The UK’s Financial Conduct Authority (FCA) awarded the last-minute reprieve to ICE Futures Europe and the London Metal Exchange (LME), one day after the German regulator BaFin gave similar relief to Eurex, Europe’s largest futures exchange.

The FCA stated the two exchanges would not be required to comply with the open access rules for exchange-traded derivatives until 3 July 2020, and

The UK watchdog also explained the extension was granted to ensure “orderly functioning of the trading venues.”

MiFID II’s open access regime entitles trading venues and clearing houses to allow non-discriminatory access to their services, meaning traders can trade a future on one exchange and clear it at a central counterparty (CCP) owned by completely separate group.

The open access model is the foundation of LCH, the world’s largest clearing house for derivatives, whereas ICE and Eurex operate under a vertical model, meaning derivatives traded on their exchanges have to be cleared through their own CCPs.

Jeff Sprecher, CEO and chairman of ICE, has been an outspoken critic of MiFID II and open access, beliving the rules will stifle competition and favour only the incumbent clearing houses.

Meanwhile exchanges such as the LSE, Nasdaq and NEX Group (when it was previously known as ICAP) had backed the open access proposals.

The deferrals for the two exchanges come despite frequent reiterations from the European Securities and Markets Authority (ESMA) that there would be no open access exemptions for listed derivatives. 

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Citi and CME Clearing have teamed up with Baton Systems to implement a blockchain-inspired platform as the firms look to reduce costs of back-office functions.

The platform allows banks to view their collateral in their ledgers in real-time and send cash or securities to clearing houses with one-click.

Citi and CME Clearing explained the software could significantly reduce costs of back-office operations and speed up margin funding times.

Traditionally banks have had to set aside capital as they wait for collateral to be settled, but the platform could see billions of dollars of capital freed up at major institutions.

Stephen Marx, head of futures, clearing, and collateral operations at Citi, explained the new system also automates certain processes to free up time for market participants. 

“The technology allows financial institutions to eliminate manual touch points, reduce email traffic an avoid logging into multiple portals. The capabilities in the funding and collateral space create efficiency and improve productivity for our clients,” Marx said.

Arjun Jayaram, CEO of Baton Systems, added the system can be implemented and is immediately scalable across any financial institution, exchange or clearing house.

“Its beauty is its simplicity, leveraging the most useful elements of blockchain, while introducing interoperability and extensibility to easily fit with existing technology 'rails' and business processes,” he commented.

Blockchain technology has now been widely implemented across financial institutions for various processes and functions.  

Earlier this month, the Australian Stock Exchange confirmed plans to replace its entire post-trade system, including the clearing and settlement of all equity transactions, with blockchain technology.

Dominic Stevens, CEO at ASX, explained at the time the decision to use blockchain would reduce costs for its customers and put Australia at the forefront of innovation in financial markets. 

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JP Morgan and Citi have become the first users of truePTS, a derivatives processing platform which uses robotics and artificial intelligence (AI) to automate back-office functions.

The platform uses proprietary matching and validation engines, as well AI voice deal capture technology, to allow auto-matching and direct clearing, and the automation of manual processes of OTC derivatives.

“We look forward to working with truePTS and the other market participants to develop new processing solutions for our clients,” said Kieran Hanrahan, global head of markets middle-office, JP Morgan.

The announcement comes after trueEx, a US swap execution facility (SEF) and owner of truePTS, ended its almost year-long legal battle with MarkitSERV, in which it claimed IHS Markit had attempted to prohibit trueEX from accessing its trade processing service.

Following the onboard of Citi and JP Morgan, truePTS anticipates other industry participants to join in the coming months.

“We will be the catalyst that provides transparency, increases efficiency and lowers costs for our clients by leveraging the most progressive technology,” said Zohar Hod, CEO of truePTS.

“We’re able to leverage the industry leaders’ strategic input, particularly as we address the challenge of scale with other clients to become the new benchmark in the post-trade processing industry.”

With two of the biggest swaps dealers signed up, it could further boost trueEX’s position in the US interest rate swaps market. As the last start-up SEF remaining, it has captured a significant portion of market share from incumbent platforms such as Tradeweb and Bloomberg. 

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The European Commission and the derivatives regulator in the US have agreed on terms, which will see mutual recognition of trading venues weeks before MiFID II.

The decision ensures some trading venues in the US will gain equivalence for MiFID II rules and platforms in Europe can offer services to counterparties in the US.

EU counterparties will be able to trade derivatives subject to MiFID II trading rules on regulatory swap execution facilities (SEFs) and designated contract markets (DCMs) venues in the US.

The European Commission and the Commodity Futures Trading Commission (CFTC) explained the ruling does not affect EU counterparties trading on venues for derivatives not subject to MiFID II trading obligation.

“European firms can continue trading in derivatives on US trading platforms and effectively hedge against risk, setting conditions for stronger growth in Europe,” said Valdis Dombrovskis, European Commission vice-president in charge of financial stability.

“On the other hand, US firms can hedge their exposures on EU platforms, facilitating trade and exchange between the EU and the US.”

A ‘common approach’ was first announced in October when the CFTC recommended an order of exemption from its SEF registration requirements for multilateral trading facilities (MTFs) and organised trading facilities (OTFs) in the EU.

Christopher Giancarlo, chairman of the CFTC, welcomed the Commission’s decision on equivalence for US trading venues regulated by the CFTC, adding it is essential to ensuring a strong and stable trans-Atlantic derivatives market.

The decision represents the third time both bodies have been able to reach equivalence agreements; first in 2016 with respect to central clearinghouses, earlier this year with respect to margin requirements for uncleared swaps and this week with trading venues. 

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Cboe Futures Exchange (CFE) will begin offering bitcoin futures trading on 10 December, eight days before rival exchange CME Group will launch its own derivatives of the cryptocurrency.

Trading on CFE will begin at 5.00pm CT, with the first full day of trading scheduled for Monday 11 December.

Cboe’s bitcoin futures - traded under the ticker symbol XBT - will be cash-settled contracts based on digital asset exchange and custodian Gemini’s auction price for bitcoin denominated in US dollars.

The exchange operator explained that XBT futures were specifically deigned to allow for more straightforward trading strategies, through settlement to a single auction price.

“Given the unprecedented interest in bitcoin, it’s vital we provide clients the trading tools to help them express their views and hedge their exposure,” said Ed Tilly, CEO at Cboe Global Markets.

The launch comes just days after CME Group announced that its own launch of bitcoin futures trading will occur on 18 December.

Terry Duffy, CEO at CME Group, said on Friday: “Though we have worked through a lengthy, comprehensive process with the CFTC to get to this point, we recognise bitcoin is a new, uncharted market that will continue to evolve, requiring continued collaboration with the Commission and our clients going forward.”

Over the last five years, the total value of all bitcoin market capitalisation has grown from less than $1 billion to over $183 billion, with daily notional turnover over $10 billion.

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The chief executive officer at EuroCCP is to step down from her position after 10 years to become a senior advisor for the clearing house.

A note to clients revealed Diana Chan will remain CEO until 1 July next year and she will then advise the chairman of the supervisory board at EuroCCP.

“In her future new role… [Chan] will assist the chairman on strategic initiatives and represent EuroCCP in its engagement with industry leaders and regulators at the most senior levels,” the note said.

Chan was first appointed CEO of the firm in 2007 and successfully oversaw the merger between EuroCCP Ltd and EMCF in 2013, leading to the creation of EuroCCP N.V. as a pan-European equities central counter party clearing house.

During her time with EuroCCP the firm gained access to trade feeds of the London Stock Exchange, SIX Swiss Exchange and Euronext, which saw its access to equities trade flows in Europe reach 80%.

EuroCCP added the search for its new CEO has already begun and clients will be advised on the new appointment in due course.

“The supervisory board of EuroCCP believes that this considered leadership succession plan will underscore the stability of EuroCCP as the company enters its second decade and a new era in equities clearing,” the note concluded. 

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Eurex Clearing’s recently established partnership programme for its interest rate swaps clearing service has gained significant ground with more than 20 market participants signed up.

HSBC, UBS, Bank of America Merrill Lynch, Citigroup, Commerzbank, Deutsche Bank, JP Morgan and Morgan Stanley are among those to have officially registered, having shown interest when the scheme was first announced in October.

The programme - established in consultation with major institutions - awards its 10 most active participants with a ‘significant’ profit share of the multi-currency interest rate swaps business.

Larger clients will also be included within the governance and committee structure of Eurex Clearing.

The firm described the scheme as a performance based programme, which “aims to build a balanced ecosystem where responsibilities and benefits are fully aligned between all participants in terms of economics and governance”.

“Clients are looking for a market-led alternative to clear interest rate swaps – and we are a committed partner”, says Erik Müller, CEO of Eurex Clearing.

“This way we support the financial industry in times of enduring uncertainty and foster choice and competition in the interest rate swap market together with our clients.”

The scheme is a push to win euro-denominated derivatives volumes from London’s LCH, which holds the majority of banks and buy-side clearing business.

LCH also operates a profit-sharing model, which has helped it win competition from its US counterparts for the majority of swaps clearing globally.

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Interest rate swap execution platform trueEX has appointed a new chief technology officer (CTO) as it looks to expand into the broader rates market.

Industry veteran Kevin Lupowitz has been appointed CTO and tasked with overseeing the expansion of trueEX’s platform in terms of technical specifications, functionality and performance.

He has held several chief information officer roles at major institutions throughout his career, including Liquidnet where he was also a founding employee, and for Thomson Reuters’ FXall trading platform.

Sunil Hirani, CEO and founder of trueEX, explained Lupowitz’s hire signals the firm’s intent to accelerate its expansion into the rates market for both dealers and institutional clients.

“With his experience at other successful industry innovators, I’m confident that Lupowitz will play a key role in this, supporting and building on our unprecedented 2017 growth.”

This year has been a strong one for trueEX, with notional trading activity up a massive 542% year-to-date compared to the year prior. Similarly, its share of the dealer-to-client swaps market now stands at more than 30%, up from 9% just a year ago.

Lupowitz described his new role as an “exciting growth opportunity to work with a pioneering, rapidly growing and independent provider of trading technology”.

He added: “With its expanding dealer and client footprint, trueEX has the potential to transform the efficiency and structure of the global interest rates markets.”

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BNY Mellon’s current chief financial officer has been appointed CEO of its newly established clearing, markets and client management business amid a major restructure of the entire business.

Thomas Gibbons will oversee several product lines as part of the role including Pershing, Markets, Government Securities Services Corp, treasury services, as well as commercial payments, credit services and regional management.

The new structure will see three new businesses created within BNY Mellon’s Investment Services segment: Clearing, Markets and Client Management, Asset Servicing, and Issuer Services.

BNY Mellon reiterated that Lisa Dolly will continue to lead Pershing, Michelle Neal will continue to lead Markets and Brian Ruane will continue to lead Government Securities Services Corp.

Charlie Scharf, BNY Mellon’s new chief executive, explained the changes will lead to a flatter hierarchy to reduce complexity, increase efficiency and allow for faster decision making.

“The business units will have increased accountability for delivering solutions for clients and driving financial performance. Overall, these changes will help drive sustainable, profitable growth and higher returns for our shareholders,” he said.

Michael Santomassimo, CFO of investment services, will take over from Gibbons as CFO of BNY Mellon. Prior to joining the bank in July last year, he spent 11 years at JP Morgan in various key finance leadership roles, including CFO of the banking segment.

Earlier this week, BNY Mellon announced plans to merge its Mellon Capital Management, Standish Mellon Asset Management and The Boston Company Asset Management businesses to form the new company.

The combined entity will have over $560 billion in assets under management, employing more than 300 individuals globally.

It will be headquartered in Boston and will be led by the current CEO of US asset management at BNY Mellon Investment Management, Des Mac Intyre.

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Through a partnership with CLS and LCH SwapAgent, its post-trade service for non-cleared derivatives, will automate swaps payments, including initial and final notional exchange solutions though CLS, and variation margin payments with SwapAgent.

With IHS Markit’s flagship MarkitSERV, it aims to help firms reduce the financial and operational risk throughout the trade lifecycle.

“These advances demonstrate how the network, workflow and integrations provided by MarkitSERV remove the need for human intervention in post-trade processes, helping firms improve efficiency and reduce risks,” said Claire Lobo, head of business development at MarkitSERV, IHS Markit.

MarkitSERV will also establish a new connectivity to LCH SwapAgent to deliver interest rate swaps trade data, which will be used as the central calculation agent for variation margin and to settle cash and collateral exchanges.

“Connecting to MarkitSERV will offer our members a way of accessing our cross-currency swaps service, when it goes live later this year,” said Nathan Ondyak, global head of LCH SwapAgent. 

“LCH SwapAgent has been launched with significant support from the market, and in that spirit it was important that we engage with MarkitSERV as the trade processing platform of choice for many firms.”  

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