Derivs - Interest Rate

The US Commodity Futures Trading Commission has expanded its interest rate swaps trading rules to require a range of additional products to be cleared through major central counterparties.

Preparing for MiFID II regulations will cost market participants over $2bn in 2017 in IT bills, a study by IHS Markit and Expand has found.

The London Stock Exchange this week moved to deflect a mounting list of European Commission concerns about its proposed merger with Deutsche Börse by saying it would consider selling off its LCH SA French clearing business.

Blockchain came sharply into focus this week for the derivatives market, as industry bodies warned on both the need for such technology and to regulate its use. Meanwhile, firms rolled out a range of new initiatives to address the market’s mounting challenges around margin and settlements.

The European Securities and Markets Authority has proposed making it mandatory to trade the iTraxx Europe and Crossover credit default swap indices on a regulated market or other recognised trading facility.

Synechron, a technology services provider, is targeting margin calls as one of six ‘blockchain accelerator’ applications for the financial markets.

Bursa Malaysia has overhauled a range of government securities futures products to create a Malaysian government bond benchmark for local and foreign investors.

ICE Clear Europe, the European clearing arm of Intercontinental Exchange, has been authorised by the Bank of England and by the European Securities and Markets Authority as a central counterparty (CCP).

Derivatives market participants must embrace new technologies to meet the challenges it faces in seeking greater standardisation and efficiency, the International Swaps and Derivatives Association has said. These include opportunities for use of blockchain, ‘RegTech’, product identifiers and ‘common domain models’.

Interest rate swap trading platform trueEX has set its sights on a narrowing pool of remaining dealers it has not signed up, as the addition of BNP Paribas this week took its market haul to 21.

Goldman Sachs has signed up many of its major dealer counterparties to new CSA documents for non-centrally cleared OTC derivatives in the last couple of weeks, using a Euroclear service to manage the collateral transfers. BAML, Barclays, Credit Suisse, HSBC, JP Morgan, Morgan Stanley and RBS are some of the firms that signed the new agreements with Goldman between September 2 and September 6.

The US Commodity Trading Futures Commission's split over whether to accept Japan's uncleared margin rules as equivalent to the US was not an ideal outcome. But the decision, however contentious, is a pragmatic step which will motivate further convergence between regulatory regimes.