While this will be a sizable increase to the CFTC budget, up 30 percent from the current $215 million, this new budget increase falls short from last year’s request of $315 million.
Platform operators seem to think that this new CFTC EC SEF agreement may not do much at all to keep liquidity between Europe and US markets.
Under the European Parliament Economic and Monetary Affairs Committee’s revised European benchmark legislation, EU based institutions will be forbidden from holding any products linked to unauthorized benchmarks.
US banks and central counter parties (CCPs) seem to be gaining confidence in the European Commission (EC) overlooking differences in their clearing house rules, preventing US CCPs from losing European clients.
The CFTC and the EU have agreed to allow US firms to trade over European platforms, rather than forcing them to be traded through US swap execution facilities, or SEFs.
Having issued a report on high frequency trading last fall, the CFTC is now looking to get feedback on the many suggestions it has put forth for better regulating the industry.
Without the no-action letter, any traders participating in package swap trading would have to report any package swap that includes swaps subject to the made-available-to-trade (MAT) ruling to SEFs by February 15th.
Masters has been working in the swaps industry for well over a decade, and helped JP Morgan begin using credit default swaps to hedge bank risks.
The agreement will relieve EU trading platforms from being affected by US derivative trading rules, at least for the time being.
With the CFTC currently going through major changes, it seems the grain industry is hoping it will lead to a more lenient Commission. And, as Mark Wetjen is currently taking over the reins, it’s very possible that this will be the case.