A collection of stories from SmartBrief publications and around the web…
OCC says Volcker implementation to cost banks between $412M and $4.3B: That price tag sounds shockingly low. Considering all the fuss Wall Street has raised over the past few years desperately trying to beat back Volcker, that range is downright amazing. The estimate is for the cost spread across only the banks the OCC regulates. I would venture to guess those firms have spent somewhere in that range breathlessly lobbying against Volcker.
Wait … Goldman Sachs is calling for more regulation?: In this Wall Street Journal op-ed, Goldman Sachs President and COO Gary Cohn offers a pretty detailed plan for curbing some aspects of high-frequency trading. Outgoing CFTC Commissioner Bart Chilton probably thinks this is some kind of going away present from Cohn. A more cynical view would be that Goldman traders aren’t exactly the fastest “cheetahs” on the street, so Cohn is really just trying to level the playing field. (read more…)
Participants in exchange-traded derivatives markets are urgently looking toward automation in the clearing and confirmation process, and their budgets reflect this priority. According to a new report from Omgeo and consulting firm Greenwich Associates, less than half of buy-side firms reconcile trades in real-time, and two-thirds of exchange-traded derivatives investors still rely on phones, fax machines, emails and text messages during the settlement process.
Manual confirmations increase risk, shown the by the average of 100 trade breaks monthly for buy-side firms, according to the report. This problem will only be compounded as more capital moves into derivative markets due to macro forces. The report notes that “a back-up in rates and unrest in emerging market countries are causing periodic volatility and spikes in volume” the rising cost of capital due to Basel III and other factors will likely mean long-term growth in the demand for exchange-traded derivatives, with event-driven spikes in demand all but certain. (read more…)
Highlights from Day Two of the 39th Annual International Futures Industry Conference in Boca Raton, Fla.
Swinburne calls for more compromise from U.S. on cross-border regulations: U.S. regulators need to do a better job of compromising as they continue the march to implementing global derivatives reforms, according to Kay Swinburne, a member of the European Parliament. “I’m not sure that the U.S. and other large countries are used to the concept of compromise. So when it comes to substituted compliance, compromise is really important,” said Swinburne, who is a member of the Committee on Economic and Monetary Affairs.
Wetjen sees political traction for derivatives-transaction fee: Mark Wetjen, acting chairman of the Commodity Futures Trading Commission, says a proposed fee on derivatives transactions appears to be gaining support among lawmakers. “Maybe I shouldn’t say this, but I will: I do get the sense that there’s more interest in this as each year passes — not so much from market participants but from other parts of the government,” Wetjen said. (read more…)