New for Traders: Week ending Nov. 2

Regulation

  • The Commodity Futures Trading Commission (CFTC) postponed the deadline when its LSOC (Legal Segregation with Operational Commingling)  rule must be implemented from Nov. 8 to Nov. 13.
  • The CFTC delayed rules governing margins from Nov. 8 to Jan. 14, giving swaps clearinghouses such as CME Group Inc. and Intercontinental Exchange Inc. more time to resolve technology problems.
  • The Securities and Exchange Commission (SEC) proposed capital, margin and segregation requirements for security-based swap dealers and major security-based swap participants. The proposed rules are mandated under Dodd-Frank.
  • The CFTC extended the deadline for market participants to determine if certain commodities fall under Dodd-Frank’s definition of a “swap,” “swap dealer” or “major swap participant” when converting them from swaps to futures contracts. The extensions affect agricultural and exempt commodities, foreign exchange forwards and swaps and certain foreign entities.

Commodities

  • CME Group will pay a total of $2 million to almost 200 Peregrine Financial Group (PFG) clients who traded on CME exchanges. The cash comes from a CME fund established earlier this year to protect farmers, ranchers and agricultural coops that use the company’s market to hedge their products.
  • CME Group announced it has reached a definitive agreement to acquire the Kansas City Board of Trade (KCBT) for $126 million in cash and a distribution of excess cash to members. CME Group agreed to keep the trading floor open for at least six months and will maintain a committee of KCBT participants to advise on hard red winter wheat contract terms and conditions for at least three years. CME Group CEO Phupinder Gill says, “This transaction will produce cross-margining benefits and other capital efficiencies."
  • Phillip Futures DMCC, an online trading services provider, has been approved as a broker clearing member of the Dubai Gold and Commodities Exchange (DGCX). The company offers clients a variety of financial services, such as stock-broking, share financing, asset management and investment research.
  • CME Group will increase the daily price limits for nonfat dry milk futures to 4¢ per pound, with an expandable limit of 8¢. The price limits for dry whey futures have also increased, to 6¢ per pound for daily price limits and 12¢ for expandable limits.

Technology

  • Telstra Global announced that Chicago will be its newest point of presence (PoP) in the U.S. The PoP, which is the company’s fifth domestic hub, is designed to allow enterprise and wholesale customers expand their business into the Asia-Pacific region by providing high-speed services. Telstra also announced the creation of eight global PoPs this week.
  • The International Swaps and Derivatives Association Inc. (ISDA) announced its support for the Clearing Connectivity Standard (CCS), which is geared towards improving over-the-counter derivatives reporting and communications for asset managers, futures commission merchants, central counterparties and custodians.

Options

  • InterContinental Exchange Inc. licensed Markit’s North American and European corporate credit default swap indexes, with the aim of developing futures and options contracts based on Markit’s CDX and iTraxx index families.
  • The Options Industry Council (OIC) and the Shanghai Association for International Exchange of Personnel signed a memorandum of understanding to strengthen cooperation on options research and education.
  • The CBOE Futures Exchange (CFE) plans to launch its S&P 500 Variance futures later this quarter. Similar to over-the-counter (OTC) variance swaps, the contract will allow users to trade the difference between the implied and realized variance of the S&P 500 Index. The CFE also plans to introduce a Lead Market Maker Program for the futures.

Financials

  • MarketAxess Holdings Inc. announced plans to acquire Xtrakter Ltd., a provider of regulatory transaction reporting, financial market data and trade matching services for European securities markets.
  • ICAP and alternative ratings firm Rapid Ratings launched a credit derivatives rating service. Customers can subscribe to the service directly through ICAP or view it via ICAP’s global vendor distribution network.
  • CME Group received regulatory approval to offer portfolio margining of over-the-counter interest rate swap positions and Eurodollar and Treasury futures for customer accounts, beginning Nov. 19. The new program is designed to reduce risk and increase capital efficiency for some portfolios.

Forex

  • CME Group is expected to offer 30 forex futures products, including currency pairs involving the USD, EUR and CNY when it launches its European bourse next year.
  • Berkeley Futures Limited has been approved as a broker clearing member of the Dubai Gold and Commodities Exchange, adding to the exchange’s international membership base.
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