Derivatives: EU, US strike derivatives deal – by Patrick Temple-West

The European Union and the United States on Wednesday February 10 struck a long-awaited deal on how to regulate the global derivatives market, worth an estimated $550 trillion.

Once fully implemented, the deal will permit U.S. and European central clearing counter-parties to continue doing business in each other’s jurisdictions.

CCPs, or clearing houses, stand between the two sides of a derivatives trade, ensuring its completion even if one side goes bust.

Jonathan Hill, the EU’s financial services chief, said the deal, which was three years in the making, means that “European CCPs will be able to do business in the United States more easily, and that U.S. CCPs can continue to provide services to EU companies.”

Timothy Massad, chairman of the Commodity Futures Trading Commission — the European Commission’s opposite number in the talks — said in a statement that the deal “will ensure that our global derivatives markets remain robust, while keeping our financial system as stable and resilient as possible.

Additionally, it is a significant milestone in harmonizing regulation of our derivatives markets.”

Read more: EU, US strike derivatives deal – POLITICO

Derivatives: EU-US split here to stay, exchange heads fear - by Tom Osborn

European and US derivatives regulation will remain split for years to come, potentially limiting competition and threatening liquidity, according to the heads of two major exchanges.

Speaking today at the Futures Industry Association's IDX conference in London, Andreas Preuss, chief executive of Eurex, warned that twin-speed market reforms – and conflicting national priorities – are making it harder for exchanges and clearing houses to reach customers on both sides of the  Atlantic.

"We have, and will continue to have for years to come, an asymmetry in regulation between the United States and Europe. The asymmetry has implications for market accessibility... [look at] how complicated it is for a European exchange or clearing house to set up their business in the US," said Preuss.

Dealers and clearing houses alike have railed against the implementation of differing and sometimes conflicting derivatives rules by national authorities. As one example, US stipulations on the protection of customer collateral could prevent contracts executed on US venues from being cleared in London, as is the case for several hundred Ice-listed energy futures.

Read more: EU-US split here to stay, exchange heads fear - Risk.net

European Parliament passes key reforms on derivatives and banking union rules - Suzanne Lynch

Almost three years since the European Commission published its plan for revisions to the Markets in Financial Instruments Directive (Mifid) following public consultation, the European Parliament yesterday signed off to the new rules. 

Mifid II, as it’s known, aims to tighten rules on the derivatives markets to curb speculative investment and protect investors’ interests. Mifid II was one of a number of pieces of financial legislation rubber- stamped this week by the European Parliament, which meets for its final session before elections in less than six weeks. 

Unsurprisingly, in light of the financial crisis, EU legislation and policymaking have been dominated by financial regulation in the past five years. 

Outgoing internal markets commissioner Michel Barnier, who is running himself in next month’s elections, has spearheaded a raft of measures since succeeding Charlie McCreevy in the role in 2009, much to the annoyance of some in the financial services and banking industry.

Read more: European Parliament passes key reforms on derivatives and banking union rules - Financial Services News | Business News | The Irish Times - Wed, Apr 16, 2014

Italy - Banking Industry: Forty Million Fiscal-shielded Euros Seized at MPS Bank

Estimates of losses over derivative contracts subscribed by the Monte dei Paschi di Siena (MPS) bank for the Antonveneta takeover are running at about €730 million. The figure was totted up by the MPS board at the end of a more than six hour-long meeting on Wednesday. The impact on MPS’s accounts on 31 December 2012 of the operation code-named Santorini is €305 million, the Alexandria operation adds €273 million and the potential losses from Nota Italia come to 151.76 million.

Yesterday, financial police officers seized fiscal-shielded cash and securities held at banks and trust funds for a total of about €40 million. Former chair Giuseppe Mussari and his number two Antonio Vigni now face charges of market rigging and issuing a fraudulent prospectus, as well as of criminal association for the purpose of defrauding the bank. The new MPS CEO Fabrizio Viola said: “We are the injured parties and will act to recover the money”.

As expected, the Siena public prosecutor’s office witnessed the first questioning of a top Mussari-era executive, the former director general Antonio Vigni. Mr Vigni was quizzed for more than eight hours without a break and could be called back for further questioning in the next few days, probably after public prosecutors Aldo Natalini, Antonio Nastasi and Giuseppe Grosso have interviewed Giuseppe Mussari.

Read more: Forty Million Fiscal-shielded Euros Seized at MPS - Corriere della Sera