By Justin Cash June 15, 2021, Financial News A high-profile group of MPs has urged the prime minister to undergo a radical shakeup of MiFID II rules in the wake of Brexit.

Key elements of the directive around costs and charges disclosure as well as rules on position limits should be scrapped, according to the government’s Taskforce for Innovation, Growth and Regulatory Reform.

full article

By Alexandra Harris and Benjamin Purvis June 15, 2021, Bloomberg More and more, investors are wondering whether the Federal Reserve will tweak its monetary policy toolkit to help out money markets that are starting to drown in a sea of cash.

The Fed’s existing facilities have helped alleviate the impact of the growing dollar glut in short-term funding markets that’s outstripping the supply of investable securities and weighing down front-end rates. But officials can only continue to do so if money-market funds, which help funnel more than $4 trillion of cash investments into short-term instruments, are functioning properly.full article

By Dylan Tokar June 14, 2021, The Wall Street Journal The US Securities and Exchange Commission said it would consider changes to regulations passed under the Trump administration, a move that drew criticism from its Republican commissioners.

Among the regulations that the SEC plans to revisit are amendments to its whistleblower award program and a rule requiring oil, gas and mining companies to disclose payments made to foreign governments. Both rules were passed late last year over opposition by the agency’s Democrats.full article

By Huw Jones June 15, 2021, Reuters A digital euro could suck away 8% of euro zone banks’ customer deposits, analysts at Morgan Stanley have estimated, although the share may be far higher in some of the smaller countries in the 19-nation bloc.The European Central Bank is expected to speed up work on a digital euro in the coming months and although a formal launch could be a few years away, economists are looking at potential implications.full article

By Marc Jones June 15, 2021, Reuters Bank of England Governor Andrew Bailey promised “tough love” for some financial technology firms and “disappointed ambitions” for others, as the central bank seeks to ensure that innovation in cryptocurrencies does not create financial instability.Bailey, speaking to the annual conference of financial trade body TheCityUK, said the BoE did not oppose competition, but did want financial innovation to serve the wider public interest.full article

By Daniel Thomas and Jim Pickard June 11, 2021, Financial Times A UK government task force is set to recommend sweeping regulatory reforms to the City of London and fast-growing sectors of the economy as ministers seek to free British businesses from EU red tape.

Prime minister Boris Johnson set up the group, led by former Conservative party leader Iain Duncan Smith, with a “mission to identify opportunities” after Brexit. full article

By Saikat Chatterjee and Thyagaraju Adinarayan June 3, 2021, Reuters Think of an exclusive poker game where the minimum bet is close to $1 million. The stock-trading version, “dark pools” that host blockbuster trades, are pulling in major money in Europe.

Their rise has been swift.full article

By Hamad Ali May 26, 2021, WatersTechnology The widespread adoption of video communications platforms such as Zoom and Microsoft Teams during the pandemic brought to the forefront new concerns about compliance and conduct risk for traders working remotely. Now over a year later, as traders and bankers start making their way back to their offices, video communication platforms are here to stay.“What we are seeing is that those behaviors of using these tools are now ingrained,” says Mark Whiteman, CEO of UK-based communications technology provider Citycom Solutions. “Everybody is used to collaborating and communicating this way, which they were not pre-pandemic. Even if people do go back into the office full-time, which I very much doubt because there are a lot of benefits of remote and home working—both financial and well-being—they are going to use these new tools.”full article

June 8, 2021, ESMA The European Securities and Markets Authority (ESMA), the EU’s securities markets regulator, has today issued an opinion on product intervention measures communicated by The Netherlands Authority for the Financial Markets (AFM). These measures concern turbos which are high-risk leveraged products with which investors speculate that the prices of the underlying asset, such as a share, an index or a currency, will rise or fall. ESMA’s opinion concludes that the proposed measures are justified and proportionate.full article

By Thomas Helm June 10, 2021, Practice Insight from IFLR Although there is still much uncertainty around where the post-Brexit divergence cards will fall, market participants expect a simplification of UK MiFID II transparency rules, according to sources.

The FCA’s decision to axe the share trading obligation (STO) and review double volume caps (DVCs) in April was a firm signal of the UK’s willingness to take a more liberal approach and remove some MiFID pain points.full article

By Philip Stafford June 3, 2021, Financial Times Fishing and farming sparked fierce debate in Westminster over whether to follow EU standards or not. Financial services, an industry that dwarfs both of them combined, is diverging with barely a murmur of disagreement.

It jars with British prime minister Boris Johnson’s disappointment that the Christmas Eve agreement “didn’t go as far as we would like.”full article

By Thomas Helm June 3, 2021, Practice Insight from IFLR While the UK’s Financial Conduct Authority (FCA) looks to revise MiFID II as part of its post-Brexit review of capital markets regulation, the EU is also engaged in a complex series of reforms that has already started to generate a library of reports, statements, consultation papers, and calls for evidence.

Indeed, this latter process spans areas as diverse as transparency measures, market data costs, consolidated tape, transaction reporting, organised trading facility (OTF) regimes, multilateral trading, position limits and position management, algorithmic trading, SME growth markets, and product intervention measures.full article

By Najiyya Budaly June 1, 2021, Law360

Europe’s securities regulator said on Tuesday that it has finalized guidelines that will recommend that trading venues quickly publish data on prices as it seeks to make financial markets more transparent and give participants an overview of trading activity.

The European Securities and Markets Authority has published final guidance on how trading venues should publish market data. Information on the price of trades should be published after each equity trade “on a reasonable commercial basis,” according to the rules. The venues should then make it available to the public, without charge, 15 minutes later.

full article

By John Crabb May 27, 2021, Practice Insight from IFLR The majority of respondents at the first day of the IFLR European Capital Markets Forum expressed concern about the divergence of the MiFID II rules affecting the UK and the EU’s primary markets.

When polled on the topic during a session on the ongoing MiFID II review, 80% of respondents suggested that they were worried about deviating rules as a result of Brexit. Just 10% were not concerned.full article

By Samuel Wilkes May 25, 2021, Risk You wouldn’t catch a miner going down a shaft littered with dead canaries. Nor will you catch the buy side wanting to start reporting under a regime their peers are still wrestling with three years after it was implemented.

And yet, repeated recommendations by the European Union’s watchdog have pressured legislators to push buy-side firms into scope of a dreaded reporting regime set out within Europe’s markets rules.full article

Being an effective supervisor of any sort – a risk manager, a regulator, a parent – means following a simple rule: don’t reward bad behaviour.

In the eyes of many of its members, the National Securities Clearing Corporation has failed to observe that rule. The lynchpin of the US equity markets, NSCC – which processes the best part of $2 trillion worth of trades every day on behalf of investors large and small – is facing serious questions over its handling of broker Robinhood’s flirtation with bankruptcy in late January.

The basic facts of the episode are well-established: in the early hours of January 28, Robinhood, broker to some 13 million largely retail clients, many of them betting on surging meme stocks, received a $2.2 billion add-on to its margin call that far exceeded its stated capital and available funding. By early morning, the charge had been halved; by mid-morning, it had been rescinded entirely. In the intervening time, Robinhood had moved to...

By Telis Demos March 9, 2021, The Wall Street Journal

Sometimes the arcana of bank regulation becomes a matter of market fascination. Often it ends up not being quite as important as everyone had hoped.

The latest example is whether or not the Federal Reserve will extend an emergency pandemic policy to exclude cash and Treasuries from banks’ supplementary leverage ratios, a key regulatory measure. Doing so would give them more capacity to gather deposits and buy government bonds. If the Fed doesn’t extend this after it is set to expire on March 31, the argument goes, there might be even more upward pressure on yields in the Treasury market.full article

By Julie Segal March 8, 2021, Institutional Investor

Being a Wall Street research analyst was once the crowning achievement of a career. 

Now it might be a stepping stone to somewhere else.

full article

By Helen Bartholomew March 9, 2021, Risk

According to Tradeweb, Sonia swaps liquidity is already commensurate with sterling Libor instruments, even at longer maturities.

The OTC trading venue saw average daily volume of £29.7 billion in Sonia OIS during the fourth quarter of 2020, outpacing sterling Libor activity by almost three to one. This electronic activity is almost exclusively cleared – transactions with maturities beyond the current three-year cutoff for mandatory clearing accounted for just 8% of traded Sonia notional on the platform. However, longer-dated contracts represented 78% of Sonia swaps risk, measured by DV01.  

“Given the expected end-date being this year, liquidity across the Sonia curve is robust and we see a significant amount of activity in the cleared space above three years for Sonia,” says Bhas Nalabothula, head of European interest rate derivatives at Tradeweb. “It’s not a surprise that Sonia...

By Brian Croce March 8, 2021, Pensions&Investments

No one ever said replacing LIBOR, the predominant derivatives and fixed-income valuation benchmark supporting hundreds of trillions of dollars in contracts, would be easy.

With millions of investments tied to the London interbank offered rate, such as interest rate swaps and long-duration fixed income, investors and their service providers could have to renegotiate with counterparties on a new benchmark, but coming to an agreement isn’t so simple, sources said.full article