A recap of the derivatives industry news in the last week
Europe
Anshu Jain and Jurgen Fitchen exit Deutsche Bank
The two embattled co-CEOs of Deutsche Bank will step down with Anshu Jain leaving the German bank at the end of June and Jürgen Fitschen exiting after the bank’s annual meeting next year.
John Cryan, the former chief financial officer of UBS, will take over the helm and become sole CEO once Fitschen leaves. Deutsche Bank has struggled to restore an image tarnished by a raft of regulatory and legal problems which include probes into alleged manipulation of benchmark interest rates, mis-selling of derivatives, tax evasion and money laundering.
In recent weeks, the pressure intensified, with an increasing number of shareholders and employees losing confidence in the bank’s performance and the management team’s new strategy. The plan only garnered 61% of shareholders approval at the May annual general meeting. Although the vote was non-binding, the record-low approval was seen as a slap in the face to the co-CEOs.
Jain and Fitschen are not alone and follow a long line of departing CEOs including Brady Dougan at Credit Suisse and Peter Sands at Standard Chartered.
Source: http://www.wsj.com/articles/deutsche-bank-co-ceos-to-announce-resignations-1433674815
German debt office poised for clearing
The Finanzagentur, Germany’s debt management office, which uses interest rate derivatives to manage risk in the course of its sales, plans to begin clearing interest rate swaps (IRS) at Eurex where it already clears repurchase, or repo, agreements. The target deadline is the third quarter of this year.
Germany will join Sweden – whose debt agency began clearing IRS in 2012 – as one of the few sovereign debt issuers that use clearing. The path was paved for the move last year after the federal budget included provisions for central clearing.
The use of interest rate derivatives allows a sovereign to swap the fixed rate of long-dated bonds into a shorter, floating rate, minimising the chances of the portfolio being adversely affected by large changes in market yields.
Source: http://www.ft.com/cms/s/0/c84577c0-0acd-11e5-9df4-00144feabdc0.html
UK
Barclays to anchor SunGard’s utility
Barclays will act as the anchor for SunGard’s new industry utility for post-trade futures and cleared OTC derivatives operations. The UK based bank has already completed the migration of specific futures and OTC derivatives clearing and technology processes to the utility, as well as the transfer of a number of Barclays employees to SunGard.
To support the new utility, SunGard has hired Andrew Whyte as president of the utility. He has held senior roles responsible for derivatives, clearing and credit operations at Goldman Sachs and JP Morgan. He will report to SunGard Financial Systems’ executive vice president, Brian Traquair and be based in London when he joins the business in mid-August.
Until that time, Alun Green, a 20-year industry veteran in post-trade derivatives processing, as well as current head of SunGard’s post-trade strategy, will have responsibility for all utility functions and day-to-day operations. On an ongoing basis, Green will also be based in London and will serve as deputy head of the utility and oversee its strategy, services and client relationships.
Sources:
Asia
MAS tightens rules
The Monetary Authority of Singapore (MAS) has unveiled plans for a stricter regulatory framework for capital markets intermediaries dealing in OTC derivatives as wells as stronger rules governing financial advisory services.
Under the proposed framework, intermediaries will have to meet prescribed capital and business conduct requirements, such as implementing risk management policies and controls to safeguard customers’ assets. In addition, it recommends a set of risk mitigation requirements to enhance legal certainty over the terms of non-centrally cleared OTC derivatives transactions as well as to foster effective management of counterparty credit risk, and facilitate timely dispute resolution.
As for rules pertaining to financial advisory services, MAS recommends exempting trading representatives from the Financial Advisers Act (FAA) who provide advice that is incidental to their execution services.
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Deutsche Boerse expands its Asian footprint
As part of its push into Asia, Deutsche Boerse plans to open a derivatives exchange alongside its planned clearing house in Singapore. The German exchange operator has already submitted its application to regulatory authorities and operations for both are expected to start in 2016.
Deutsche Boerse is also moving into the Chinese market with its recently agreed joint venture with Shanghai Stock Exchange and China Financial Future Exchange to develop and market Chinese shares as well as exchange traded funds for investors outside mainland China.
Source: http://www.reuters.com/article/2015/06/02/deutsche-boerse-derivatives-asia-idUSL5N0YO1JV20150602
Global
FIA Global launches rulebook review
FIA Global, in cooperation with the law firms Linklaters and Milbank, Tweed, Hadley & McCloy, has launched the FIA Global CCP Rulebook Review, a new guide to the rules of central clearing counterparties (CCPs). The subscription service will provide a standardised, comprehensive overview and analysis of the rules and procedures governing certain CCPs, as well as timely updates on changes to the regulatory framework.
The CCP Risk Review currently has detailed information on over 30 CCPs and their associated services, with more CCPs being added on a rolling basis. It is designed for a broad range of market participants, including clearing members of CCPs, clients of clearing members, CCPs, professional advisers and regulators.
Source: https://fia.org/articles/fia-global-launches-interactive-reporting-tool-ccp-risk
