Derivs - Regulation

Pan-European securities watchdog ESMA on Friday announced that it would renew its restrictive measures for contracts for difference (CFD) products for another three months.

Karel Lannoo, the chief executive of the Centre for European Policy Studies, indicated that he was optimistic about the prospects of an equivalency agreement on the oversight of clearing houses between the United Kingdom and EU 27 after Brexit.

Representatives from all corners of the derivatives industry will tonight gather at the Jumeirah Carlton Tower in London to celebrate the winners of the GlobalCapital Global Derivatives Awards.

UK financial market regulators have demanded firms show clear evidence that they are engaging with the transition away from the Libor benchmark.

Nasdaq Clearing said early on Monday that it had replenished 90% of its member default fund, adding it had “no indication” that a member would shirk on its commitments. The deadline for replenishment is on Monday.

Jörg Kukies, secretary of state at the German Ministry of Finance, suggested that the EU’s proposed covered bond directive should not dilute the quality of the product too much. He also wanted to see developments on the Capital Market Union (CMU) by the end of the year and called for an agreement on third-country central counterparties (CCPs).

Autorité des Marchés Financiers, the French markets regulator, has reemphasised the importance of a Europe-wide ban on binary options and restriction on contracts for difference.

More finance and derivatives industry groups this week came out against the leverage ratio and its impact on client clearing, backing the findings of an August report by global watchdogs. In a joint paper, trade bodies including the FIA also expressed concern over Brexit and its potential impact on client clearing.

Three executives from global bulge bracket banks have called for more supervisory cooperation over Brexit, particularly on the side of the EU. All three expressed hopes for a Brexit deal that was more bespoke than just third country equivalence.

The World Federation of Exchanges (WFE) on Friday said that the leverage ratio should recognise the exposure-reducing nature of initial margin, becoming the latest body to call for change on the issue.

One of the central planks of the UK government’s policy on how the financial services sector would cope with a no-deal Brexit could turn out to be illegal under World Trade Organisation rules, and could be challenged by other WTO members.

The UK’s preparations for a no-deal Brexit published this week include a proposal to strip away preferential capital treatment for EU27 exposures — meaning a hit to UK bank capital ratios at the worst time imaginable.