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Financial Services Regulation & Supervision (the future): Transparency Analytics and Big Data

 

Gillian Tett put me onto this topic in this article in the Financial Times; she set me thinking as she usually does and a google search turned up some interesting stuff. As I do on some pages here on asymptotix & over on my technical blog on Analytic Bridge, I share the benefits with you of my experienced filter and select the best of the material as references for you to use but this process also creates a repository of useful references for me! Anyway here are some references to some people doing some important thinking about the uses of Big Data and thus the Analytics thereof in the future of Financial Services supervision and regulation; all progressing towards that ‘Transparency’ nirvana.

A Secretive Banking Elite Rules Trading in Derivatives

On the third Wednesday of every month, the nine members of an elite Wall Street society gather in Midtown Manhattan.

The men share a common goal: to protect the interests of big banks in the vast market for derivatives, one of the most profitable — and controversial — fields in finance. They also share a common secret: The details of their meetings, even their identities, have been strictly confidential.

Drawn from giants like JPMorgan Chase, Goldman Sachs and Morgan Stanley, the bankers form a powerful committee that helps oversee trading in derivatives, instruments which, like insurance, are used to hedge risk.

In theory, this group exists to safeguard the integrity of the multitrillion-dollar market. In practice, it also defends the dominance of the big banks.

The banks in this group, which is affiliated with a new derivatives clearinghouse, have fought to block other banks from entering the market, and they are also trying to thwart efforts to make full information on prices and fees freely available.

Banks’ influence over this market, and over clearinghouses like the one this select group advises, has costly implications for businesses large and small, like Dan Singer’s home heating-oil company in Westchester County, north of New York City.

European Securities and Markets Authority ESMA - Michel Barnier will have Verena Ross as first Executive Director

ESMA nominates Verena Ross Executive Director - The Board of Supervisors (BoS), ESMA’s decision taking body made up of 27 voting members, nominated Verena Ross today, for the post of ESMA’s first Executive Director, subject to confirmation by the European Parliament. The Executive Director will be entrusted with the day-to-day management of ESMA. According to the Regulation establishing ESMA, the Executive Director will serve a term of five years, renewable once. 

Deutsche Börse talks consolidation in cash equities clearing with rivals

Deutsche Börse, operator of one of Europe’s largest clearing houses, has talked to rival clearers about consolidation in cash equities clearing as a revamp of the region’s securities post-trade business appears imminent.

Clearing, viewed as the mundane processing of trades on stock and derivatives exchanges, has moved centre stage following the financial crisis as regulators insist on a greater use of clearing houses in the opaque derivatives markets.

The clearing of equities in Europe has for months been on the verge of change as three clearing houses and their national regulators try to produce a mechanism under which they could together provide market participants with a choice on where their trades are sent for clearing.

Bloomberg Sues ECB to Force Disclosure of Greece Swaps

Bloomberg News filed a lawsuit against the European Central Bank, seeking the disclosure of documents showing how Greece used derivatives to hide its fiscal deficit and helped trigger the region’s sovereign debt crisis.

The lawsuit asks the European Union’s General Court in Luxembourg to overturn a decision by the ECB not to disclose two internal documents drafted for the central bank’s six-member executive board in Frankfurt this year. The notes show how Greece used swaps to hide its borrowings, according to a March 3 cover page attached to the papers obtained by Bloomberg News.

ECB President Jean-Claude Trichet withheld the documents after the EU and International Monetary Fund led a 110 billion- euro bailout ($144 billion) for Greece. The dossier should be disclosed to stop governments from employing the derivatives in a similar way again and to show how EU authorities acted on information they had on the swaps, according to the suit, filed by Bloomberg Finance LP, the parent of Bloomberg News.

Bank for International Settlements (BIS) warning regulators - clearing industry systemic risk potential

The Bank of International Settlements (BIS) has warned regulators and central bankers that some market structures being created by the clearing industry risked creating the potential for systemic risk. However, the report from the Committee on Payment and Settlement Systems (CPSS), consisting of many of the world’s biggest central banks, also found that the ownership and structure of clearing houses made little difference to the risk they posed to global financial stability.

LSE Said to Hold Talks With Banks on Setting Up Stock Trade Clearinghouse - while Clearstream shed 10% of staff

London Stock Exchange Group Plc has held talks with banks about creating a clearinghouse for guaranteeing stock trades, according to people familiar with the situation.

This according to Bloomberg and Financial Times.

EU proposes curbs on 'Wild West' trading

The European Commission has published draft rules on trading in complex financial products, saying it currently operates in a "Wild West territory". The body wants to create a watchdog to monitor the derivatives market - products used to make bets on assets without buying them. Officials also want to assess the extent of short-selling, when traders bet on asset prices falling. The practices have widely been blamed for causing economic instability. Derivatives and short-selling are viewed by some as contributing to the eurozone debt crisis, which led to major market instability. In May this year, during a period of heightened uncertainty on the markets, Germany made a surprise decision to temporarily ban some types of short-selling of financial products.

EU Consultation on Derivatives, market Infrastructures, Short Selling and Credit Default Swaps

EU Commission, DG Internal Market: In order to advance swiftly in completing the necessary reforms to ensure a safe and stable financial system in Europe, the European Commission has launched two consultations in the area of financial services.

Transparency Clearing & Regulation of Derivative Securities

 

Transparency Clearing & Regulation of Derivative Securities 

 

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