Merkel to Lead High-Frequency Trading Crackdown

Nearly half of Germany’s market trading volume is derived from algorithmic computer trading. Now, Chancellor Merkel’s cabinet is expected to draft rules subjecting these high-frequency traders to regulation. If the new rule passes through German parliament, traders will be certified and overseen by...

New Life for Credit Default Swaps?

On the heels of reduced volume in the credit derivatives market, Wall Street is adding new financial instruments. Markit, an index provider, will now include CIT Group, Calpine Corp, and Charter Communications in its North American high-yield CDX index. They hope their inclusion will drive banks to launch...

FX Exemption Decision After Election

Several industry participants and a senior administration official have suggested that the decision to exempt currency derivatives from new rules will be issued by the end of the year. “We have gotten a strong sense in meetings with the U.S. Treasury that the decision will likely be delayed until after...

ISDA Chairman Says Keep Libor

The Financial Services Authority is publishing its recommendations for legal changes to Libor on September 28. In advance of the report, ISDA chairman Stephen O’Connor has stated that Libor should be retained in the short- and long-term until a suitable alternative is found. “Libor must continue to be...

CME’s New Product Based on Goldman Sachs Patent

CME Group, one of the biggest U.S. clearers of interest rate swaps, announced on Tuesday that they will offer a new suite of futures contracts, with Goldman Sachs acting as a market maker to boost liquidity. Now there are reports that the new futures contract is based on a patent owned by Goldman Sachs. The...

CFTC Charges Company with $53 Million Forex Fraud

The CFTC has issued a civil enforcement action against Senen Pousa and Joel Friant of Investment Intelligence Corporation. The company, which does business as ProphetMax Managed FX, is accused of committing fraud against nearly 1,000 clients worldwide. U.S. District Judge Lee Yeakel of Texas has issued an...

Confusion Over FX Swaps Ahead of New Deadline

The American Bankers Association plans to write Treasury Secretary Timothy Geithner to ask for clarification ahead of new rules slated for October 12. The new rules mandate that businesses using derivatives to protect against currency fluctuations begin counting swap transactions. If businesses rise above an...

Volcker Rule to be Completed After Election

After an initial delay, the Volcker Rule is on track for completion by the end of the year, confirms Martin Gruenberg, FDIC Acting Chairman. “The agencies are working on it. I think that’s the intention,” he said at the American Bankers Regulatory Symposium in Arlington, VA. The Volcker Rule, a mandate...

European Regulator Calls for HFT Ban

European Central Bank (ECB) governing council member Ewald Nowotny said Thursday that high-frequency trading should be banned, saying it does not benefit markets. Responding both to HFT enthusiasts who claim it provides markets with much-needed liquidity, and proponents of a balanced approach that would...

Collateral Transformation May Conceal Systemic Risk

In response to higher collateral requirements for derivatives trades, banks will allow clients to borrow Treasury notes and similar assets that qualify as collateral, in return for lower rated securities that do not. While this would help clients who are short on collateral to continue trading, it would also...