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Flash Crash Trader Fine Endorsed by US Court A US district court judge has entered a consent order brought by the US Commodity Futures Trading Commission (CFTC) against UK-based trader Navinder Singh Sarao. Sarao was accused by US authorities of helping to trigger the infamous flash crash in US equity markets in May 2010 and was extradited to the US recently. The order requires him to pay a $25,743.174.52 civil monetary penalty and $12,871,587.26 in disgorgement. It also permanently prohibits Sarao from further violations of the Commodity Exchange Act (CEA) and CFTC regulations, as charged, and imposes permanent trading and registration bans against him.
Bank Negara Governor Hits Out at NDF Market, MYR at Year’s Low The Malaysian Ringgit is approaching its lowest trading level against the US dollar since the Asian crisis in 1998 when the country was prompted to introduce capital controls. In an attempt to stem the outflow of MYR, the country’s central bank, Bank Negara, last week issued a warning regarding offshore NDF trading – a move widely seen as a reintroduction of capital controls – by sending letters to compliance heads at onshore and offshore banks demanding they commit to ceasing offshore trade of MYR NDFs.
Sexton New Head of NFA Thomas Sexton has been named as the National Futures Association’s new president and CEO, succeeding Dan Roth, who is retiring. The appointment is effective March 1 2017 and was unanimously endorsed by NFA’s board after what the association says was an “exhaustive” search process. Sexton is an existing member of NFA, which is a self-regulatory organisation for the US derivatives industry, having joined the association in 1991 as an attorney and subsequently being promoted to assistant general counsel in 1998, and to general counsel and secretary in 2001.
ESMA Seeks Delay for Clearing Extension The European Securities and Markets Authority (ESMA) has asked the European Commission to delay the extension of mandated clearing to smaller counterparties. Due to a range of reasons, but in particular the fact that the relevant EU legislations are under review or still being finalised, ESMA says it proposes to postpone the phase-in period for central clearing of OTC derivatives applicable to financial counterparties with a limited volume of derivatives activity. ESMA’s report proposes to amend EMIR’s Delegated Regulations on the clearing obligation in order to prolong, by two years, the phase-in for financial counterparties with a limited volume of derivatives activity – those ones classified in Category Three under EMIR Delegated Regulations.
Clearinghouses Pass CFTC Stress Test The five clearinghouses under US jurisdiction have passed the Commodity Futures Trading Commission’s (CFTC) first stress test. The purpose of the test was to assess the impact of a hypothetical set of what the CFTC says is an extreme but plausible market scenarios across multiple clearinghouses and their clearing members. The analysis included five clearinghouses registered with the CFTC located in the US as well as in the UK, they are CME Clearing, ICE Clear Credit, ICE Clear Europe, ICE Clear US, and LCH Clearnet. It encompassed cleared futures and options, interest rate swaps, and credit default swaps. The analysis included the largest clearing members (measured by margin deposited) at each clearinghouse.
More Senior Departures at Thomson Reuters? Two weeks after global head of foreign exchange Phil Weisberg left the firm, as it announced plans to cut 2,000 jobs, market sources tell Profit & Loss that Thomson Reuters has unveiled the first round of cuts to its foreign exchange business. The sources say that Tom San Pietro, head of product management for FXall; Jack Linker, head of liquidity sales, transactions, for the Americas; and John Richards, senior director, liquidity sales, Americas, have all left the firm in the US as part of the cuts. The sources add that Richard Williams, head of sales for North Asia and Japan; Elmer Chiu, sales in Singapore, Sydney-based Simone Halpin, director, FXall, and Amy Goh, head of financial designs, transactions, Asia, have also left as part of the cuts.
CLS Volumes Slightly Lower in October Data from CLS Group signals a small drop off in activity in FX markets in October 2016, however year-on-year the data is more positive. CLS says that the average daily input volume submitted to it, combining the settlement and aggregation services, was 1,015,928 down 2.1% from 1,038,025 in September 2016. The average daily input value submitted to CLS was $4.92 trillion down 1.4% from $4.99 trillion in September 2016. Year-on-year was a more mixed picture, in October 2015 CLS reported input volume of 1,056,574, higher that last month, however the value submitted in October 2015 was lower at $4.64 trillion.
Changes at ISDA The International Swaps and Derivatives Association (ISDA) has announced two senior changes in its organisation. Tara Kruse has been appointed head of ISDA’s margin for non-cleared derivatives implementation effort. She replaces Mary Johannes, who is leaving the association to pursue other interests. Kruse joined ISDA in 2013 as a director in the data and reporting team, and was appointed co-head of data, reporting and FpML in March 2015. As head of the ISDA Working Group of Margining Requirements (WGMR) initiative Kruse will be responsible for helping the industry prepare for the variation margin ‘Big Bang’ on March 1, 2017, and the extension of initial margin requirements to phase-two entities in September 2017. She will also oversee forthcoming updates to the ISDA Standard Initial Margin Model (SIMM) and the management of the SIMM governance framework.
Rowcliffe Takes Icap AP Post Trade Role Icap has appointed Guy Rowcliffe, CEO of its Reset business as head of Asia Pacific, Icap Post Trade Risk and Information Services (PTRI), which comprises a portfolio of businesses, including Reset, TriOptima, Traiana, ENSO, Abide and Icap Information.. In the newly created role, Rowcliffe will be responsible for Asia Pacific regional strategy for Icap’s PTRI business and will represent the company amongst regulators, industry bodies and committees. He will continue in his role as CEO of Reset and will report to Jenny Knott, CEO of Icap’s PTRI division.
Saxo Adds Cross Collateralisation to PB Solution Saxo Bank is boosting its FX prime brokerage solution with the addition of a cross-collateralisation facility between PrimeXM sites in New York, London and Tokyo where it provides FX direct market access. The facility will enable the firm’s prime clients with global liquidity needs to further optimise their collateral by synchronising balances and exposures across the three primary global FX locations. Saxo says the cross-collateralisation facility is a natural step in the evolution of the service which will help its clients avoid over allocation of capital by giving them the ability to use a single pool of collateral across the three major global FX sites, while maintaining a pre-trade credit check per site.