"In short, dealers are really just matchmakers. So here's the thing: we've seen how human matchmaking can be entirely replaced by (1) algorithms and (2) apps. For algorithms, that's just stuff like Match or eHarmony. And for apps, well, there's Tinder, etc. I assume that someone has even combined algorithms with an app, so users don't have to browse for dates, but just log on and are automatically matched. This model seems entirely applicable to many types of financial contracts. If I'm a hedge fund looking to go short on some debt obligation, I need to find someone who will sell me CDS. I could go to a dealer (and pay a nice bit for this), but why not just use an app that will match me with all of the funds that are looking to go long?"
Back in 2008, incoming President Barack Obama inherited a U.S. financial crisis that was to some degree made in China. The next U.S. president may well confront a Chinese financial crunch with its origins in the U.S. (Nov 6)
Broker-dealer compliance reports
CFTC grants extra time to file
(Nov 10) A rule adopted unanimously by the Commodity Futures Trading Commission, without an open meeting, gives futures brokers and swap dealers an extra 30 days in which to file their annual compliance program reports. Firms may file the reports within 90 days of the end of their fiscal year. The new rule, effective upon publication in the Federal Register, ensures that chief compliance officer reports and year-end financial reports will be filed around the same time.
(Nov 6) Regulators in three major Asia-Pacific markets missed the Sept. 1 internationally agreed upon deadline on collateral rules for the $493 derivatives market, echoing the discord between the world's largest markets on efforts to reduce risk in over-the-counter derivatives trading. The U.S. implemented the rules as agreed. Japan was right on schedule. The European Union has yet to give a date. The Hong Kong Monetary Authority plans to issue final rules by year-end. Singapore and Australia regulators said they will announce their plans "in due course."
(Nov 4) The European Union is a bit closer to adopting a new system of capital requirements for thousands of investment firms, acknowledging industry arguments that current rules inappropriately subject them to restrictions designed for big banks. In a discussion paper,
the European Banking Authority outlined a new method to determine how much capital and liquidity firms must have to manage risks. The plan could also lead to revised rules for compensation and bonuses and could apply to asset managers, proprietary-trading firms and commodity traders overseeing trillions of dollars across the 28-nation bloc. Their framework, which may be years away from completion, would be subject to European Commission legislation.
