Jim Allen, CFA, head of Americas capital markets policy at CFA Institute, and Eric Boess, CFA, director and global head of derivatives at RCM Allianz Global Investors, discuss the impact of derivatives reform on global derivatives trading.
Of the shift fromover-the-counter (OTC) derivatives trades onto exchange-like structures, “The general idea to make markets more transparent and hence more stable is absolutely right. The problem is how you do it, and what you achieve on the way there might not be exactly only positive.”
Central counterparties need to work on implementing effective resolution regimes, and "authorities must take steps to ensure that CCPs do not themselves become a source of systemic risk," according to a Financial Stability Board discussion paper. The paper is open for comment until Feb. 1. Futures & Options World (subscription required) (15 Nov.)
UK Prime Minister Theresa May says that despite the resignation of two Cabinet ministers and vocal opposition from her party to a draft Brexit agreement, she is determined to "see this through." A change in course on Brexit would subject the country to "deep and grave uncertainty," she says. Politico (15 Nov.)
Libor is likely to be discontinued, and other benchmarks are available, but Libor alternatives aren't being written into financial contracts. Banks say there is too much uncertainty to reference alternative benchmarks, despite regulators' frustration the process is moving slowly. Practice Insight (15 Nov.)
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