A-Team Insight Exchange is a new event series for 2010, which will combine A-Team’s expertise in financial markets IT with thought leadership from world-class technology innovators and practical experience from financial market practitioners.
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UK FSA’s Risk Head Dewar Sends Out Second Warning on Client Assets; Three Strikes and You’re Out…
As part of its tougher stance towards the market and in a follow up to a related “Dear CEO” letter sent out in January (see our coverage here), the UK Financial Services Authority’s (FSA) managing director of risk Sally Dewar has sent out another letter warning firms to respond to its request for information on their management of client assets. The letter is aimed at those insurance brokers and investment firms that have thus far failed to reply to its previous appeal for these firms to improve the way they protect client assets, including record keeping considerations, and declare their intentions in writing.
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Middle Office Cinderella Finally Getting its Day in the Spotlight Due to New Transparency Requirements, Says Op Risk Panel
The new transparency requirements that are being mooted as part of the MiFID review process by the Committee of European Securities Regulators (CESR) have resulted in a surge of interest and investment in the middle office, according to panellists discussing operational risk at last week’s Xtrakter user conference. Godfried De Vidts, director of European Affairs at Icap, explained that the need for a more harmonised approach to the post-trade space is being highlighted by the push for greater data transparency and the fragmentation of the clearing environment with the addition of new central clearing counterparties (CCPs) on the scene.
September 2014 is Revised Deadline for T2S; New Directive Poses Potential Threat
As noted by A-Team Insight earlier this year (see here), the launch of the European Central Bank’s (ECB) Target2-Securities (T2S) project has been delayed by at least a year due to a “longer than expected” development phase. Hugh Simpson, senior advisor to the T2S programme from Bourse Consult, told delegates to last week’s Xtrakter user conference that new launch date will be September 2014, rather than the previously stated mid-2013. The industry consultation period may have been long enough to delay the launch, but have industry participants really considered the wide ranging impact of T2S and its related directive, including on the corporate actions process?
CA Cheuvreux Report Details MiFID’s Impact on Equity Liquidity
Research by CA Cheuvreux into the outcomes of MiFID on liquidity shows that high-frequency traders could destabilise equity markets, that the roles of market participants – particularly liquidity providers and consumers – have changed, and that traders using dark pools or high-frequency trading strategies should prepare to work in a probabilistic rather than a deterministic environment.
CESR’s CP on Non-equity Markets Transparency Confirms More Derivatives Data Requirements on the Cards
The Committee of European Securities Regulators (CESR) has issued a consultation paper on post-trade transparency this month, which indicates that European firms may soon face a whole host of new data requirements for structured products. The paper, which is part of the ongoing MiFID review process that is being conducted over the course of this year (see our recent coverage here), recommends that trade information with a basic set of data be published for corporate bonds and the more standardised structured products including asset backed securities (ABSs), collateralised debt obligations (CDOs) and credit default swaps (CDSs).
MiFID JWG Reconvening in June, JWG’s Di Giammarino Points to Overlooked Reference Data Aspects of MiFID Review
In light of the current review of MiFID going on at the European level (see recent coverage here), the MiFID Joint Working Group (JWG) is set to reconvene at the start of June to discuss the key business and IT related issues. One such issue will be the impact of all this regulatory work on the reference data space, an area that PJ Di Giammarino, CEO of think tank JWG feels has been too often overlooked during recent discussions on MiFID.
UK FSA Moves from Spreadsheets to XML Submissions for Liquidity Risk Reporting
Following on from its recent testing procedures for the submission of liquidity risk reporting data to its online regulatory reporting system (see details here), the UK Financial Services Authority (FSA) has indicated that rather than accepting spreadsheets for all data as first planned, firms will need to prepare XML submissions. The regulator notes that the manual online or offline keying of data items, especially those required in the FSA047 reports, will be “impractical for all but the simplest set of liquidity assets and liabilities”.
Regulators are Cracking Down on Counterparty Identifiers in Line with the MiFID Review
The UK Financial Services Authority’s (FSA) recent fining of German bank Commerzbank (see our coverage here) for its transaction reporting failures is just one instance of the regulator’s current focus on the data details of a firm’s business. One of the underlying problems in Commerzbank’s case was the incorrect allocation of counterparty codes and the use of proprietary codes for these counterparties, which is exactly why the FSA and other European regulators are so keen for the mandatory inclusion of Bank Identifier Codes (BICs) in these transaction reports, among other data standards.
Deutsche Bank Appoints Ex-JPMorgan Head Newman as New Prime Finance Risk Manager
Deutsche Bank has appointed ex-JPMorgan risk executive Richard Newman as a senior risk manager for Global Prime Finance within the bank’s Global Markets division. Newman will be based in London and will be responsible for providing risk management solutions to international hedge fund clients focused on European markets.
UK FSA Slaps Commerzbank with £595,000 Fine for Transaction Reporting Data Failures
The UK Financial Services Authority (FSA) has fined Commerzbank £595,000 for transaction reporting failures stemming from underlying data errors, including the use of multiple internal codes for the same counterparties. The German bank’s fine may be a fraction of the £2.45 million imposed on Barclays last year (see here), but it indicates that the regulator is continuing to focus on the data details of the reports that it receives from the industry.
Swiss Regulator to Introduce New Liquidity Risk Reporting Regime by End of June
As noted by A-Team Insight at the start of this year (see our coverage here), the Swiss regulator is closely following behind the UK Financial Services Authority (FSA) in its introduction of a new liquidity risk reporting regime. To this end, the Swiss Financial Market Supervisory Authority (Finma) and the Swiss National Bank (SNB) have confirmed this week that the new regime will enter into force on 30 June 2010.
Japanese Regulator Plans to Extend Risk Reporting Requirements for Large Financial Groups
Following the release of its basic blueprint for reform of the financial services market at the end of last year (see here), the Japanese Financial Services Agency (FSA) has this month indicated that it will be drawing up a draft bill, including reforms related to capital and liquidity risk reporting, for governmental consideration this year. A key part of this will be to expand risk controls on large securities companies above an as yet unspecified value of total assets, thus adding more reporting requirements for firms at a consolidated group level.
Wall Street Reform Act Includes Key Risk and Data Requirements in Light of Lehman Failure
The US House Committee on Financial Services’ Wall Street Reform and Consumer Protection Act, which is currently making its way through the US legislative process, is seeking to rectify a number of inadequacies in light of the failure of Lehman, including key provisions around data and risk management. For example, the issue of living wills legislation and the creation of a Systemic Risk Council will both likely compel firms to invest in their data management and risk systems.
Fernbach’s Hamm Talks up Partnership with Intel and HP for Liquidity Risk
In line with its partnership approach to the market, international financial reporting standards (IFRS) and risk management solution vendor Fernbach Software has launched a strategic initiative with HP and Intel to target the liquidity risk management space. Mike Hamm, managing director of the vendor, explains to A-Team Insight that the firms have been working on the launch since January and are aiming to provide an easy to use and quick to deploy technology platform for both stress testing and risk data reporting to those under the FSA’s jurisdiction and beyond.
UK FSA Gives Firms Until 16 July to Submit Implementation Plans for Reverse Stress Testing
The UK Financial Services Authority (FSA) has this month released its implementation timetable to introduce new reverse stress testing requirements, as promised in its December policy statement: Stress and Scenario Testing PS 09/20 (see here). Firms have until 16 July to submit their implementation plans for compliance with the reverse stress testing requirements to the regulator.
Risk Data Challenges Being Exacerbated by "List of Regulatory Unknowns", Agree FS Club Panellists
The level of uncertainty in the industry due to the ongoing debate within the regulatory community with regards to new risk management reporting requirements has proved to be both a blessing and a curse to those in the data business. Panellists at this month’s FS Club agreed that the industry is being forced to take data more seriously but there are significant gaps around risk related regulation that may prove to be pitfalls in the near future.
UK FSA Reveals More About Plans for Soft Launch of Gabriel Liquidity Reporting, Pushes Back Data Quality Testing
During its most recent firms forum on the subject of liquidity reporting, the UK Financial Services Authority (FSA) confirmed that it is planning a soft launch for liquidity risk reporting on its online regulatory reporting system, Gathering Better Regulatory Information Electronically (Gabriel). As noted by the FSA in January (see here), firms are being required to test the submission process for their data items to the Gabriel system, but the regulator has backed off from pushing data quality tests by delaying these for another three months.
US Interagency Regulatory Policy Statement on Liquidity Risk Prompts 22 Industry Responses
Following the publication by five US regulatory agencies of a joint policy statement on principles of funding and liquidity risk management in July last year, 22 financial industry representatives have commented on the proposals. The regulators have this month published these responses to the statement, which adds new requirements for market participants based on the Basel Committee on Banking Supervision’s (BCBS) September 2008 principles.
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Video: Andrew Delaney Talks to Atrium Network's Des Peck 29 Jul 2010 |
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A-Team Insight Podcast - July 2010 22 Jul 2010 |
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A-Team Insight Webinar (Recorded): Trading Beyond the Horizon 07 Jul 2010 |
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