From CEO, Andy Coyne – Taking Stock

Like the rest of the marketplace, we at Traiana a keeping a sharp eye on regulatory developments impacting the foreign exchange derivatives marketplace. The coming months will see the fruition – in terms of implementation start dates – of a raft of regulatory measures that will affect market participants across the board: from clients on both sides of the business, to trading platforms and clearinghouses.

Among the ongoing developments has been the CFTC’s issue of interim relief that clarifies the treatment of non-US individuals conducting swaps trades with non-US branches of US banks. First, until the earlier of the finalization of its own proposed cross-border guidance or the end of the year, swaps trading by non-US persons with non-US branches of US banks will not affect the determination of the requirement to register with the CFTC.

The CFTC has also confirmed that FX swaps and forwards may be excluded retroactively from decisions on whether an entity is a swap dealer or major swap participant, should the Treasury Secretary exempt such instruments from the definition of the term ‘swap’ before year-end.

Recent CFTC clarifications also include reporting requirements for cleared swap trades, more detailed specification on client collateral under Legal Segregation Operationally Comingled (LSOC), and more clarity on timeliness and pre-clearing credit checks.

Beyond the FX swaps market, the CFTC proposed regulations aimed at enhancing protections for customers and their futures funds held by Futures Commission Merchants (FCMs) and derivatives clearing organizations. In OTC derivatives, the requirement for clearinghouses and FCMs to move to the LSOC clearing model for client collateral came into force November 8

Meanwhile, in Europe, the European Securities Markets Authority (ESMA) has draft a set of Regulatory Technical Standards on derivatives that outlines implementing rules for elements of the European Market Infrastructure Regulation (EMIR). This is by no means final, however, and practitioners should expect to see further provisions of EMIR – among them, details on the margin for uncleared derivatives, and aspects of the intra-group exemption – are expected to emerge over the coming weeks and months.

Finally, more amended texts emerged from the European Council and ECON committee of the European Parliament covering the Markets in Financial Instruments Directive and Regulations (MIFID and MIFIR).

As you can see, there’s a lot going on. You can be sure that Traiana is on top of all the developments affecting its clients’ business, and will be monitoring developments in 2013, which promises to be a year of high regulatory activity.