Aquis Exchange To Offer Access Via BT Radianz Cloud

Aquis Exchange To Offer Access Via BT Radianz Cloud

Date 29/07/2013
BT given preferred supplier status
Aquis Exchange Members will benefit from subscription pricing
Allows quick and cost-effective access to Aquis Exchange
Enables straight through processing
Aquis Exchange Limited, the proposed pan-European stock exchange*, today announced a new agreement with BT that allows its Members to access its trading platform via the BT Radianz Cloud.
The BT Radianz Cloud — the largest secure networked financial community in the world — helps financial market participants globally to exchange market information, trade with each other and clear and settle transactions.
Under the new agreement, BT will not only be Aquis Exchange’s preferred cloud connectivity supplier, but the Exchange’s services will now be accessible to the thousands of members of the BT Radianz Cloud community globally.
In addition, Aquis Exchange Members can use the BT Radianz infrastructure to connect with Aquis Exchange’s clearing partners using one resilient access point. This allows the full trade cycle to be conducted seamlessly and helps institutions achieve straight through processing (STP).
Commenting on the agreement, Alasdair Haynes, CEO of Aquis Exchange said:
“The opening of our doors to the BT Radianz Cloud community to access Aquis Exchange is important for us. It provides us with an opportunity to gain rapid access to an unrivalled community of market participants, which is why we have selected them as our preferred cloud connectivity supplier. We believe in having the widest possible range of users to strengthen the ecology of our marketplace and extend the benefits of our subscription pricing model to all professional investors.”
Robin Farnan, Managing Director, Financial Technology Services, BT, said:
“We are delighted to have been selected as Aquis Exchange’s preferred cloud connectivity provider. Aquis Exchange now joins over 100 trading venues that are already part of the BT Radianz Cloud community and benefits from reduced time-to-market and cost of technology infrastructure. The availability of Aquis Exchange to the BT Radianz Cloud community is a great example of how technology can accelerate innovation and efficiencies in the financial sector.”
Aquis Exchange’s subscription pricing works on a similar model to that of the telecoms industry and is designed to encourage participation from all categories of professional trading firm. Users will be charged according to the message traffic they generate, rather than a percentage of the value of each stock that they trade. There will be different pricing bands to accommodate varying degrees of usage. There will be a very low usage band for small firms, that are traditionally disadvantaged by the pricing structure of the incumbent exchanges and, at the other end of the pricing structure, will be the top category where usage is unlimited (subject to a fair usage policy).
For Aquis Exchange Members that are not part of the BT Radianz Cloud, access is available in a number of other ways, including via direct line connection or co-location into Equinix’ LD4 data centre in Slough (Berkshire, UK)

ISDX Launches New Admissions Criteria For ISDX Growth Market Companies

The ICAP Securities & Derivatives Exchange (ISDX), has today announced the launch of its new admissions criteria for companies wanting to apply for admission to the ISDX Growth Market.

via Pocket July 08, 2013 at 07:36PM

Javelin OTC Derivatives Establishes Presence in Telx’s Chicago Data Center

Javelin OTC Derivatives Establishes Presence in Telx’s Chicago Data Center

Telx, a leading provider of global interconnectivity, cloud enablement services and datacenter solutions, today announced at SIFMA Tech 2013 that Javelin Capital Markets, an OTC derivatives execution platform, has leveraged Telx’s network & interconnection rich Cloud Connection Center, “CHI1” at 350 East Cermak Road, Chicago, Illinois, providing Javelin with access to Telx’s extensive Financial Services community. As a colocation and interconnection client in Telx’s strategically located data center in downtown Chicago, Javelin can now offer Telx’s financial community high-performance connectivity to derivatives execution platforms for Interest Rate Swaps and Credit Default Swaps. Javelin offers both anonymous electronic and voice-hybrid methodologies for trade execution.

Newly formed Swaps Execution Facilities (SEFs), that have emerged as aspects of Dodd-Frank become implemented, are incorporating their services in secure data center environments. Low-latency connectivity is a critical component for the OTC Derivatives market linking SEFs and Central Counterparty Clearing (CCPs). With CCPs being located in Chicago, the proximity of Telx’s CHI1 facility at 350 East Cermak provides financial customers with high-performance and flexible connectivity to Javelin as well as to other SEF engines from a single location.

“As aspects of Dodd-Frank become cemented in the financial community, the need to establish SEFs in secure environments is a crucial step for our eventual classification as a Swap Exchange Facility,” said Michael Black, MD of Infrastructure of Javelin. “Telx’s ability to provide us with access in their premier Chicago facility, and their proximity to the clearing venues, swaps execution facilities, and buy-side participants put us in a strong market-leading position to service current and future clients.”

“We are excited to have Javelin join the expanding Telx financial ecosystem in our CHI1 facility. Javelin’s secure exchange platform with a state of the art user interface is well positioned in the rapidly changing OTC Derivatives market,” said Shawn Kaplan, general manager of Financial Services for Telx. “In recent months we have seen an increasing number of trading systems turn to Telx and our CHI1 facility, most recently with the announcement of Sky Road joining Telx’s financial community. Javelin and other industry leading financial institutions at 350 East Cermak benefit by connecting with other financial institutions in the facility, which allows them to offer their full suite of services with flexible connectivity to current and future clients.”

Telx’s CHI1 facility, located in the South Loop of the Chicago Central Business District, provides customers with the financial eco-system at 350 Cermak, one of the leading financial eco-systems in the world. As the operators of the “Meet-Me-Room,” and one of the largest colocation providers at the CHI1 facility at 350 Cermak, Telx provides industry leading data center and connectivity services for the global financial community.

Attendees at SIFMA Tech 2013 in New York City can register to attend Telx’s grand opening event of its new flagship data center, NJR3 in Clifton, New Jersey on June 19, 2013 from 3:00 p.m. to 7:00 p.m. Round-trip transportation will be provided by Telx for all registered guests. The event will feature a keynote address by NFL Legend Phil Simms, along with public remarks Clifton Mayor James Anzaldi, State Senator Nia Gill, and Telx’s Executive Vice President of Engineering and Construction Michael Terlizzi. Cocktails and refreshments will be served, and tours of the new data center will be given.


Moscow Exchange seeks to ramp up derivatives offering

Moscow Exchange seeks to ramp up derivatives offering

The Moscow Exchange will add futures based on popular German stocks to its market, as part of its plans to further develop a derivatives offering for both retail and institutional investors.

Moscow Exchange seeks to ramp up derivatives offering

The Moscow Exchange has partnered with Deutsche Börse-owned derivatives market Eurex to offer futures based on the stocks of Deutsche Bank, Siemens, BMW, Volkswagen and Daimler from September.

Speaking to Financial News, Roman Sulzhyk, head of futures and options market at Moscow Exchange, said: “These new futures will offer Russian retail investors with new products to invest in and are the first step in our cooperation with Deutsche Börse. We plan to look at the portfolio of products offered by both exchanges to see where we can further extend our partnership.”

Deutsche Börse signed a letter of intent with Moscow Exchange in November 2012, which established a strategic partnership between the two bourses. The exchanges have previously said they will look to cooperate on infrastructure, product development, regulations and post trade services.

The new derivatives are short-dated products that Sulzhyk said would allow retail investors to take short-term bets on the future stock price of the five German stocks. He added that Eurex and Moscow Exchange deliberately started with products that would not lead to a shift of liquidity from Germany to Russia.


Sulzhyk also said the Moscow Exchange was actively working with regulators to help encourage the use of derivatives among institutional investors.

“We are working hard to make it easier for large Russian funds to trade derivatives. There aren’t many Russian funds with derivatives in their portfolio because of unclear regulation. Institutional investors want access to liquid, longer-dated derivatives that will help them to hedge against portfolio risk,” he said.

The Russian exchange already lists futures based on the main indices of Brazil, India, Hong Kong and South Africa as part of an initiative known as the Brics Exchange Alliance that was launched last June.

The Moscow Exchange was formed in December 2011 from a merger of Russia’s two main domestic exchanges RTS and Micex as part of the Russian government’s plan to transform Moscow into an international financial centre. Since the deal was completed, the exchange has taken steps to encourage overseas firms to trade on its market, including major changes to post trade processes.


— write to and follow on Twitter @anishpuaar


Prism Valuation Enhances Lat-Am Derivative Valuation Service

Prism Valuation Enhances Lat-Am Derivative Valuation Service

Prism Valuation has recently introduced two enhancements to its Derivative Valuation Service for Lat-Am products. Firstly, it now offers its clients the choice of discounting valuations for Brazilian Real (BRL) CDI zero coupon swaps using a curve constructed from USD/BRL non-deliverable forwards and swaps. This is in addition to the already existing option of allowing forecasting of the forward CDI rates using either an on-shore or an off-shore curve.

The non-deliverable curve discounting option is now being delivered to several clients trading these instruments. In addition, Prism has recently added support for the valuation of Colombian Peso (COP) OIS swaps, which can also be discounted using deliverable or non-deliverable curves. In addition to BRL and COP, Prism currently delivers IRS and other derivative valuations for Chilean Peso (CLP), Mexican Peso (MXN) and Peruvian Nuevo Sol (PEN) in the Lat-Am region.

“Supporting non-deliverable discounting for BRL and other Lat-Am and Asian interest rate swap types reflects Prism’s continuing commitment to providing a flexible, robust framework to meet clients’ derivative valuation requirements. We are always willing to make the effort to broaden our coverage and utilize emerging methodologies in order to deliver the best possible service” comments Keldon Drudge, CEO.


Government’s ‘once in a generation securities law rewrite’ to set out a detailed definition of derivatives for the first time

The Financial Markets Conduct Bill, touted by the Government as a once in a generation securities law rewrite, could end decades long uncertainty about just what derivatives are by recognising them as a category of financial product in their own right.

via Pocket June 17, 2013 at 09:11PM

Deutsche Börse Group : Deutsche Börse Group

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via Pocket June 06, 2013 at 07:33PM

The EMIR Delusion

The EMIR Delusion
by Michael Beaton
DRS’ Michael Beaton explains the potential problems with counterparty classification under EMIR now and with upcoming regulatory obligations


Under EMIR, parties to OTC derivative transactions are classified as either:

• financial counterparties (“FC”);
• non-financial counterparties which have exceeded the clearing threshold (“NFC+”); or
• non-financial counterparties which have not exceeded the clearing threshold (“NFC-”).

Whilst primarily used to determine whether a counterparty is subject to the obligation to clear, in reality a number of different EMIR requirements can apply depending on the exact counterparty classification. This poses few practical problems with respect to the sell-side as the definition of “financial counterparty” is relatively static in nature. However, classification as an NFC+ or NFC- is a function of the gross notional value of derivatives contracts executed by the party in question and so is liable to change over time. Unfortunately, the impact of the consequences that flow from this fact are not restricted to the non-dealer community, highlighting the fact that understanding, confirming and monitoring of counterparty classification represents the first step in ensuring general EMIR compliance for both buy-side and sell-side firms – a step which many firms are yet to take.

EMIR Current Status

EMIR came into force on 16 August 2012. However, the regulation is, in part, an example of enabling legislation in which many of the detailed provisions are published in secondary legislation (in the form of regulatory technical standards (RTS) and implementing technical standards). As a result, many EMIR obligations – including those relating to reporting and clearing (generally regarded as the main focus of EMIR) – do not yet apply. Current estimates suggest that the EMIR reporting requirement is unlikely to take effect before 23 September 2013 (and then only with respect to interest rate derivatives and credit derivatives) and the first clearing of trades under EMIR is unlikely to occur before Q1/Q2 2014. Nonetheless, this should not be taken to mean that aspects of EMIR do not currently impact market participants or that planning for its implementation can be delayed. In reality, a number of EMIR provisions which require an understanding of counterparty classification are already in force and more are looming on the horizon, as detailed below.

EMIR Provisions Already in Force

EMIR Counterparty Classification Reporting

Under Article 10(1) of EMIR, from 15 March 2013, all non-financial counterparties (i.e. both NFC+ and NFC-) that enter into OTC derivatives contracts that exceed the clearing threshold must notify their competent authority. In practice, regulators such as the Financial Conduct Authority (FCA) require non-financial counterparties to notify both when they exceed, and no longer exceed, the clearing threshold.

Timely Confirmation Requirements

Under Article 11(1)(a) of EMIR, from 15 March 2013, FCs, NFCs+ and NFCs- have been required to put in place documented policies and procedures with their counterparties to facilitate the confirmation of non-cleared OTC derivative contracts within specified deadlines. The exact deadlines are a function of transaction type, the date upon which the transaction was executed, but also counterparty classification.

Unconfirmed Transaction Reporting

Under Article 12(4) of the “Risk Mitigation RTS” , from 15 March 2013, FCs are required to establish procedures to report, on a monthly basis, the number of unconfirmed OTC derivative transactions that have been outstanding for more than five business days. Whether a transaction has been unconfirmed for more than five business days depends on when it should have originally been confirmed, itself a function of counterparty classification.

Upcoming EMIR Obligations

Portfolio Reconciliation

Under Article 11(1)(b) of EMIR, from 15 September 2013, counterparties to OTC derivatives transactions are required to establish “formalised…robust, resilient and auditable” processes in order to facilitate portfolio reconciliation. Furthermore, pursuant to Article 13 of the Risk Mitigation RTS, the frequency with which any reconciliation must be performed is again a function of counterparty classification.

The Reporting Obligation

Under the RTS dealing with trade reporting , a number of the data points to be reported to trade repositories (as detailed in Table 1 of the Annex to the RTS) are a function of EMIR counterparty classification. For example, in reporting the “Financial or non-financial nature of the counterparty”, parties to OTC derivatives transactions are required to distinguish between FC and NFC status. Additionally, in reporting against the “Clearing threshold” field, counterparties are required to further distinguish between NFC+ and NFC- status. Finally, NFCs- are not subject to the requirement to report collateral, mark to market, or mark to model valuations, an exemption which implies an understanding of whether the reporting party actually has NFC- status.

The EMIR Delusion

Anecdotal and empirical evidence would suggest that the market is currently doing very little in the way of understanding, confirming or monitoring EMIR counterparty classifications. As of 14 May 2013, only seven entities had adhered to the ISDA 2013 NFC Representation Protocol, the purpose of which is to enable parties to amend ISDA Master Agreements to reflect their status under EMIR as FCs, NFC+ or NFC-. Moreover, the alternative solution offered by the British Bankers’ Association (see this blog post for more detail) seems yet to have been adopted to any material extent by the dealer community. Although there is some encouraging talk within the market regarding the creation of a central database to house EMIR counterparty classification data, by its very nature, this will take a significant amount of time to develop and will face many legal and logistical hurdles along the way.

The current situation will not be allowed to persist for much longer. Buy-side firms cannot simply avoid the issue or expect dealers to ride to the rescue. As per the ESMA EMIR Questions and Answers document, from 15 March 2013, NFCs which trade OTC derivatives have been obliged to determine their own status against the clearing threshold and notify their National Competent Authority accordingly. This can only be right given that the clearing threshold is calculated by reference to the total gross notional value of OTC derivatives executed by a party (calculated on a 30-day rolling average basis) – a metric that, in almost all circumstances, will be available only to the party in question and not to any single dealer.

For their part, sell-side firms must avoid the misconception that EMIR counterparty classification is entirely the responsibility of clients, that counterparty classification information will simply fall into their laps or that there is currently nothing that needs to be done once this information is acquired. The ESMA EMIR Questions and Answer document makes clear that dealers must obtain representations from their counterparties as to EMIR status. Once obtained, these may be relied upon unless the dealer is in possession of information which clearly demonstrates that they are incorrect. This implies both a requirement to make contact with clients for the purposes of initial classification and the establishment of a process to monitor continuing accuracy of EMIR status.

Once obtained, robust procedures will be necessary in order to govern the maintenance and use of counterparty classification data. In reality, it is likely that much of the obligation to report will be delegated, either to dealers or to third parties. As a consequence of this, the reporting party will understandably require trade counterparties to accurately reflect their EMIR status at all times. Moreover, the limits on the extent to which dealers can rely on client representations regarding EMIR classification implies a change of process in order to mitigate risk in this area. Similarly, changes in process will be required in order to comply with unconfirmed transaction reporting requirements, as even those regulators (such as the FCA) which do not require FCs to submit information unless requested, still require firms to have procedures in place to do so when requested. Timely confirmation and Portfolio Reconciliation requirements promise to go even further, requiring firms to apply counterparty classifications (and recognising that these classifications may be subject to change) in the context of executing potentially large-scale amendments to portfolios of derivative documentation.

Both FCs and NFCs need to act now in relation to client classification. The nature and impact of the EMIR obligations which reference client classification should be fully scoped. A remediation plan which makes realistic assumptions about the level of resource and timeframes required in order to implement change should follow. The process is unlikely to be quick or easy. However, the current situation will not continue for much longer and any firm that can show its regulator that it is making efforts to tackle the issue of EMIR compliance generally and counterparty classification specifically is likely to be in a much better position that those who continue to operate under the EMIR delusion.

JC Rathbone Selects Quantifi for CVA Analytics

JC Rathbone Selects Quantifi for CVA Analytics

Quantifi delivers leading edge models for fast, accurate CVA pricing and analytics

JCRA leverages Quantifi for CVA analytics

Quantifi, a leading provider of analytics, trading and risk management solutions for the global OTC markets, today announced that as part of their financial risk management services J.C. Rathbone Associates (JCRA) has selected Quantifi as its primary solution for counterparty risk analytics. JCRA is an innovative consultancy firm that provides financial risk management and structured finance advisory services to a broad range of global clients.

JCRA required a comprehensive and intuitive solution that could be rapidly implemented to deliver accurate, transparent and immediate CVA pricing for a range of vanilla and exotic derivatives. After a detailed review, JCRA selected Quantifi based on ease of use, performance, transparency and the high quality of support.

“The combination of Quantifi’s product coverage, modeling techniques and advanced technology has significantly enhanced our counterparty risk management. With the advent of IFRS 13, CVA becomes a required component of derivative valuations for many companies. We sought a proven CVA solution that is reliable, flexible and intuitive but also sophisticated enough to provide real value-added services for our clients. Quantifi proved to be the ideal solution. By leveraging Quantifi’s advanced American Monte Carlo engine we can carry out end-of-day and incremental CVA analysis on complex portfolios. The responsiveness and quality of the support team at Quantifi meant we were up and running within a matter of days,” comments Ivan Harkins, Director at JCRA.

Quantifi provides pricing and structuring for even the most complex OTC products in a fast, flexible and intuitive environment. Comprehensive, powerful and easy-to-use functions cover the simplest calculations to the most advanced pricing and sensitivity analysis. Quantifi’s CVA module utilises the most advanced semi-analytic and Monte Carlo models, making it the fastest, most sophisticated and comprehensive CVA tool on the market. Best-of-breed CVA pricing models reflect current best practice, helping clients correctly price wrong and right-way risk.

Rohan Douglas, CEO of Quantifi, comments, “Advisory businesses need tools that are flexible and easy to use but also sophisticated enough to provide real value-added services for their clients. Quantifi’s tools fulfil this need and provide a competitive advantage in the rapidly changing advisory landscape. We continue to expand the number of advisory firms who adopt Quantifi for pricing and valuations. JCRA continues this trend and we look forward to working with a company that has such well-rounded and experienced professionals.”

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