Last week, the Canadian Securities Administrators (CSA) opened for comment the latest in its series of consultation papers on the regulation of over-the-counter (OTC) derivatives. CP 91-404 explores issues, considers alternative solutions, and sets out proposals for the segregation and portability of customer accounts and collateral associated with OTC derivatives transactions cleared through a central counterparty (CCP). The protection of customers’ collateral is an important topic; indeed, Aite Group wrote about account segregation (as well as CCPs) in Top 10 Trends in Institutional Securities & Investments, 2012. We have come to expect the CSA’s Derivatives Committee to explain complex matters clearly and develop regulatory … Continue Reading →

The Markets in Financial Instruments and amending Regulation (MiFIR) released on October 20, 2011 looks to introduce competition in the European derivatives space through open access to central counterparties (CCPs) and trading venues, and fair licensing of and access to benchmarks. These changes came as a shock to certain major dominant players in the derivatives market, but were welcomed by those looking to enter the derivatives markets. After all, derivatives margins are a lot higher than those in equities. Since the launch of derivatives products on the Turquoise platform, Turquoise’s Adrian Farnham has been particularly vocal on this space. He … Continue Reading →

At SunGard’s recent London City Event, a panelist made the controversial comment that “governments implicitly support CCPs.” That assertion will, hopefully, never have to be tested. If it is, the legislative reaction would be to place extreme constraints on the capacity of central counterparty clearinghouses (CCPs) and terminate any aspirations CCPs may hold toward interoperability among CCPs across national borders. A decision to support a CCP out of taxpayers’ money would be a non-starter. Taxpayer support of CCPs would be totally unacceptable to politicians and their national electorates. CCPs’ operations transform systemic risk; they diffuse systemic risk and create systemic … Continue Reading →