Continued market uncertainty following the UK’s
vote to leave the European Union vote has led to a flight to safe haven
currencies and raised questions about the future of financial regulation,
although corporates appear to be coping well with ...
Financial regulations, particularly for
benchmarks, are likely to be materially aligned in the UK and rest of Europe by
the time Brexit is completed, however obtaining “equivalence” status for the UK
might not be quite as straightforward, a number of ...
The European Securities and Markets Authority (ESMA) has published a Q&A document seeking to clarify expected standards around certain practices, including best execution.
The questions have been set following feedback and enquiries from the general public, other regulators and market participants.
On best execution ESMA publishes two Q&As, the first explains the different between the “reasonable steps” firms were expected to take to obtain the best possible execution under MiFID I and the “sufficient steps” they are required to take under MiFID II.
There’s a wave of change sweeping across non-equity markets driven by regulatory initiatives and the rise of non-bank liquidity providers. Other factors driving buy-side adoption of Transaction Cost Analysis (TCA) in FX are the need to generate alpha on investment returns, and regulatory scrutiny
of trading practices in over-the-counter (OTC) instruments.
TCA is a broad term which doesn’t describe the actual analysis to be carried out. Asset managers who rely on custodian banks to execute currency trades have a compliance obligation to analyze these FX trading costs.
By monitoring fill rates, TCA tools can help traders determine if ‘last look’ is occurring, and then decide whether or not to shift their trades to other venues.
As 2016 comes to a close the regulatory agenda shows no signs of slowing. While the FX market itself has largely not been directly addressed by new regulations, it has been swept up in many of the broader OTC market reforms.
March 1 will mark the implementation of the variation margin requirements for non-cleared derivatives, meaning that thousands of counterparties – including asset managers, pension funds, insurance companies and hedge funds – will need to change their existing collateral support agreements, or set up new ones, before this date.