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December
As rival bills to clean up over the counter derivatives worm their way through Congress, the debate has become clogged by vague claims. Philip McBride Johnson cuts through the blather to get to the reality.
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Regulatory debates are often so filled with misleading hype and special pleading that one despairs of any truth being found. The controversy over flash trading of options is a refreshing exception.
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November
When planning FOW's awards for innovation, we felt it was only right to consider the regulators - a category of market participant that probably bulks larger in the futures and options world than it does in many other areas of financial services.
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October
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September
Slapping position limits on traders in OTC energy markets would be punishing the innocent, argues Michael Cosgrove of GFI Group. Markets do need to operate under rules, but rules must be based on understanding.
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Regulators have seized on central counterparty (CCP) clearing as a solution to some of the risks in the over-the-counter derivatives markets. But Kevin White of Ineum Consulting warns that they should be careful.
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Speculators in futures and options are a much bigger beast than they used to be, but are US regulators right to attack them? Derivative markets depend on this capital, argues Philip McBride Johnson.
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July
It’s easy to be blasé about commodity prices when you’re a wealthy American or European, and say “markets will be markets”. But if a large part of your income was going on oil or food, a 250% price rise in three years might bother you. Governments cannot duck the issue of whether speculation has created unnecessary volatility in commodity prices. It is time for the futures industry to stop trying to throw the regulators off the scent and engage seriously with the issues.
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April
Politicians are gunning for the over-the-counter markets, and some exchange-traded derivatives specialists are happy to let them take the flak, swanking that the world has finally recognised the exchanges’ virtues. But Alex McDonald, chief executive of the Wholesale Market Brokers’ Association, argues that the OTC markets, with their devolved regulation and confederated structure, actually hold the secret to a healthy lifestyle for the financial markets as a whole.
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Why did it take a financial crisis and regulatory whipping to bring the CDS market to embrace central counterparty clearing? Some people in the market clearly thought change would cost them money. Either they were right, and it will, or they were wrong, and the market is about to get more efficient. Vishala Sri-Pathma tries to find out which it is.
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Perhaps the most important choice in reforming the financial system has been all but ignored – is it better to have a few large, strong regulators, banks and exchanges – or a wider variety of smaller ones? How we answer this question could determine whether reforms succeed or fail.
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The Commodity Futures Trading Commission is investigating oil trading on February 6, amid suggestions that United States Oil Fund LP, an exchange-traded fund listed on NYSE Arca, and other investors may have affected the price of oil.
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In the clearest sign yet of how the Obama administration will reform the US derivatives market, treasury secretary Timothy Geithner said the government would seek new legislation to force over-the-counter derivatives to be cleared via a central counterparty.
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The Turner Review of financial regulation in the UK, published on March 18, contained little detail on how it would affect derivatives. Many experts canvassed by FOW were reluctant to comment on it, some saying they had not yet had time to assess its meaning – or even, that they did not expect it to have any effect on derivatives at all.