Wed, Sep 17, 2014
A A A
Welcome Guest
Free Trial RSS
Get FREE trial access to our award winning publications
Industry Updates

World Federation of Exchanges urges international regulatory bodies to modify capital standards for exchange traded derivatives in support of G20 reforms

Tuesday, November 27, 2012
Opalesque Industry Update: The World Federation of Exchanges (WFE), representing 59 publicly regulated stock, futures, and options exchanges and associated clearinghouses, today called on international regulatory bodies to modify capital standards to appropriately reflect the liquidity and efficiency of exchange traded derivative (ETD) markets. In a letter to the Financial Stability Board and other policy organizations, WFE encouraged global standard setting bodies to demonstrate continued support for the G20 commitments to bring greater transparency and central clearing to derivative markets by ensuring that the costs of ETD markets are not unnecessarily increased.

The Basel Committee on Banking Supervision (BCBS) has issued an Interim Capital Standards proposal that “seeks to apply a blanket 5-day margin period or risk standard to highly liquid and transparent ETDs,” the WFE says in a letter from Hüseyin Erkan, Chief Executive Officer, and Jorge Alegria, Chairman of the International Options Markets Association (IOMA) which is the WFE’s global association of options and futures exchange leaders.

If adopted by the BCBS and implemented by national bank regulators, the 5-day capital standard would conflict with current margin standards for highly liquid ETDs, resulting in increasing costs for users of exchange-traded markets. “This may force exchange users (e.g. manufacturers, food producers, employee pension funds, and investors) to either discontinue critical hedging practices or move activity to the less transparent OTC derivative markets. Such outcomes would clearly undermine the G20 OTC market reform commitments,” the WFE letter states.

The Financial Stability Board (FSB), an international body established by the G-20 nations in 2009 after the global financial crisis, is working in coordination with other international organizations such as the International Organization of Securities Commissions (IOSCO) and the Basel Committee on Banking Supervision (BCBS) to develop global capital and margin standards for both exchange traded and “over-the-counter” (OTC) derivative instruments. “The WFE respectfully requests global standard setters to eliminate the 5-day margin period of risk banking capital standard for exchange traded derivatives and demonstrate international support for the more appropriate current standards for the highly liquid, transparent, and efficient exchange traded derivative markets. Such action by global standard setters will be instrumental in advancing the G20’s commitment to bring increased transparency and the safety and soundness of central clearing to the global derivatives market and broader financial system.”

The full letter from WFE to the five regulatory bodies may be viewed here.

Press Release

BM

What do you think?

   Use "anonymous" as my name    |   Alert me via email on new comments   |   
Today's Exclusives Today's Other Voices More Exclusives
Previous Opalesque Exclusives                                  
More Other Voices
Previous Other Voices                                               
Access Alternative Market Briefing


  • Top Forwarded
  • Top Tracked
  • Top Searched
  1. Investing - Big hedge funds show interest in Alibaba, Maglan joins other hedge funds in rush to Argentinian assets[more]

    Big hedge funds show interest in Alibaba From Hereisthecity.com: …Three other major hedge fund investors who have shown interest in the IPO are Dan Loeb of Third Point, David Tepper of Appaloosa Management and Dan Benton of Andor Capital Management. All three were among the roughly 800 p

  2. Investors looking at other sources for hedge fund-like returns[more]

    Komfie Manalo, Opalesque Asia: Investors who are always on the lookout for higher gains are looking at alternative sources of income, particularly exchange-traded fund industry that generates hedge fund-like returns, according to

  3. Investors move capital out of Scotland ahead of referendum[more]

    Benedicte Gravrand, Opalesque Geneva: Ahead of Scotland’s independence referendum on September 18, asset managers, investors and pension savers are moving billions of pounds out of the country,

  4. Indices - Greenwich Global Hedge Fund Index up 1.57% in August (+4.22% YTD), Eurekahedge Hedge Fund Index rebounds in August gaining 1.36% (4.22%), Lyxor Hedge Fund Index was up 0.9% in August (YTD +1.7%)[more]

    Greenwich Global Hedge Fund Index up 1.57% in August (+4.22% YTD) The Greenwich Global Hedge Fund Index ended the month of August up +1.57%. Equity markets were up in August with the MSCI World Index up +2.00%. This was primarily driven by the performance of the S&P 500 which was up +4.

  5. Alpha Strategic buys stake in Premium Point Investments[more]

    Benedicte Gravrand, Opalesque Geneva for New Managers: Alpha Strategic plc, a affiliate of