Derivs - People and Markets

Commodity Futures Trading Commission commissioner Mark Wetjen claimed that central counterparty risk mitigation and management strategies need more coordination and harmonisation. But legislative bodies should take note of the potential negatives associated with harmonisation and the centralisation of counterparty risk before pursuing new rules, said lawyers.

Overall credit default swap notional that was reported to swap data repositories last week increased by 48% from the previous week, according to data from the International Swaps and Derivatives Association. Overall interest rate derivatives trading that was reported was also up by 54% from the previous week, following a week of moderate decreases in trading for both CDS and rates.

Javelin, a swaps execution facility, has asked the Commodity Futures Trading Commission for a reduction of the liquidation time required for market agreed coupon swaps and international money market swaps that are cleared on SEFs in an effort to promote better liquidity and higher competitive trading volumes.

A lack of clarity over Canadian rules and regulatory oversight between provincial regulators has posed some challenges for derivative market participants. As Canada looks to fulfil components of the G20 reform mandate for OTC derivatives trading — including trade reporting, clearing and margin requirements — a lack of uniform compliance among participants and rulemaking differences between regulators pose hurdles for the market.

The European Securities and Markets Authority (ESMA) signed a memorandum of understanding (MoU) with the Australian Securities and Investments Commission (ASIC), which grants Australian authorities access to derivative contracts data from EU trade repositories (TRs) outside of their jurisdiction.

Daniel Petherick, ex-managing director and head of equity derivative flow sales for Europe, Middle East and Africa at Citigroup in London, has joined Société Générale as head of European flow derivatives sales, also based in London.

The Depository Trust and Clearing Corporation has partnered with TriOptima, enabling daily reconciliation of over-the-counter derivatives trades that are reported to DTCC’s European trade repository via triResolve, as mandated by the European Market Infrastructure Regulation.

Demand in the Canadian derivatives markets is increasing as investors are drawn to the country’s financial stability, creditworthy banking system, proximity to the US and strong regulatory infrastructure. There has accordingly been a substantial growth in futures markets tied to the country’s natural resources and commodities trade, driven by both domestic and international investors.

Regulators demand numerous know-your-customer checks to be performed and accurate client and counterparty data checks be made. Not only do firms need to make substantial changes to their internal processes to meet these requirements, they must ensure that the counterparty and client data they hold is accurate from the outset and then efficiently managed forevermore. Legal entity data management is far from a simple task, however, and with a swathe of risk management and investor transparency requirements due to come into force over the coming years, firms need to give this critical activity some serious attention. To read the full Learning Curve titled ‘The big data challenge: firms must act now’ written by Mark Davies, general manager and head of Avox, please go to www.globalcapital.com/derivatives/learning-curves.

Bursa Malaysia Derivatives has launched enhanced five year bond futures, providing market participants with a tool to help manage risk in an environment governed by central bank interest rate policies.

CME Group has increased its offer for GFI Group to compete with a recent bid by BGC Partners. The exchange has now increased the consideration payable to GFI Group stockholders from $4.55 a share, to $5.25 a share, payable in a mix of CME Group Class A common stock and cash.

The US Commodity Futures Trading Commission has reopened the comment period for the much debated position limits following several years of deliberation, which is expected to result in new proposed rules or a new final rule, according to lawyers.