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FIA/ISDA jointly respond to ESMA’s Clearing Obligation CP no. 6
On 31 August, FIA and ISDA submitted a joint response to ESMA’s consultation paper on Clearing Obligation under EMIR (no.6), in particular relating to the treatment of intragroup transactions. FIA and ISDA members strongly support ESMA’s move to extend the derogation from the clearing obligation for intragroup transactions concerning third-country entities based in jurisdictions which do not benefit from an equivalence determination under article 13(2) of EMIR. Were the derogation not extended, particularly in the time available before the expiry of the current exemption, the impact on the ability of European derivative market participants to operate on a cross-border basis would be severe. The full response can be found here.
CONTINUE READINGFIA co-signs statement calling for extension of tax derogation for European Power, Gas and Carbon Markets
FIA and 17 other trade associations active in energy markets jointly submitted a statement highlighting an urgent need to confirm the extension of the VAT derogation for a domestic reverse charge mechanism (“DRCM”) in European electricity, gas and emission allowance markets. The option for member states to apply DRCM was introduced to combat VAT fraud in those markets and, unless extended, will expire on 31 December 2018. Before the introduction of DRCM, billions of VAT had been defrauded from European Exchequers. The associations recommend an extension of the derogation by at least five years, a confirmation that DCRM also applies to Certificates of Origin, and comprehensive application of DRCM across all EU member states to ensure market participants can maintain trust in the integrity and safety of electricity, gas and emission allowance markets.
CONTINUE READINGFIA Announces Fintech Startups Chosen for Fourth Annual Innovators Pavilion
Washington, D.C.—FIA today announced that 15 companies have been chosen to exhibit in the FIA Innovators Pavilion at the 34th Annual Futures & Options Expo, which will take place in Chicago on Oct. 16-18.
CONTINUE READINGMarket Information for National Day of Mourning, Wednesday, December 5, 2018
FIA has gathered the following information for individuals and companies who use the various financial markets on a daily basis. In observance of the National Day of Mourning to honor former President George H.W. Bush, who passed away November 30, US equity and fixed income markets will be closed on Wednesday, December 5. US equity index and fixed income futures and options markets will also be closed for trading during US business hours. All other US futures markets will open as usual.
CONTINUE READINGNeither a Borrower Nor a Lender Be: On CCPs and Banks
A central counterparty, viewed from an economic perspective, is a “commitment mechanism.” The ultimate function of a CCP is to assure performance of contract obligations between its members. They do so by becoming substituted counterparties to all trades submitted for clearing—becoming, in effect “the buyer to every seller and the seller to every buyer”—thereby ensuring the performance of open contracts.
CONTINUE READINGTAIFEX delivers a stellar performance and hits an all-time trading record in 2018
Overall trading volumes on the Taiwan Futures Exchange reached another all-time record in 2018. More than 308 million contracts were traded, an increase of 16% compared to the previous year. In addition to growth in the exchange's core products, two other distinct factors also contributed to this exciting growth: the popularity of TAIFEX's night session, which more than doubled compared to 2017, and the expanding participation of international investors, who now account for 20% of the exchange's total volume.
CONTINUE READINGFIA responds to Volcker Rule consultation, urges greater legal certainty for clearing services
On Oct. 17, FIA submitted a comment letter responding to amendments to the Volcker Rule proposed by U.S. banking regulators and market regulators in July. The letter focused on a section of the proposed amendments that relates to clearing services provided by a bank to hedge funds and private equity funds that are serviced by a bank affiliate acting as, for example, an investment manager, investment adviser, commodity trading advisor, or sponsor to the funds. The letter sought to clarify that this type of clearing service is not the type of activity that was intended to be prohibited by the rule, and expressed FIA's support for a rulemaking by the Commodity Futures Trading Commission to allow all banks to provide clearing services to funds that are customers of affiliates.
CONTINUE READINGFIA offers recommendations for CFTC and SEC harmonization
On Nov. 14, FIA submitted a letter to the CFTC and the SEC proposing several areas where it recommends that the CFTC and the SEC coordinate and harmonize their regulatory programs for cleared derivatives. FIA focused in particular on simplifying rules that apply to firms that are dually registered as futures commission merchants with the CFTC and as broker-dealers with the SEC. These areas include record-keeping, reporting, margin rules, and oversight of products subject to both agencies' authority. FIA also proposed codifying certain exemptions for security-based swaps.
CONTINUE READINGFIA asks SEC to amend proposed margin requirements for credit default swaps
On Nov. 19, FIA submitted a letter to the Securities and Exchange Commission in response to a re-opening of the comment period on proposed rules relating to single-name credit default swaps and other security-based swaps. The proposed rules, which include capital, margin and segregation requirements for security-based swap dealers, was first issued in November 2012 but never finalized. In October 2018, the SEC updated the proposal and re-opened the comment period to seek additional feedback from market participants. In its letter, FIA urged the SEC to reconsider a proposed requirement that clearing firms seek SEC approval for their margin methodologies and internal risk models. Instead the SEC should adopt a "harmonized approach" that defers to the standard margin methodologies used by clearinghouses such as ICE Clear Credit, FIA said. In addition, FIA urged the SEC to coordinate with the Commodity Futures Trading Commission regarding the proposed capital requirements and pointed in particular to three proposed amendments that could impair the ability of clearing firms to clear security-based swaps.
CONTINUE READINGWalt Lukken's opening remarks at Asia 2018
Welcome everyone to the 14th annual Asia Derivatives Conference.
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