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While the London Stock Exchange’s bid for LCH.Clearnet makes commercial sense, it opens up the exchange to charges of hypocrisy.
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Why real time risk management is essential in the modern trading environment.
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It was not until 1954, 25 years after the event, that JK Galbraith published his much celebrated tome on stock market crash of 1929.
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The devil of the Dodd Frank financial reform bill is in the details. After the CFTC postponed the process of translating the bill into specific regulatory rules, those details will only become clear by the end of 2011.
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When it comes to derivatives reform, there are three workflows which are taking place at the moment – regulatory change, improvements to financial market infrastructure and changes to capital requirements.
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A curious thing may be happening on the road to implementing the Dodd-Frank Act in the United States. Billed as legislation that would bring federal regulation to the huge over-the-counter swap market by forcing many such transactions onto supervised exchanges and through highly-capitalised clearing organizations, Dodd-Frank’s real outcome might be remarkably different.
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Exotic financial instruments contributed to the financial crisis starting in 2007. Four years on, they are as potent as ever. You often hear about the ambiguous role played by derivatives in finance.
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A remarkable number of global financial institutions are actively pursuing setting up Swap Execution Facilities (SEFs) since they have become enshrined in U.S. law under the Dodd-Frank act. Recent announcements have delayed when they formally need to be ready, but few institutions care. Why?
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On June 29, 2011 a historic deal took place in Moscow, Russia, with two Russian exchanges merging into a single entity, marking a long-anticipated step towards transforming Moscow into a financial hub, increasing the exchange liquidity and strengthening the market infrastructure already in place.
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The decision by the European Commission to extend the consultation period for the Deutsche Börse and NYSE Euronext merger came as no surprise. However, the depth of concerns raised by the Commission will cause concern for Duncan Niederauer and Reto Francioni, the chief executives of NYSE Euronext and Deutsche Börse.
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We generally think of managed futures as a legitimate diversification tool for a sophisticated investor’s traditional portfolio of stocks, bonds and real estate. According to Lintner, managed futures are a very powerful tool when used to diversify the typical portfolio. It is this belief that has driven the growth of alternative investments over the last three decades.
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Increasing political stability, greater levels of consumer affluence and international interest in the potential value of its natural resources and commodities are placing the countries of Latin America (LATAM) on the trading map.
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As traders diversify to realise greater opportunities for arbitrage and move into new markets, the demand for cross-asset class trading capabilities has never been greater. Roger Aitken looks at what solutions are out there and how traders are increasingly looking for platforms that can trade equities, derivatives, FX and commodities and how the search for low and ultra low latency is defining the evolution of the market.
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Make no mistake, the 2009 G20 leaders statement on OTC derivatives will be seen to have been the initiator of a revolution in OTC derivatives trading as we know it today.
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Value at Risk (VaR) is a popular metric used in risk management. While it gained popularity in the 1980s after the market crash of 1987, today it is being scrutinized after the market crash of 2008 due to extreme tail events that were not properly identified or mitigated.
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The Dodd Frank Act creates a new class of trading venue intended to bring greater transparency to the trading of OTC derivatives. With new fixed income trading venues already emerging in response to the US legislation, Sassan Danesh and Murray Reid of ETrading Software argue the time has come for the introduction of open industry connectivity standards, based on the FIX Protocol and FpML.
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China will open up its derivatives markets to foreign investors but it will take time and the focus will be on creating a secure environment for traders, a leading Chinese regulator said this month.
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Interest rate derivatives represent the fastest growing and largest asset class in the sector and, as moves to push trading onto exchanges gather pace, innovative new contracts and exchanges are launching to meet the anticipated demand.
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The biggest regulatory overhaul since the Great Depression has hit a snag. Or make that several snags. With fierce debate, lobbying and the threat of regulatory nationalism we asked Theo Casey to investigate what is happening across the OTC market.
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Tadashi Ezaki, president and chief executive of the Tokyo Commodities Exchange, has called on the Japanese government to remove the barriers to exchange mergers.
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Transparency within over the counter (OTC) derivative markets is at the heart of the G20 declaration on financial reform and a key component to reducing systemic risk.
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Global regulatory initiatives such as MiFID II, EMIR and Dodd-Frank have the potential to create significant new business opportunities for financial institutions and market infrastructure providers such as exchanges. But too many organisations seem either unable or unwilling to grasp this simple fact. Rather than burying their heads in the sand, as many appear to be doing, market participants should be embracing these new frameworks and putting their resources behind innovations that will respond to this new world order.
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Managed futures provide strong uncorrelated returns and are an important source of diversification. Back In 2008, when US and international equities dropped 38% and 45%, respectively, managed futures were up 14%.
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Napoleon famously described China as a “sleeping giant”, warning that once she wakes, “she will shake the world”. In terms of the derivatives industry, China is still slumbering but the global industry is eagerly awaiting her awakening.
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