Market data crucial for FMIs to comply with CPSS-IOSCO’s PFMIs
Zohar Hod, global head of sales and support at SuperDerivatives, discusses challenges faced by FMIs in Europe and the US in their bid to comply with new regulations. September 26, 2013 | Esther TanThe Committee on Payment and Settlement Systems (CPSS) and the International Organization of Securities Commissions (IOSCO) jointly published the Principles for Financial Markets Infrastructures (PFMIs) - http://www.bis.org/publ/cpss101a.pdf in April 2012. These 24 principles aimed at better regulating financial market infrastructures (FMIs) facilitating the clearing, settlement, and recording of monetary and other financial transactions whilst reinforcing G20’s mandate of having over-the-counter (OTC) derivatives centrally cleared. According to Zohar Hod, global head of sales and support at SuperDerivatives, a cloud-based, real-time market data, derivatives technology and valuation services provider, the core objective of these 24 principles is to enhance transparency and create a more liquid environment in financial markets. By introducing transparency to opaque financial markets, regulators will have enhanced control and be able to better mitigate associated risks. However, the principles are causing problems for a large number of market participants. “FMIs such as payment systems, securities settlement systems and trade repositories are not necessarily ready to comply with said regulations, thus, it is might be more operationally logical to restrict them to central clearing houses,” said Hod. Issues encountered by FMIs include productivity on the buy side, as investors face complications which include connectivity with trading venues. Stricter reporting requirements, crucial for instilling confidence, mean that FMIs need to be able to demonstrate where trade information is held and the frequency and parameters of reporting them. Finally, as higher standards on credit and liquidity risks heighten cost of capital implications, instruments that require lower amounts of collateral and margins will decline, removing cost efficiencies from market participants. For the sell side, investments which are not necessarily traded on exchanges ar... Please login to read the complete article. If you already have an account, you can login now or subscribe/register.
Categories: Clearing & Settlement, Markets & Exchanges, Operational Risk & Security, Risk & Compliance, Technology & Operations, Trading & DataClearing & Settlement,Markets Exchanges,OperationalRiskSecurity,Risk & Compliance,technology,Trading & Data, Clearing & Settlement,Markets & Exchanges,Operational Risk & Security,Risk & Compliance,Technology & Operations,Trading & Data, Keywords:Zohar Hod, SuperDerivatives, PFMIs, CPSS, IOSCO, FMIs, OTC Derivatives, Market Data, CCP, ISDA, SGX Zohar Hod, SuperDerivatives, PFMIs, CPSS, IOSCO, FMIs, OTC Derivatives, Market Data, CCP, ISDA, SGX
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