By Wendy Lisney May 21, 2021, Global Investor Group Derivatives trade body ISDA has called for a single risk, capital and margin reporting model as the growing complexity of detail that firms are required to provide puts market participants under increasing strain.

“Management of risk in derivatives markets has changed beyond recognition over the past decade with the introduction of mandatory central clearing, margin requirements for non-cleared trades, trade reporting and revised capital requirements,” said ISDA, the International Swaps and Derivatives Association, in a white paper released on Thursday afternoon.full article

By Elizabeth Marshall May 21, 2021, Reuters Reservation systems for seats. Algorithms that say whether a location is crowded or not. Cameras to show what’s happening in real-time. Trackers that let others know you are there.

Technology that has swept the world for convenience, curiosity, and accountability is arriving at workstations of US bank employees, as they prepare to return to offices in coming months because of the pandemic easing, industry sources and outside vendors said.full article

By Huw Jones May 21, 2021, Reuters A sense of urgency is needed to plug data gaps in how banks in the European Union disclose their green credentials, the bloc’s banking watchdog said on Friday.The European Banking Authority in March set out how banks would have to publish a groundbreaking “green asset ratio” or GAR as a core measure of how business activities are climate-friendly, as defined in the “taxonomy” compiled by the bloc.full article

By Kyle Glazier May 17, 2021, The Bond Buyer The Municipal Securities Rulemaking Board appears poised to do away with a requirement that dealers provide disclosures to customers who may not be invested in municipals, a request industry groups have been making for years.

The MSRB requested comment May 14 on potential changes to Rules G-10 on investor and municipal advisory client education and protection and G-48 on transactions with sophisticated municipal market professionals. The proposed changes would require dealers to make certain disclosures only to customers who hold a muni position or who have made a municipal bond transaction in the prior year, and would exempt SMMPs from receipt of those disclosures.full article

By Alice TchernookovaMay 20, 2021, Practice Insight from IFLR Confusing and contradictory messaging from the US authorities around alternative rates for USD Libor may have negatively impacted efforts to transition away from the controversial benchmark rate. “A number of corporations have identified very confusing messages from the Alternative Reference Rates Committee (ARRC) and the Federal Reserve (Fed) as it relates to both transition timing and alternative reference rate availability,” said Bradley Ziff, senior advisor and operating partner at management consulting firm Sia Partners, during a Libor event hosted by Shearman & Sterling.full article

By Alice Tchernookova May 18, 2021, Practice Insight from IFLR Credit-sensitive alternatives to USD Libor have come under growing scrutiny and criticism from the official sector as they continue to gain popularity among end users.

While credit-sensitive rates are somewhat of a holy grail for some market participants, and close enough to Libor for them to feel comfortable with them, others – particularly on the authorities’ side – think this similarity is too much of a risk to run.full article

By Jeff Cox May 20, 2021, CNBC The Federal Reserve is moving forward in its efforts to develop its own digital currency, announcing Thursday it will release a research paper this summer that explores the move further.

Though the central bank did not set any specific plans on the currency, Chairman Jerome Powell cited the progress of payments technology and said the Fed has been “carefully monitoring and adapting” to those innovations.full article

By Michael S. Derby May 19, 2021, The Wall Street Journal Federal Reserve officials are debating ways they could tame money-market volatility the next time it flares, including with a tool known as a standing repo facility, minutes from their April policy meeting show.

The tool would allow eligible firms to borrow cash from the central bank in exchange for Treasurys used as collateral. Supporters of such a facility see it as a way for firms to quickly obtain dollar liquidity without having to sell Treasury securities, which can create market disruptions if the selling is large enough.full article

By Huw Jones May 19, 2021, Reuters Scrapping get-out clauses for market makers when trading turns rocky could avoid a repeat of the volatile ‘dash-for-cash’ seen at the start of pandemic lockdowns last year, a Bank of England policymaker said on Wednesday.

The BOE and other central banks had to inject liquidity into markets to avoid a freeze as shuttering economies last March to fight COVID-19 triggered extreme bouts of trading volatility.full article

By Huw Jones May 19, 2021, Reuters It should be for clients to decide where they clear euro derivatives, though customers are ready to move business from London to Frankfurt if forced to by the European Union, bankers said on Wednesday.

The London Stock Exchange’s LCH unit clears more than 90% of euro-denominated interest rates swaps, a market that helps companies guard against unexpected moves in borrowing costs.full article

By Lorenzo Migliorato May 19, 2021, Risk The share of credit default swap (CDS) contracts cleared by central counterparties (CCPs) rose to a record 62% at end-2020, data from the Bank for International Settlements shows. Notional amounts of cleared CDS surged 23%, or $983 billion, to $5.2 trillion year on year.full article

By Martin Arnold May 19, 2021, Financial Times The rising debt levels of Eurozone governments and companies have made it more likely that economic aftershocks from the Coronavirus pandemic could trigger financial instability, the European Central Bank has warned.

While the economic outlook has brightened recently due to falling infection rates and accelerating vaccinations, the ECB said on Wednesday in its twice yearly financial stability review that the bloc was still far from safe.full article

By Richard Metcalf May 18, 2021, GlobalCapital The International Capital Market Association has published definitions for a set of terms such as “axe” that are used to indicate interest for bonds in the secondary market, in response to frustration on the buy-side about the loose interpretations sometimes used by dealers.Traders have used the term “axe” for decades to describe a desire to either buy or sell a particular bond at a set size. The longer phrase from which it derives, “having an axe to grind,” is also sometimes used.full article

By Li Renn Tsai, Tradeweb AsiaMay 18, 2021, Regulation Asia The clock is ticking for Libor. Nearly a decade after the benchmark lending rate was hit by a high-profile fixing scandal, the financial industry is moving ever closer to the transition date for a range of replacement rates, as transaction-based methodologies are taking center stage.  At the beginning of 2021, we see different market participants at different levels of preparedness for a fundamental shift that will affect everything from interest rate swaps to syndicated loans and credit cards.

Those who think that doing nothing is an option, or that the pandemic has delayed the need to prepare for the new rates, are making a mistake that could leave them unprepared further down the line.  In early March, the ICE Benchmark Administration (IBA), the body that manages Libor, said that it would stop publishing most Libor rates at the end of 2021, with a few USD rates staying in action until June 2023....

By Stefan Boscia May 18, 2021, City A.M. Lord David Frost has said City of London firms need to “get on and do its own thing” post-Brexit as he signals that equivalence is unlikely.Boris Johnson’s UK-EU relations minister also told a House of Lords committee today that Brussels will continue to take decisions on equivalence that are “in their interest.”full article

March 19, 2021, Institutional Asset Manager The World Federation of Exchanges (WFE), the global industry group for exchanges and CCPs, has published its annual derivatives report, analyzing trends in the exchange-traded market in 2020.According to the report, in 2020, there was a 40.4% increase in derivatives trading volumes, an increase more than three times larger than the year before (11.4%) and greater than the surge during the financial crisis of 2007-2008. The increase is attributed to the need to manage risk under the heightened  levels of uncertainty and volatility produced by the COVID-19 pandemic.full article

By Chris Flood May 18, 2021, Financial Times A top US regulator has signaled that greater scrutiny of index providers could be necessary after the Securities and Exchange Commission hit S&P Dow Jones Indices with a $9 million penalty for publishing incorrect data on a key measure of US equity market volatility.

Hester Peirce, one of five politically appointed commissioners at the SEC, said on Monday that it was time to examine “whether a regulatory framework for index providers was appropriate and, if so, what it should look like.”fill article

By Philip Stafford May 17, 2021, Financial Times Winters suggests the delayed reaction may have been because UK banks were able to use an exemption from UK regulators to trade in the EU while they made arrangements to go to the US, as guided by the watchdog.

Even so, traders are seeing little difference in prices on their screens for the same swap traded in different countries, says Enrico Bruni, head of Europe and Asia at Tradeweb. “There are consistent liquidity pools between the various venues in cash markets, and we have seen quote and hit rates remain strong and consistent across all venues, with no discernible differences.”full article

By Samuel Wilkes May 18, 2021, Risk London will face further loss of swaps trading activity unless stop-gap powers conferred on the Financial Conduct Authority can be made permanent before they lapse at the end of next year, market participants warn.“There will be expiries of transitional relief on a variety of fronts – the derivatives trading obligation at the end of next year being one example,” says Christopher Bates, a partner at law firm Clifford Chance. “So, there are cliff-edge changes in the regulatory regime yet to happen.”full article

By Steve Kaaru May 13, 2021, CoinGeek Blockchain technology has the potential to disrupt an $867 trillion market, a report by the World Economic Forum (WEF) has revealed. The report looked at the integration of blockchain in derivatives, debt markets, asset management, securitized products and more.

Titled “Digital Assets, Distributed Ledger Technology and the Future of Capital Markets,” the 100-page report sought to provide policy makers, regulators and executives with insights on the emerging use cases of distributed ledger technology (DLT) in capital markets.full article

By Annabel Smith May 17, 2021, The Trade European asset managers could be excluded from significant pools of liquidity following the UK’s decision to axe the share trading obligation (STO) following Brexit, a Liquidnet report has warned.

The liquidity landscape report found that between April and September 2019 75% of trading occurred between the UK and international institutional counterparties, with only 25% including EU asset managers.full article

By Francesco Canepa May 17, 2021, Reuters Eurozone banks face potential climate hazards such as floods and droughts on up to a third of their loans to companies, with lenders in Greece, Portugal, and Spain among the most exposed, the European Central Bank said on Monday.

The ECB study is part of a broader analysis of the risks that climate change poses to the financial sector, ranging from physical damage to changes in regulation or in consumer preferences.full article

As Jerome H. Powell nears the end of his term as Federal Reserve chair, Ms. Yellen will have a say over whether he should stay on. Many progressive Democrats want him replaced.