between (forced) transparency and (true) liquidity, worth watching here.

Tabb group also provided a report on the technology implications and costs of Dodd Frank on Financial Markets., showing that they estimated that the largest dealers (top 15 firms) would spend some $1.8bln on restructuring their businesses for Dodd Frank, of which some $560mln would be spent on e-commerce and low touch distribution.

The SEF showcase was followed up by a number of presentations from market participants and potential SEF providers, highlighting issues and value propositions. This one from BlackRock, is worth going throughDodd-Frank Derivatives Regulation Interconnectivity

Filed under: Dodd Frank, Regulation, SEF, Technology Trends, Web trading technology | Tagged: Dodd Frank, SEF | Leave a comment »

Poll results confirm, Single Dealer Platforms best positioned to provide SEF routing capabilities

Posted on June 16, 2011 by Paul Blank

We have been running a poll asking whether Single Dealer Platforms should provide routing through to SEFs.

The results are shown below, and not unsurprisingly the majority of voters thought that SDPs should provide an aggregated view of SEF liquidity, and order routing capabilities.

Our survey echos the findings of a similar poll carried out during live Webcast last week on Regulation and OTC e-commerce: Future-proofing your systems (may require password), with some 80% of voters suggesting that Single Dealer Platforms will become more important rather than less important as new trading regulations unfold. Actual webcast available here

Filed under: CFTC, Dodd Frank, Regulation, SEF, Single-Dealer Platforms, Survey Results | Tagged: Dodd Frank, SEF, single-dealer platform, Survey Results | 3 Comments »

Dodd Frank/SEFs may drive FIX adoption as electronic trading protocol for Fixed Income

Posted on June 15, 2011 by Paul Blank

Major sell side firms see the potential for the FIX protocol to become the electronic trading standard for emerging swap execution facilities (SEFs) in the OTC derivatives market, according to Courtney Doyle McGuinn, FPL Operations Director, who spoke with Wall street & Technology at the SIFMA event in New York yesterday.

However, the usage of FIX in fixed income markets is still lagging even though the tags for fixed income have been available in FIX since the 2002/2003 time frame, partly because assets managers call up their brokers to execute a trade.

However, momentum for adopting FIX for fixed-income is building as a result of the Dodd-Frank financial reforms which is seeking greater market transparency by requiring most types of OTC derivatives to clear through central counterparty facilities and trade on swaps execution facilities or SEFs. A surge in new market trading venues is expected within the U.S. and similar reforms are expected from upcoming MiFID II regulations in Europe.

rest of story here

Filed under: Dodd Frank, Regulation, SEF, Technology Trends | Tagged: Dodd Frank, FIX, fixed-income trading, SEF | Leave a comment »

Smart Order Routing to SEFs – just what’s needed for Single Dealer Platforms

Posted on June 14, 2011 by Paul Blank

RTS today announced their new central order routing and execution system, which sounds like could be useful for banks looking to provide SEF routing via their single dealer platforms.

Products traded and matched on RTD CORE will include equities, futures, options, foreign exchange, interest rates and custom OTC products. Clients can include exchanges, OTC platforms, brokerage firms, supply chain management firms, commodity trading houses, hedge desks and swap execution facilities (SEFs) created by the Dodd-Frank Act, among others.

Filed under: Dodd Frank, Regulation, SEF, Single-Dealer Platforms, Technology Trends, Web trading technology | Tagged: Dodd Frank, SEF, smart order routing, SOR | 1 Comment »

Should Single Dealer Platforms provide SEF routing capabilities? (New Poll – vote NOW)

Posted on June 1, 2011 by Paul Blank

Poll Question:

Following my last blog post which looked at Single Dealer Platforms fighting back against SEFs by providing SEF routing capabilities, I thought we could get some reader participation on the topic, by asking the following question.

Results to be published next week.

Filed under: Dodd Frank, SEF, Web trading technology | Tagged: Dodd Frank, SEF, Weekly Poll | Leave a comment »

ISDA release paper on the Economics of Central Clearing (by the Streetwise Professor)

Posted on May 23, 2011 by Paul Blank

ISDA has just released a discussion paper called “The Economics of Central Clearing: Theory and Practice“, written by the Streetwise Professor

I have a lot of time for the prof, so I am sure the paper will be worth the read!

The paper points out both the benefits and potential issues related to central counterparty clearing facilities (CCPs). Several of its more important conclusions include:

CCPs can successfully reduce and reallocate counterparty risk through rigorous preparation for, and management of, member defaults;
CCPs can also create systemic risk, and it is imperative they have strong and conservative risk management and sufficient financial resources to withstand stressed markets. They also require close supervision by regulators;
The margin policies of CCPs can pose risks to the efficient functioning of the financial system. Mandatory clearing of OTC derivatives will lead to a large amount of liquidity being tied up as margin at CCPs. Increases in margin requirements by CCPs during a crisis could be destabilizing;
CCPs should generally align control, governance and membership requirements with the interests of participants that absorb their risks and share their losses.

Filed under: Dodd Frank, Regulation | Tagged: CCP, Dodd Frank, regulation | Leave a comment »

CCP Clearing for OTC Derivatives – white paper from Cognizant

Posted on May 16, 2011 by Paul Blank

An informative white paper from Cognizant on the impact of CCP on OTC Derivatives markets. Great workflows for the trade routing to CCP shown on page 6.

Filed under: Dodd Frank, Regulation | Tagged: CCP, Dodd Frank, regulation | Leave a comment »

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