In the run-up to the Brexit vote, many firms trading OTC interest rate swaps were understandably worried about the impact of short term market volatility on the margin that they would need to post to their clearing houses.
Given the large moves in Swap rates that we highlighted in our BREXIT Day One and Day Two blogs, I thought it would be interesting to look at the impact on Swap margins.
Harmonization and coordination are easy enough to identity as objectives, but harder to achieve. Regulators can take a lot of credit, then, for their efforts to develop a coordinated global margining framework for non-cleared derivatives.
London is the world centre of the complex plumbing of markets, but leaving the EU complicates that
Confounding all elite prognostication (more on this aspect below), British voters repudiated their self-anointed better-thans and voted to leave the EU.
Statement from Agustín Carstens, Chairman of the Global Economy Meeting, on the implications of the EU referendum in the United Kingdom (25 June 2016)
Posted by Alec J. Burnside, Cadwalader, Wickersham & Taft LLP, on Friday, June 24, 2016
Posted by Ben Perry, Sullivan & Cromwell LLP, on Friday, June 24, 2016
Potential economic impact from a mis-match in timing of the new un-cleared margin rules between the EU and US (and the rest of the world)
The best case scenario is that some or all of the EU regulations and laws which apply are transposed into UK law. Worst case, UK becomes an outsider and the focus for financial services moves on-shore into Europe.
Last night the UK population voted to leave the European Union, by a narrow margin.
A brief statement from the FCA - nobody really knows what the future for UK based financial services will look like.
Clear Compress has created an innovative, on-demand approach to trade compression, offering an exciting new alternative for clearing members and clients of clearing members alike that can benefit from reducing gross notional and associated costs. In this interactive breakfast meeting we aim to address the barriers to compression and demonstrate whether the benefits are achievable.
New regulatory measures start to deliver benefits as efforts to reduce outstanding derivatives have achieved brilliant results in the last 18 months. By June 2015, the derivatives market had shrank to USD 553 trillion from its peak of USD 711 trillion in the first half of 2014. Aggregate compressions over the same period was of USD 265 trillion, three times as much as in the previous 18-months.
I saw a news article recently about how high frequency trading firms are turning to artificial intelligence (AI) to improve their trading performance and profit. Two large companies were mentioned with each having a slightly different approach.
In a decision of 9 June 2016, the German Federal Court of Justice (Bundesgerichtshof, “BGH”) has ruled that the determination of the close-out amount in a netting provision based on the German Master Agreement for Financial Derivative
The first 50 industry/profressional attendees can register for free. Registered OTC Space readers can make use of a 10% discount.
All firms that participate in the Capital Markets Industry - from Banks, Fund Managers, Institutional Asset Managers, and Corporate Treasuries to Exchanges and Industry Utilities - need to stay abreast of existing and emerging regulations that dictate what, how, when, and where they need to report about their activity.
There is no end of research extoling the grim realities or lamenting the high costs and negative impacts of Trade and Transaction Reporting, unfortunately, it’s not going away. We thought it was time to explore the positive perspective. In this live event we have asked 4 firms with varying stakes in the Trade and Transaction Reporting domain to discuss the perceived, achieved and potential positives to be gained from this unavoidable obligation.
Big banks are, ironically, ‘building’ small. Faced with an unprecedented compliance requirement in the form of new margin mandates, banks are doing what they have always done: tackling each regulation anew by constructing small compliance ‘houses’.