• 628

    THE CLIENT CLEARING OFFERING: balancing cost, risk and client service

    Financial institutions are facing pressure to offer clearing services to their clients. This is a costly endeavor that offers little financial upside for firms: It is a low-margin service that requires a large capital commitment to clearing houses as well as a heavy investment in technology. Phil Matricardi and Adam Kott discuss the costs and risks of offering client clearing as well as how firms may begin collaborating in the future to meet their clients’ needs. High-cost, high-touch banking and advisory services, such as over-the-counter (OTC) derivative brokerage, mergers and acquisitions advisory and fixed income capital markets, have been either [...]
  • 586

    EUFTT: the tax that is dividing a union

    The European Union Financial Transaction Tax (EUFTT) is one of the most talked about regulations in the last couple of years. Despite the controversy, it will likely be imposed on almost all financial transactions by early next yearóif not in late 2014. In this article, Ajay Mathur and Thomas Zimmermann provide an overview of the current state of the discussion around the EUFTT and highlight some key concepts of the proposed legislation. They also address the challenges financial institutions may face during implementation and important next steps firms should take to prepare for the EUFTT. Some attention will also be [...]
  • 566

    SWAP EXECUTION FACILITIES: a catalyst for OTC market change?

    Could mandatory electronic execution of over-the-counter (OTC) derivatives, stemming from the 2009 G20 Pittsburgh Summit, act as the catalyst in spawning new business models? Jim Myers, Kimon Mikroulis and Paul Gibson discuss the impact of mandatory electronic execution for certain OTC products under the most advanced of these electronic mandates, Dodd-Frankís swap execution facilities (SEF). As the OTC markets are entering a phase of rapid evolution, concepts that were originally created in the exchange-traded world, such as sponsored access, agency execution and general price aggregation, are emerging as critical issues to be addressed by OTC market participants. Introduction The Dodd-Frank [...]
  • 1059

    REGULATION SCI: regulators take aim at exchanges’ electronic systems

    As issues with electronic systems continue to impact exchange operations, the US Securities and Exchange Commission (SEC) has proposed a new regulation designed to improve the stability, performance and security integrity of a variety of computerized systems in the listed securities markets. In this article, Jim Myers introduces Regulation Systems Compliance and Integrity (Reg SCI), discusses industry reaction and proposes steps exchanges can take now to prepare for this new legislation. Over the past six months, several major exchanges have fallen victim to systems-related issues, losing valuable time and money—and damaging their reputations in the process. On April 12, the [...]
  • 799

    BENCHMARKING AND MATURITY ASSESSMENTS: how a small time contribution garners major insights and helps to improve data management

    With the onslaught of regulatory change programs and corporate realignments, more firms are performing internal current-state assessments of their practices and procedures and reaching out to the industry to benchmark against peers. Often, these initiatives require considerable time and effort, yet once the final reports are delivered, typically only 20% of the findings are acted upon. In this article, Sylvia Darwell and Gavin Kaimowitz explain how taking a slightly different approach can provide the majority of the results in a fraction of the time. What is Peer Benchmarking? Benchmarking is a continuous, systematic process used to evaluate and compare the [...]
  • 813

    MARGIN ON UNCLEARED SWAPS: a review of the key elements that will drive margining

    With adherence to the Dodd-Frank Act and EMIR clearing requirements well underway, the attention of global regulators has turned to the non-centrally cleared over-the-counter (OTC) derivatives portion of the OTC sector. In 2011, the G20 agreed to add margin requirements for non-centrally cleared derivatives to the reform program. Subsequently, the Basel Committee on Banking Supervision (BCBS) and the International Organization of Securities Commissions (IOSCO) have been tasked with developing a set of key principles to ensure that appropriate margining practices are established for all non-centrally cleared OTC derivative transactions. Recently, the third and final iteration of the framework establishing the [...]
  • 660

    REPORTING FOR EMIR: firms that assume they are covered because of Dodd-Frank implementations may need to reconsider

    Through most of 2012, derivative dealers across the globe have been frantically making efforts to become compliant with the Commodity Futures Trade Commission (CFTC) implementation of the Dodd-Frank Act’s Title VII reporting regulations. On February 28, 2013, most of the approximately 70 registered Swap Dealers1 stumbled across the finish line for the last asset classes to be reported (Equities, Commodities, and FX). While undoubtedly a major milestone, the CFTC implementation of Dodd-Frank was one of the first of the G20 reporting commitments to go live with many more to follow, and there is enough difference in its European Union (EU) [...]
  • 524

    REGULATORY REPORTING: how do capital market participants assure ongoing compliance within an ever-changing regulatory landscape?

    The investment banking industry is undergoing a monumental transformation as the world’s regulators shift their focus away from exchange-traded instruments to the strict enforcement of a new regulatory regime in the historically unregulated and opaque OTC derivative market. Nowhere is this shift more apparent than in the US where the Commodities Futures Trading Commission (CFTC) is pushing ahead of the other global regulators with all four of the G20 commitments: mandated execution (trading), clearing, capital and reporting obligations. These requirements are certain to transform the investment banking industry altogether. As the industry is currently implementing a number of tactical fixes [...]