Derivs - Regulation

After discussions with the Bank of England and the Sterling Risk-Free Reference Rates Working Group over the impact of Covid-19 on companies’ plans to transition from Libor, the UK’s Financial Conduct Authority said on Wednesday that the final deadline of the end of 2021 was immutable.

Proprietary trading firms, dealing with swollen options supply, are pleading for regulators to hurry along changes to counterparty credit risk calculations (SACCR) that in their present form are threatening their ability to make markets.

ISDA chief executive Scott O’Malia on Monday stressed the importance of keeping markets open despite concerns about the spread of Covid-19.

Prominent short sellers have criticised European financial regulators’ clampdown on short selling as being counterproductive. Meanwhile, US hedge fund Bridgewater Associates has been unwinding its multibillion short positions in European stocks, after price falls across indices on the continent in recent days.

The US Commodity Futures Trading Commission gave market participants adapting to working from home some relief late on Tuesday, with sweeping no-action relief on voice recording requirements. The UK’s Financial Conduct Authority hasn’t gone so far, but has offered firms some flexibility.

Financial industry lobbyists have told the US Commodity Futures Trading Commission (CFTC) that its proposed revisions to swap dealers’ and major swap participants’ capital requirements will have “a significant negative impact on the US swaps market”.

As clear daylight emerges between jurisdictions making their transitions away from Ibor benchmarks, the cross-currency basis swap market could become a headache.

MEP Markus Ferber has come out swinging at the European Securities and Markets Authority for appointing chief French regulator Robert Ophèle to temporarily chair its central counterparty (CCP) supervisory committee.

The European Central Bank’s private sector working group on euro risk-free rates has recommended market participants replace Eonia products with €STR-referencing derivatives “as soon as possible” and flagged a threat to swaptions in the transition.

A politically charged fight over position limits on commodity derivatives appears set to kick off after the European Commission opened a consultation on the second Markets in Financial Instruments Directive (MiFID II) this week.

The European Commission has opened a public consultation on MiFIR/MiFID II, as it takes stock of two years of the sweeping regulations.

US Commodity Futures Trading Commission (CFTC) commissioner Rostin Behnam has added his voice to the growing clamour for derivatives market participants to find a solution to fallback issues as they transition away from Libor.