CFTC's keynote address @ Boca Raton conference

/
Timothy massad @boca2015

Timothy massad @boca2015

On Wednesday 11 March, Timothy Massad, Chairman of the CFTC addressed the gathered masses in a keynote speech. The full speech can be found here but here is a quick overview of his talking points:

  • Regulation should be set up in a manner that avoids excessive risk build-up but also enables a proper foundation for the derivatives industry to thrive
  • The CFTC is finishing the rule writing on IRS moving towards the CCP implementing different requests from the community such as exemptions in reporting for certain users or packages
  • The final Dodd/Frank implementations mostly around the uncleared business and the margin requirements
  • The CFTC is working together with the European and Asian peers to get regulation in line as much as possible, but emphasizes that it will not be identical
  • Automated Trading Strategies will be an increased focus for the CFTC going forward, as well as cyber security
  • 75% of standardized swaps are now cleared via clearing houses. This means that the CFTC has to increase its focus on ensuring their stability
  • All measures that are taken have one thing in common, it should enable the CFTC to  be proactive in esuring the integrity of the system
  • Further discussions are being held on looking at risks other than the extremely rare defaults, such as operational stucture, security and the viability of recovery plans
  • The CFTC would like to do more examinations but lacks the resources to do so
  • The CFTC believes that rigorous ongoing oversight and a broad range of policies and procedures are instrumental in ensuring the longevity of this industry and that central clearing is fundemental  to the health of the markets

 

FIA's Mark Spanbroek pens article on MIFID II

/

It's Boca Raton week this week, the annual Florida outing for executives in the financial industry. So, plenty of industry news to report. 

Next week, it's the annual FOW Amsterdam in the Hilton. A usual guest speaker there is Mark Spanbroek. After a big career at Getco, Mark now represents the interests of Trading Firms as Vice Chairman of the FIA European Principal Traders Association. In this capacity, Mark wrote an article venting concern about upcoming Mifid II regulation. In short, only a colloquial Dutch phrase sums it up: "Bezint eer gij begint". Or, if we have to make an effort to sum it up, Mark states that we should really consider what we're doing right now in order for us not to regret these decisions in a couple of years from now.

It's a good read and will provide plenty of discussion points for next weeks FOW. Click here for the full article.

Everything you need to know about the AFM in 2015

/

Let’s face it, more oversight and regulation is here to stay and it will never, ever go away. And, it is not all necessarily bad. Apart from the obvious pain of lots of paperwork and extra costs, we can all agree that this sector needs more stability and above all, it needs to regain trust. In order for the sector to grow, to attract more money but also the ‘right’ kind of people to work in this industry we need to be trusted.

The AFM, the Dutch regulator, plays an important role here. The AFM is our gateway to the European regulatory institutions and the political processes that drive them. One of the things the AFM is seeking in this sector is more transparency. And, in an effort to set the right example, they’ve issued an agenda for 2015, outlining the focus points of their oversight for this year.

So, if you’re up for it; it is only 66 pages. Click here for the full document.

One of the things that the AFM will zero in on, according to BEURS.NL  is HFT. As part of their capital markets focus, they will investigate HFT in the Netherlands in the publish a report on this in the third quarter. Read that article here

Another report will be produced on the quality of the advice given to investors and the handling of previous scandals as can be read in this report from AMWEB.

And, especially accountants can expect a lot of visits from the people on the Vijzelgracht. As much as went wrong in the financial sector, the accountant always had your back or he actualy had no idea what he was accounting. That needs to change dramatically. Click here for the article from Accountantweek.

Prop Roundtable Paper

/

FOW organized an interesting roundtable discussion in the UK and published a PDF document. Interesting read. If you're familar with the industry, there is nothing new or shocking to discover but it would confirm what you probably already know; the nature of traders is changing to the 'nerdier' type (sorry boys), margins will remain thin, costs to enter, regulatory changes, and difficulty in clearing higher the barrier to enter, discouraging new blood into this industry.

Read the full article here 

Does HFT have a future?

/

If you're a fan of American tv-series, you will know that the US Patriot Act is often used as a sort of 'enabler' to get things done, bypassing the usual rules.

According to Craig Pirrong, professor at the University of Houston, the same thing could apply to the DoddFrank act and HFT. He feels that, regardless of actual argumentation or merits, the Act can be used to kill off HFT, just because HFT is of inconvenience to some.

Click here for his article and blog.

UK 1 - ECB 0; Clearinghouses allowed to remain on an island

/

In a legal battle between the UK and the ECB, the European general court ruled in favor of the UK and annulled the location policy for Clearing Houses to handle Euro denominated transactions to be handled within the Eurozone. 

The policy, instituted four years ago, was never effected and now the UK can be certain that the city of London can remain Europe's financial center, housing clearing moguls like ICE Clear and LCH.Clearnet.

More info: http://www.ft.com/fastft/286422/uk-wins-court-battle-with-ecb-on-euro-clearing