Why are many derivative market participants still objecting to exchange clearing of the remaining OTC derivative contracts?
Banks argue that derivative paper work is a mess and too hard to clean up for exchange clearing.
Credit default swaps (CDSs) are one type of derivative contract, and regulators in the US and EU put them on a faster track to exchange clearing.
They can gain from the transparency on the exchange clearing.
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The CFTC announced on June 14 it is going to miss its July 16 Dodd-Frank Fin Reg deadline to publish detailed rules for exchange clearing of many types of derivatives.
The important benefit of exchange clearing is a clearing house acts as the central counterparty to both sides of a CDS transaction, thereby reducing risk on both sides of the transaction.
In anticipation of the new regulations, DB set up a new derivative exchange-clearing unit called Markets Clearing for listed and over-the-counter derivatives for interest rates, foreign exchange, credit, commodities and equities contracts.
These CDS contracts might be triggered for payouts soon and hopefully the new exchange-clearing operations will protect CDS buyers from counterparty failure.
None of this is particularly novel: in recent years Frankfurt's stockmarket, derivatives exchange and clearing house have all been brought under one roof, and Singapore and Australia are planning the same.
It owns 10% of the Oslo Stock Exchange, and 60 other exchanges, depositories and clearing organizations, including the Nordic Exchange, an umbrella term used to describe the stock exchanges of Helsinki, Copenhagen, Stockholm, Iceland, Tallinn, Riga and Vilnius.
Credit default swaps becoming more exchange-oriented with centralized clearing perhaps even a consolidated tape.
There are several exemptions, including primary equity and bond issues, spot foreign-exchange deals and deals involving central clearing-houses.
With his plan to take over Montetitoli, Mr Capuano wants to get clearing and settlement under the exchange's roof.
The derivatives market will continue to grow with the growth in technology and algorithmic trading techniques which will push trade volume higher and more and more of this trade will go through an exchange or at least be tracked better using clearing houses.
The republics also discussed a Ukraine suggestion to create an interstate clearing-bank, which would establish exchange rates between republican currencies.
An example is virt-x, a small electronic exchange for European blue-chip shares which offers clearing and settlement alternatives: nearly all the liquidity has migrated to just one of them.
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It took the intervention of Congress and the Securities and Exchange Commission to set up the Depository Trust and Clearing Corporation which moved American non-government securities markets from seven settlement agencies to one settlement organisation and one central counterparty.
Euronext, a continental stock exchange that offers central counterparty and netting services via its clearing house, Clearnet, says it is happy to discuss partnerships with other European clearing houses to find a pan-European solution.
The UK's competition regulator has given the London Stock Exchange Group the go-ahead for its planned takeover of clearing house LCH Clearnet.
In other words, he is leaning towards the German model of a vertical silo in which a stock exchange oversees not just the trading of securities, but their clearing and settlement as well.
During that interview, Greifeld spoke about centralized clearing and having two regulators the Securities and Exchange Commission and the Commodity Futures Trading Commission.
The London Stock Exchange is to buy a 60% stake in LCH Clearnet, the European clearing house, but for a lower price.
They have also coaxed leading international banks into setting up a global clearing house to reduce the risk of loss should big foreign-exchange trades not be completed as the parties agreed.
And when she appeared in a full-page Wall Street Journal ad cutting a hundred-dollar bill in half as a symbol of her discount philosophy, her long-time clearing house dropped her, and she was briefly threatened with Securities and Exchange Commission expulsion.
"We're pleased they're going to repropose" amendments, says Susan Milligan, senior vice president of government relations for Options Clearing, the clearing house for the major options exchanges, including the Chicago Board Options Exchange, American Stock Exchange, Boston Options Exchange and International Securities Exchange.
In July, virt-x encouraged its two clearing houses London Clearing House and x-clear jointly to act as a counterparty for the exchange's users.
The issue of clearing and settlement was a crucial factor in the government's 2011 decision to reject Singapore Exchange Ltd.
Bovespa provides trading, clearing, custody, and other services with regulation of the financial markets by the Securities and Exchange Commission of Brazil.
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Not to be outdone, local competitor Singapore Exchange (SGX) was in the news last month with regards to an acquisition of UK-based clearing house LCH.
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Once the bond offering is successfully sold to QIB's through the holding and clearing companies in New York and Europe, the bond will be officially listed on a foreign stock exchange (in this case, the Hang Seng).
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