Articles by: Tom Riesack

Derivatives Regulation – a Corporate Treasurer’s Nightmare

by December 7, 2012 at 10:08 am 0 comments

By Tom Riesack and Ute Herzog In the ‘new normal’ of highly regulated financial markets, corporate treasurers are feeling the reverberations in their daily activities. Corporates are using swaps to hedge their commercial risks, stemming from currency, interest and commodity price exposure. To mitigate such risks treasurers have a wholeRead More

Trading swaps in a cleared world

by November 2, 2012 at 8:53 am 0 comments

Meet Joe. Joe is a swaps trader within a small institution that has a straightforward hedging strategy at both the micro and macro level. Being a price-taker, Joe has built and maintained broker relationships that enable him to easily get a swap priced at an acceptable level provided counterparty limitsRead More

Bilateral Margin Requirements: A Liquidity Vortex?

by October 24, 2012 at 9:35 am 0 comments

$30,000,000,000,000 – This huge figure is the estimated additional liquidity financial institutions worldwide will need if the current proposal by the International Organisation of Securities Commissions (IOSCO) and the Basel Committee on Banking Supervision (BCBS) on margin requirements for non-centrally-cleared derivatives were to be implemented. The estimate was calculated byRead More

The LEItmotif of the OTC BUSIness is PreoccUPIed with Data Integrity and Consistency

by October 16, 2012 at 11:02 am 0 comments

Just one year ago you were probably aware of ISINs, BICs and/or SWIFT codes. But LEI, USI or UPI would probably have elicited a mere shrug. In the regulated world of OTC derivatives, these acronyms are the foundation for stringent and consistent regulatory oversight. The Dodd-Frank Act mandated the creationRead More

If They Build It, Will They Come? A Look at Electronic OTC Trading Venues

by October 16, 2012 at 10:58 am 0 comments

One of the mandates of the 2009 G20 summit was to ensure the electronic trading and central clearing of standardised OTC derivatives. OTC or ‘over-the-counter’ is seen as the antonym to exchange-traded or ‘listed’ in most literature. Now, global regulators seem intent on removing OTC from the trading landscape. ShiftingRead More

Trade Repository Reporting: The Regulation of Unintended Consequences

by October 3, 2012 at 9:05 am 0 comments

In order to monitor systemic risks as near to real-time as possible regulators have introduced the requirement for market participants to report all OTC derivatives trading activity to swap data repositories (SDR).The aim is to boost transparency and surveillance capability. The idea is strikingly elegant, yet fraught with complexity whenRead More

OTC clearing and Its Impact on Collateral Management

by October 1, 2012 at 8:58 am 0 comments

Collateral: banks, broker-dealers, funds and clearinghouses all need it more than ever. Collateralization of bilateral as well as cleared OTC trades is essential to ensure a functioning and stable financial market that is able to absorb potential shocks of Lehman-esque dimensions. Upcoming regulations like Basel III, Dodd-Frank and EMIR andRead More

‘Extraterritoriality’ in trading — try saying that quickly, three times over!

by October 1, 2012 at 8:58 am 0 comments

After almost two years since the Dodd-Frank Act (DFA) was put on the statute books, the first swap-related articles finally take effect on 12th October this year. Now everyone can be assured they are trading, clearing and reporting under a common set of rules, right? Not so. While DFA requiresRead More

OTC regulatory complexity fosters clearing insecurity

by October 1, 2012 at 8:57 am 0 comments

“[…] The financial crisis that began in 2007 had its origins precisely in over-complex regulation.” These are the wise words of Niall Ferguson, Professor of History at Harvard, speaking at this year’s BBC Reith Lectures. He goes on to cite Dodd-Frank as a near-perfect example of excessive complexity in legislation.Read More

Are financial institutions prepared for central OTC clearing?

by October 1, 2012 at 8:57 am 0 comments

Just three years ago the G20 leaders agreed upon a common course to regulate the financial markets, with focus on standardising OTC derivatives. In that time regulators have created the largest reform packages since the dawn of modern financial history including Dodd-Frank and the European Market Infrastructure Regulation (EMIR). ButRead More