Derivatives updates

European Union

EU regulatory changes affecting derivatives: what's already in force and what's to come
  • European Union
  • December 21 2016

Five years on from the G20's commitment to implement measures to increase transparency and reduce risk in the derivative markets, there have been significant changes to regulations affecting the derivatives markets in the European Union. However, many new rules are still not yet in force and some, such as the margin requirements under the European Market Infrastructure Regulation, will not be fully implemented until 2020.

Getting ready for EU margin requirements
  • European Union
  • October 26 2016

The European Commission recently published the final delegated regulation on the margin requirements for derivative trades not cleared by a central counterparty. Under the European Market and Infrastructure Regulation, certain counterparties will need to exchange both initial and variation margin in respect of derivative trades not cleared by a central counterparty. These rules will have far-reaching consequences for derivatives documentation.

Top tips to negotiate OTC derivatives clearing arrangements
  • European Union
  • August 24 2016

The European Commission has introduced a new EU regulation on over-the-counter derivatives, central counterparties and trade repositories. The regulation provides clearing obligation and risk mitigation techniques for certain derivative contracts, trade reporting, registration, financial and risk management requirements for clearing organisations and new trade execution requirements.


Contributed by Shearman & Sterling LLP
CFTC chair outlines further steps to swaps trading rules reform
  • USA
  • May 16 2018

Commodity Futures Trading Commission (CFTC) Chair J Christopher Giancarlo and Chief Economist Bruce Tuckman recently published a white paper on potential reforms to the CFTC's swaps trading rules. The white paper proposes a series of changes to rules relating to transactions on swap execution facilities. Accompanying statements note that commission staff is expected to propose a formal rulemaking in this area in Summer 2018.

Gemini co-founders Cameron and Tyler Winklevoss propose virtual commodity self-regulatory organisation
  • USA
  • April 11 2018

Virtual currency exchange Gemini recently released a proposal to create the first self-regulatory organisation for US virtual currency exchanges. The so-called 'Virtual Commodity Association' (VCA), as envisioned, would be a non-profit, independent regulatory organisation that would operate to foster responsible virtual commodity markets. The VCA would also encourage greater cooperation with relevant regulators in an effort to assist with the maturation of the virtual commodity industry.

Federal court upholds that virtual currencies are commodities
  • USA
  • April 11 2018

The US District Court for the Eastern District of New York recently confirmed that virtual currencies are a commodity within the anti-fraud jurisdiction of the Commodity Futures Trading Commission (CFTC). The ruling marks the first time that a federal court has affirmed the CFTC's 2015 determination that virtual currencies are 'commodities' as defined by the act. This provides the CFTC with further standing to police fraud in virtual currency spot markets.

US derivatives regulation: a pause in 2017, and a look ahead to 2018
  • USA
  • January 31 2018

Although changes in the regulatory landscape were limited in 2017, several steps, including the Capital Markets Report and Project KISS, may lay the groundwork for more significant developments to come, particularly now that regulatory agencies have new leadership and senior staff and have had an opportunity to review market participant feedback. There also remain a number of outstanding issues and emerging issues that are likely to demand regulatory attention in the coming year.

Second Treasury report issued: implications for derivatives market
  • USA
  • December 06 2017

The US Department of the Treasury recently released its second in a series of four reports evaluating the US financial regulatory system. As it relates to the derivatives markets, the report does not advocate fundamental changes in the regulatory framework but suggests a change in regulatory emphasis. Further, it makes a series of specific recommendations that would broadly make incremental improvements suggested by market participants.

United Kingdom

Distributed ledger technology and derivatives – is the FCA looking to regulate innovation?
  • United Kingdom
  • May 10 2017

The UK Financial Conduct Authority (FCA) recently published a discussion paper to gauge market participants' views on how the future development of distributed ledger technology (DLT) should be regulated by the FCA in FCA-regulated markets. As industry efforts to use DLT continue, the FCA expects that in the second half of 2017 and into 2018 there will be more movement from the 'proof of concept' stage to 'real-world' deployments.

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