Derivs - Regulation

After much heated debate, the Derivatives Service Bureau (DSB), which generates international securities identification numbers for some over the counter derivatives, seems to have successfully navigated the first week of the Markets in Financial Instruments Directive’s second coming.

Five years after being pushed on to trading venues in the US by the Dodd-Frank Act, over-the-counter derivatives players are beating a similar path in Europe, under the Markets in Financial Instruments Directive II. Most people think MiFID II has been a worse experience, and will make it harder for small players. But efficiency gains may follow. Ross Lancaster reports.

The London Stock Exchange this week reaffirmed its commitment to open access under the second Markets in Financial Instruments Directive, as major European exchanges and clearing houses (CCPs) were granted exemptions from the requirement until July 3 2020.

Crédit Agricole has added to the momentum in systematic internaliser sign up, joining other banks in registering as one well ahead of a 2018 deadline.

Repo traders convened this week in Brussels to rethink how to fix the plumbing of financial markets and mulled using other forms of collateral in the market.

Amid all of the hand-wringing about the advent of the Markets in Financial Instruments Directive on January 3, there are some firms which are set to be clear winners, and welcome the start of the controversial regulation.

As the prospect of a ‘hard Brexit’ looms over the City of London, UK politicians are facing the humiliating prospect of losing financial market primacy to Paris. The derivatives market is one area where participants are actively looking across the Channel, worrying Nicky Morgan, chair of the UK parliament’s Treasury Select Committee.

The head of the foremost derivatives regulator in the US, Christopher Giancarlo, has issued a warning to European regulators on incoming regulation, condemning “costs and regulatory burdens” to the US economy.

The FCA has imposed its first fine for failure to report derivatives trades under the European Markets Infrastructure Regulation (EMIR) — but endemic cultural issues in large banks suggest it won’t be the last.

European and US derivatives regulators have struck common ground in their approach to electronic trading and agreed equivalence in their oversight of the OTC market, a move that will reduce margin requirements for cross-border market participants.

The Basel Committee on Banking Supervision (BCBS), which is working to improve the stability of financial markets after the 2008 crisis, on Friday announced it would soften its terms on banks' derivatives liabilities.

The chief counsel to former Commissioner Sharon Bowen, Petal Walker, followed her boss on the way out of the Commodity Futures Trading Commission (CFTC) on Tuesday.