Financial Regulatory Forum

INTERVIEW: Volcker Rule, derivatives in U.S. business lobby’s sights for new year

By Emmanuel Olaoye, Compliance Complete

The U.S. Chamber of Commerce has been a leader in contesting U.S. regulators’ implementation of the Dodd-Frank Act. Lawsuits challenging the Securities and Exchange Commission and Commodity Futures Trading Commission over the justification for the rules have stopped some rules in their tracks and forced the regulators to hire more economic analysts.

With a new Congress due to start on January 3, Compliance Complete sat down with three senior officials at the Chamber to discuss their priority issues for 2013. These include the Volcker rule banning risky trading by banks, exemptions for non-financial users of derivatives, the role of the Financial Stability Oversight Council in money-market fund reform. (more…)

INTERVIEW: Volcker Rule, derivatives in U.S. business lobby’s sights for new year

By Emmanuel Olaoye, Compliance Complete

WASHINGTON, Dec. 24 (Thomson Reuters Accelus) - The U.S. Chamber of Commerce has been a leader in contesting U.S. regulators’ implementation of the Dodd-Frank Act. Lawsuits challenging the Securities and Exchange Commission and Commodity Futures Trading Commission over the justification for the rules have stopped some rules in their tracks and forced the regulators to hire more economic analysts.

With a new Congress due to start on January 3, Compliance Complete sat down with three senior officials at the Chamber to discuss their priority issues for 2013. These include the Volcker rule banning risky trading by banks, exemptions for non-financial users of derivatives, the role of the Financial Stability Oversight Council in money-market fund reform. (more…)

CFTC adopts final rule requiring firms to save their oral communications

By Emmanuel Olaoye, Compliance Complete

WASHINGTON/NEW YORK, Dec. 19 (Thomson Reuters Accelus) – The Commodity Futures Trading Commission on Monday approved a final rule that would require firms registered with the agency to record the oral communications of their brokers for up to a year.

Firms would have to start recording conversations on telephones, voicemail, cell-phones and other media if they trade in a “commodity interest”.  (more…)

Consumer groups see momentum building against more White House authority over regulators

By Emmanuel Olaoye, Compliance Complete

WASHINGTON, Nov. 20 (Thomson Reuters Accelus) - A coalition of public-interest groups is urging Congress to reject a bill that would allow the White House to review major rules proposed by the Securities and Exchange Commission and the Commodities Futures Trading Commission.

The “Independent Agency Regulatory Analysis Act” which was introduced by Republican Senator Rob Portman of Ohio, would give the White House’s Office of Information and Regulatory Affairs the power to ask independent agencies such as the SEC to submit a cost-benefit analysis on “significant rules” or rules that have an economic impact of $100 million.  (more…)

U.S. Treasury to move by year end on plan to exempt forex swaps, sources say

By Emmanuel Olaoye

WASHINGTON, Oct. 24 (Thomson Reuters Accelus) - The U.S. Treasury Department will move ahead after the Nov. 6 U.S. national elections to issue its plan for exempting foreign exchange swaps, a banking industry source said. A senior government official said a decision on the issue was expected by year end, after international standards setters complete work on derivatives margin requirements.

The Treasury plan, which was proposed in April 2011, would exempt instruments such as foreign exchange swaps and forward contracts from new rules affecting dealers in the $650 trillion over-the-counter derivatives market.  (more…)

Kill switches may be too difficult to implement despite new call by CFTC member, expert says

By Emmanuel Olaoye, Compliance Complete

WASHINGTON, Oct. 17 (Thomson Reuters Accelus) - CFTC Commissioner Bart Chilton has called for high frequency traders, or “cheetahs” to face so-called kill switches that would shut down a broker dealer’s trading over erroneous orders or technology glitches. But a trading expert said the measure may be too difficult to implement in practice.

The problem with kill switches lies with the timing of the decision to turn off electronic trading, said Bernard Donefer, a professor of Trading Technology and Risk management in financial markets at Baruch College and NYU Stern School of Business.  (more…)

With new U.S. swaps definitions, the horse is finally put before the cart

By Bora Yagiz

NEW YORK, July 24 (Thomson Reuters Accelus) - The definition of swaps finalized by the U.S. futures regulator is the linchpin in an overhaul that will change the swaps market landscape markedly and offer the promise of lower risk.

In an effort to bring the over-the-counter (OTC) swaps into the regulatory fold for the first time since they appeared in 1981, the Commodity Futures Trading Commission (CFTC) issued a set of final rules this month defining a “swap” under the Dodd-Frank Act, section 721. These rules complement the agency’s other final rule on end-user exemptions as well as those adopted by the Securities and Exchange Commission on “security-based swaps” and “security-based swaps agreements.” They also delineate the jurisdiction for mixed swaps between the agencies. (more…)

Futures customer protections improved in U.S. and overseas after frauds

By Nick Paraskeva

NEW YORK, July 17 (Thomson Reuters Accelus) - The CFTC approved tough customer protection rules for futures firms’ days after the Peregrine default led to over $200 million in missing client funds. Losses arising from a fraud by the owner of the futures broker come soon after a $1.6 billion hole in client funds from the collapse of MF Global. The new rules require daily calculations of client money to be reported, and for senior management to certify cash movements.

The CFTC charged Peregrine Financial Group, and its owner Russell Wasendorf, Sr, of misappropriating customer funds. A recent audit of Peregrine by the National Futures Association (NFA), the self-regulator for independent futures firms, found the firm falsely represented it held $220 million customer funds at a bank account, which only had $5.1million. The firm filed for liquidation Friday, and its owner was arrested. (more…)

Barclays case gives U.S. futures regulator more clout on overseas derivatives, funding

By Nick Paraskeva

NEW YORK, July 5 (Thomson Reuters Accelus) - The U.S. Commodity Futures Trading Commission’s $200 million settlement with Barclays for manipulation and false reporting of benchmark interest rates not only helped fuel a firestorm that consumed the bank’s top management. It also gives the futures regulator more clout to apply new Dodd-Frank swaps rules to activities abroad despite industry and political opposition, and to make a case against congressional Republicans for a strong enforcement budget.

The CFTC joined the U.S. Justice Department and Britain’s Financial Services Authority (FSA) in settling allegations that Barclays had manipulated Libor interbank rates in London that affect U.S. consumers and markets. The fine paid to the CFTC was the largest monetary penalty in the case, and the enforcement came hard on the heels of the revelation by JPMorgan Chase that it had discovered losses on its UK derivatives transactions that may grow to as much as $9 billion. (more…)

Barclays’ governance, compliance weaknesses exposed in U.S. regulator’s findings

By Emmanuel Olaoye

WASHINGTON/NEW YORK, July 3 (Thomson Reuters Accelus) - A U.S. regulator’s case against Barclays revealed significant failures with the bank’s internal controls as well as failures with its corporate governance.

Barclays agreed last week to pay $453 million to U.S. and British authorities to settle allegations that it rigged key interbank lending rates, called the London Inter-bank Offering Rate (Libor) and a separate Euribor rate, by manipulating its reported rates in submissions to the British Bankers Association, which calculated the benchmark figures. (more…)

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