Tue, Jul 7, 2015
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. Opalesque Exclusive: New systematic strategy managed alongside research firm outperforms S&P500[more]

    Benedicte Gravrand, Opalesque Geneva for New Managers: An emerging CTA manager explains how he runs his strategy, which is based on an index produced by a research firm. Peter Turk is head of

  2. Opalesque Exclusive: New systematic strategy embraces machine learning[more]

    Benedicte Gravrand, Opalesque Geneva for New Managers: The founder of a New York-based systematic trading firm, which offers a hybrid between alpha strategies and alternative feta at lower fees, describes his approa

  3. Larry Robbins' hedge fund Glenview buys 1m Tenet Healthcare shares[more]

    Komfie Manalo, Opalesque Asia: Glenview Capital Management said it bought an additional 979,482 shares at Tenet Healthcare Corp valued at $53.80 million, raising its stakes in the healthcare services company to 15.16%, reported

  4. Legal - Grayson’s hedge funds under scrutiny for possible ethics violations, Court rejects hedge fund’s motion to block merger of Samsung affiliates[more]

    Grayson’s hedge funds under scrutiny for possible ethics violations From Freebeacon.com: Rep. Alan Grayson is finding himself in hot water over managing hedge funds that bear his name, actions that are in possible violation of House ethics rules. Sitting members of Congress are prohibite

  5. Hedge funds decline in June as stocks tumble on Greek woes[more]

    From Bloomberg.com: Hedge funds posted losses across strategies last month as uncertainty over whether Greece will remain in the euro sent global stock markets tumbling. Winton Capital Management declined about 3.1 percent in June in its $12.1 billion Winton Futures Fund, leaving it down 1.9 percent

 

banner