• CFTC urged to exclude cleared and exchange-traded swaps from 'de minimis' count
    16 August 2018
    The US Commodity Futures Trading Commission should exclude cleared and platform-traded swaps from its tally of firms’ derivative business toward a registration threshold, the biggest US clearinghouses and a foreign bank group said.

    If the CFTC were to concur while permanently adopting the proposed $8 billion 'de minimis' cutoff, it could significantly reduce the number of banks subject to heightened oversight as swap dealers.

    CFTC Chairman Christopher Giancarlo has said he favors an exemption for cleared swaps from the threshold count.

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  • Brokers' SI systems to keep some tick-size advantage over exchanges in EU plan
    16 August 2018
    Brokers will be able to keep an advantage over exchanges in their systems for stock trading with clients by quoting in smaller price increments when handling large orders, according to revised EU plans.

    The European Commission has rejected regulators’ proposals for a wider crackdown on brokerage systems known as systematic internalizers, or SIs, offering smaller “tick sizes,” according to a letter obtained by MLex.

    The commission instead plans a more narrowly drawn rule that still aims to prevent SIs from harming the flow of trading by chopping up orders into smaller moves, such as a tenth of a cent for stocks otherwise quoted in one-cent increments.

    SIs will only be obliged to apply tick-size rules for orders “below the standard market size,” the EU executive said in the Aug. 10 letter to the European Securities and Markets Authority. The measure will cover stocks and depositary receipts, the stand-ins typically used for shares in companies based in other countries.

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  • Bank groups at odds with CFTC, each other over calculation of traders' derivatives business
    15 August 2018
    Bank groups are objecting to a US Commodity Futures Trading Commission proposal for how to calculate the amount of traders’ derivatives business in determining whether they must register as swap dealers.

    At the same time, the groups are at odds with each other over who should decide the methods for calculating the notional amount of these firms’ swaps under the CFTC plan to keep the $8 billion 'de minimis' registration threshold.

    The CFTC’s proposal calls for delegation of these calculations to its swap dealer and intermediary oversight unit, headed by staffer Matthew Kulkin.

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  • Fed should go back to drawing board on capital surcharge, banks say
    14 August 2018
    The US Federal Reserve should reassess its design of the capital surcharge for the eight largest banks now that it is due to be combined with stress test results in determining a firm’s capital requirements, banking groups said.

    The surcharge, which is supposed to reflect the added threat to financial stability posed by a large bank, is miscalibrated, disadvantages US firms and fails to take into account firms’ improved resiliency in recent years, according to both the groups and chief executives of the biggest banks.

    “Addressing these flaws is important not only to establish greater confidence in the Federal Reserve’s capital and stress testing framework but also to create a precedent for global regulatory capital standards,” said The Clearing House and other banking associations.

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  • US Treasury official warns virtual currency firms to create anti-money-laundering 'culture'
    13 August 2018
    The top US enforcer of money-laundering laws threatened to hold virtual currency businesses accountable for failing to establish a “culture of compliance” with these rules.

    Kenneth Blanco, head of the US Treasury Department’s Financial Crimes Enforcement Network, said too many firms aren’t creating strong anti-money-laundering programs until after they learn of an impending federal examination.

    “This does not constitute compliance,” he told a Chicago technology conference* last week (see here). “It is not a culture we will tolerate.”

    Blanco added: “A strong culture of compliance should be part of building your operations from the ground up, and you can expect that we will identify where this is not taking place and take appropriate action.”

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