GFMA as part of a joint industry letter provides comments to the Commodity Futures Trading Commission (CFTC) on Margin Requirements for Uncleared Swaps for Swap Dealers and Major Swap Participants

GFMA, the International Swaps and Derivatives Association (ISDA) the Institute of International Finance (IIF) submitted a join response to the Basel Committee on Banking Supervision’s consultation on the leverage ratio treatment of client cleared derivatives. The industry believes that in the context of a bank exposure created by a client cleared derivative transaction, the leverage ratio framework should recognize the exposure-reducing effect of initial margin, particularly as it is not used to increase the bank’s leverage.

GFMA FX Division Submits Comments to the BCBS on its Consultative Document “Leverage ratio treatment of client cleared derivatives”

GFMA FX Division Submits Comments to the FSB, BCBS, CPMI and IOSCO on their consultation on Incentives to Centrally Clear Over-the-Counter (OTC) Derivatives

The Global Foreign Exchange Division (GFXD) of the GFMA provides comments to the Monetary Authority of Singapore (MAS) on their Policy Consultation on Margin Requirements for Non-Centrally Cleared OTC Derivatives.

The Global Foreign Exchange Division (GFXD) of GFMA provides comments to the European Commission’s Public Consultation on Regulation (EU) No 648/2012 on OTC Derivatives, Central Counterparties and Trade Repositories

The Global Foreign Exchange Division (GFXD) of GFMA provides comments to the Monetary Authority of Singapore (MAS) on the Policy Consultation on Regulatory Framework for Intermediaries Dealing in OTC Derivative Contracts, Execution-Related Advice, and Marketing of Collective Investment Scheme issued by MAS on 3 June 2015.

GFMA's Commodities Working Group (GFMA CWG) submitted comments to the Commodity Futures Trading Commission (CFTC) in response to a proposed rulemaking notice regarding position limits for derivatives (Proposed Rule).

GFMA CWG urges the CFTC to avoid the anomalies and associated impacts to liquidity and the proper functioning of the market that are likely to arise as a result of the Proposed Rule's failure to appropriately address dealers' net risk positions taken to hedge commitments under commodity index contracts.

GFMA, SIFMA and the Asset Management Group of SIFMA (SIFMA AMG), The Australian Financial Market Association (AFMA), the Alternative Investment Management Association (AIMA), the British Bankers Association (BBA), the German Investment Funds Association (BVI), the European Fund and Asset Management Association (EFAMA), the Futures Industry Association (FIA Global), the Global Foreign Exchange Division (GFXD) of the Global Financial Markets Association (GFMA), the International Swaps and Derivatives Association (ISDA), the Managed Funds Association (MFA) and The Investment Association provide comments supporting key principles to improve global trade reporting and data harmonization. 

This letter was sent to:

ASIC
BIS
Canadian Securities Administrators
CFTC
CPMI
EBA
ECB
EC
ESMA
FSB
FINMA
HKMA
IOSCO
JFSA
MAS
OFR
Reserve Bank of Australia
SEC

 The Global Foreign Exchange Division (GFXD) of GFMA provides comments  on the Consultation Paper issued by the Hong Kong Monetary Authority (HKMA) and the Securities and Futures Commission (SFC) on 18 July 2014.

The Global Foreign Exchange Division (GFXD) of GFMA provides comments to European Banking Authority (EBA), European Insurance and Occupational Pensions Authority (EIOPA), European Securities Markets Authority (ESMA) on the Consultation Paper on draft regulatory technical standards on risk-mitigation techniques for OTC-derivative contracts not cleared by a CCP under Article 11(14) or Regulation (EU) No 648/2012 published by the EBA, EIOPA and ESMA (Authorities).

GFMA Chief Executive Simon Lewis writes to the editors of the Financial Times calling for G20 finance ministers and financial heads of all nations to formally endorse the robust application of the international principle of comity – where the home regulator defers to the host regulator where the latter’s rules are consistent with the G20 recommendations and best practices.

The Global Foreign Exchange Division (GFXD) of GFMA provides comments to the Canadian Securities Administrators' (CSA) Consultation Paper, Proposed Model Provincial Rule on Mandatory Central Counterparty Clearing of Derivatives, CSA Consultation Paper 91-303.  

The GFXD generally supports the Proposed Model Rules in their current form but wish to draw the CSA’s attention to specific areas of the Proposed Model Rules as they relate to the global FX market.

The Global Foreign Exchange Division (GFXD) of the Global Financial Markets Association (GFMA) provides comments to the Financial Stability Board - Aggregation Feasibility Study Group of the Bank for International Settlements regarding the Consultation Paper on the Feasibility study on approaches to aggregate OTC derivatives data issued by the Financial Stability Board (FSB) on February 4th, 2014.

GFMA provides comments to all G20 Finance Ministers in Support of Global, Consistent Standards and Meaningful Regulatory Reform. This letter addresses important developments related to implementation and global consistency of the G20s regulatory reform agenda which may risk divergence from consistent implemention.

The Global Foreign Exchange Division (GFXD) of GFMA provides comments to the Securities Commission Malaysia (SC), Bank Negara Malaysia (BNM) and Perbadanan Insurans Deposit Malaysia (PIDM) (collectively the Regulatory Agencies) on the Joint Public Consultation Paper on Trade Repository Reporting Requirement for Over-the-Counter Derivatives.

Many of the current legislative and regulatory reforms will have a significant impact upon the operation of the global FX market and GFXD feels it is vital that the potential consequences are fully understood and that new regulation improves efficiency and reduces risk, not vice versa.

GFXD is supportive of the approach outlined in the joint consultation paper and provide specific comments with respect to the requirements and your questions. In addition, GFXD particularly welcomes the Regulatory Agencies' to harmonise reporting requirements under the regime with those that will apply internationally.

GFMA, as part of the The LEI Trade Association Group, a coalition of financial services firms and trade associations, provides comments to Securities Commission Malaysia (SC), Bank Negara Malaysia (the Bank), and Perbadanan Insurans Deposit Malaysia (PIDM) (Regulatory Agencies) on their Joint Public Consultation Paper: Trade Repository Reporting Requirement for Over-the-Counter Derivatives , NO. 1/2013, November 20, 2013.

The Associations strongly encourage the Regulatory Agencies to reconsider the use of the SWIFT code or company registration number for identifying Parties in trade reporting. Instead, the groups respectfully propose the adoption of the legal entity identifiers (LEIs) that are available through the Global Legal Entity Identification System (GLEIS) towards this purpose. The GLEIS, developed under the auspices of the Financial Stability Board (FSB) and endorsed by the G20, is aimed at achieving a unique, unified global system of identification of parties to financial transactions.

GFMA, the International Institute of Finance (IIF) and the International Swaps and Derivatives Association, Inc. (ISDA) provide further response to the Basel Committee on Banking Supervision (BCBS) relating to notional definitions for the BCBS Consultative Document, The Non-Internal Model Method for Capitalizing Counterparty Credit Risk Exposures.

The groups believe the Consulative Document is a significant step in the right direction and believe that the proposed non-internal model method (NIMM) framework has great potential. As an alternative to the current exposure method (CEM), it is clear that NIMM performs significantly better as a measure of exposure.

However, the industry feels an articulation of supervisory standards for the definition of effective notional that will allow firms to reliably and consistently apply NIMM to the vast majority of derivative structures is important. We urge the Basel Committee to articulate these standards to help ensure global consistency and a level playing field, facilitating an effective application of NIMM.

GFMA, the International Swaps and Derivatives Association, Inc. (ISDA) and the International Institute of Finance (IIF) provide comments to the Basel Committee on Bank Supervision (BCBS) responding to the BCBS Consultative Documents: Capital Treatment of Bank Exposures to Central Counterparties (CCPs), BCBS253.  

The Associations commend the BCBS for undertaking another consultation on these proposals and desire to provide meaningful input to ensure a viable capital framework is adopted. This response focuses on elements of the consultative document that stand to motivate and influence the expansion of central clearing. The groups share concerns that the proposal discourages propagation of central clearing, in direct contrast to policy objectives stated at the G20 September 2009 summit and related regulatory initiatives such as the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank Act) and European Market Infrastructure Regulation (EMIR). They also believe the proposal fails to provide incentives for CCPs to invest in the improvement of their risk systems and methodologies and discourages fundamental CCP risk practices, notably the intended function of the default fund.

The Global Foreign Exchange Division (GFXD) of GFMA provides comments to the European Securities and Markets Authority (ESMA) in response to the Discussion Paper on the Clearing Obligation under the European Market Infrastructure Regulation (EMIR), ESMA/2013/926. 

Given the global nature of the Foreign Exchange (FX) market, GFMA emphasizes the importance in ensuring that the regulatory treatment of FX products in multiple, global jurisdictions remains consistent. GFMA shares its recommendations are responses to questions including the detailed rationale behind the exemption to any central clearing obligation of deliverable over-the-counter (OTC) FX forwards and swaps by the U.S. Department of Treasury. GFMA strongly recommends that ESMA follow a similar approach by not issuing a clearing obligation for such products.

GFMA letter to the Basel Committee on Banking Supervision (BCBS) and International Organization of Securities Commissions (IOSCO) regarding Swap Margin Requirements For Non-Centrally-Cleared Derivatives.

The Global Foreign Exchange Division (GFXD) of GFMA provides comments to the Canadian Securities Administrators (CSA) in response to the CSA Consultation Updated Model Rules - Derivatives: Product Determination and Trade Repositories and Derivatives Data Reporting, CSA Staff Notice 91-302.  The GFXD broadly supports the proposed approach outlined in the Updated Model Rules and, specifically, the various amendments made to reflect GFMA's earlier comments on the Draft Model Rules.  GFMA offers recommendations limited to key issues which they believe remain, or are newly raised in the CSA Consultation.

GFMA and ISDA provide comments to the Basel Committee for Bank Supervision (BCBS) responding to the BCBS Consultative Document, Recognising Cost of Credit Protection Purchased.

The groups share multiple concerns, including that, while capturing a small number of transactions deemed abusive by the regulators, the proposed rule would have a disproportionate effect on a wide range of banks' financing activities (both in corporate and investment banking), wherever banks seek to hedge borrower credit risk or associated counterparty risk. Also they believe the Committee's concern can and should be addressed by regulatory supervision, and may also be partly addressed by proposed changes to relevant accounting standards, without amendments to existing Pillar 1 capital rules.

The Global Foreign Exchange Division of GFMA provides comment on the consultative document on margin requirements for non-centrally-cleared derivatives issued by the Basel Committee on Banking Supervision (BCBS) and the International Organization of Securities Commissions (IOSCO) joint Working Group on Margin Requirements (WGMR).

The Global FX Divsion of GFMA provides responses to the Canadian Securities Administrators (CSA) on the CSA Consultation Paper 91-406 –Derivatives: OTC Central Counterparty Clearing (20 June 2012).  In addtion to its comments, the Global FX Division notes that many of the current legislative and regulatory reforms will have a significant impact upon the operation of the global FX market and we feel it is vital that the potential consequences are fully understood and that new regulation improves efficiency and reduces risk, not vice versa.

The Global Foreign Exchange Division (GFXD) of GFMA provides comments to the European Securities Markets Authority (ESMA) on the the Discussion Paper relating to draft technical standards for the regulation of OTC derivatives, central counterparties (CCPs) and trade repositories.

The Global FX Division (GFXD) of GFMA provides comments to the The Treasury of the Commonwealth of Australia on the implementation of a framework for Australia’s G20 over-the counter derivatives commitments (Consultation Paper, April 2012).  Many of the current legislative and regulatory reforms will have a significant impact upon the operation of the global FX market and the GFXD feels it is vital that the potential consequences are fully understood and that new regulation improves efficiency and reduces risk, not vice versa. The GFXD is committed to ensuring a robust, open and fair market place and shares its views in response to the  consultation paper.

GFMA and the International Swaps and Derivatives Association, Inc. (ISDA) provide comments to the Committee on Payment and Settlement Systems (CPSS) and the Technical Committee of the International Organization of Securities Commissions’ (IOSCO) regarding two consultative reports related to the CPSS-IOSCO Principles for Financial Market Infrastructures (the FMI
Principles): the Disclosure Framework for Financial Market Infrastructures (the Disclosure Framework) and the Assessment Methodology for the Principles for FMIs and the Responsibilities of Authorities (the Assessment Methodology).  The groups believe the FMI Principles will have the effect of establishing strong foundations for the global financial infrastructure and support longterm stability to the extent they are diligently observed.  In that spirit, GFMA and ISDA offer their comments regarding the guidelines.

The Global FX Division provides comments to the Canadian Securities Administrators on their Consultation Paper 91-401 on Over-The -Counter Derivatives Regulation in Canada.  GFMA responds to those questions in the Consultation Paper, where they have a specific comment to make in regard to the foreign exchange (FX) market.

The Global FX Division provides comments to the Commodity Futures Trading Commission (CFTC) on confirmation, portfolio reconciliation and portfolio compression requirements for swap dealers and major swap participants, RIN 3038-AC96 – 17 CFR Part 23.  The proposal would implement provisions of Title VII of the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank Act).  The Global FX Division notes there are some specific challenges that face the foreign exchange industry when compared to other asset classes, namely the high volume of transactions and the wider universe of participants. These arise because the foreign exchange market forms the basis of the global payments system. These two issues provide a practical challenge in ensuring that all relevant trades and counterparties are able to comply with any proposed rules.

GFMA provides comments to the Commodity Futures Trading Commission (CFTC) on real-time public reporting of swap transaction data, RIN 3038-AD08 – 17 CFR Part 43. In the proposed rulemaking, the CFTC asks for specific data and analysis to support the block trades proposal. At this time, it is difficult to provide such statistical analysis given that there are no central bodies responsible for collecting sufficiently granular detail – an issue that swap data repositories (SDRs) are in part intended to address. GFXD therefore advocates an approach that allows the CFTC flexibly to assess the appropriate methodologies for determining swap categories, block sizes and cap sizes.

GFMA provides comments to the European Securities and Markets Authority (ESMA) on the discussion paper regarding draft technical standards for the regulation of OTC derivatives, central clearing counterparties (CCPs) and trade repositories.  Many of the current legislative and regulatory reforms will have a significant impact upon the operation of the global FX market and we feel it is vital that the potential consequences are fully understood and that new regulation improves efficiency and reduces risk, not vice versa.

GFMA provides comments to the Monetary Authority of Singapore (MAS) the consultation paper issued regarding the proposed regulation of OTC Derivatives.  Many of the current legislative and regulatory reforms will have a significant impact upon the operation of the global foreign exchange (FX) market and we feel it is vital that the potential consequences are fully understood and that new regulation improves efficiency and reduces risk, not vice versa.

The Global FX Division of the Global Financial Markets Association (GFMA) provides comments to the Monetary Authority of Singapore (MAS) on the MAS Consultation Paper on Proposed Regulations of over-the-counter (OTC) derivatives.  GFMA believes that many of the current legislative and regulatory reforms will have a significant impact upon the operation of the global FX market and feels it is vital that the potential consequences are fully understood and that new regulation improves efficiency and reduces risk, not vice versa.

GFMA's European affiliate, the Association for Financial Markets in Europe (AFME), authored a briefing note on the European Commission's 2010 review of the Markets in Financial Instruments Directive (MiFID), specifically in regards to transparency in foreign exchange derivatives.

Background: 

As part of its 2010 review of the Markets in Financial Instruments Directive (MiFID), the European Commission is expected to propose legislation extending transparency requirements into the non‐equities markets. The Committee of European Securities Regulators (CESR) will provide technical advice to the Commission in the context of non‐equities markets transparency and has consulted on the following markets: Corporate Bonds, Structured Finance products (ABS and CDOs), Credit Default Swaps (CDS) and Derivatives (Interest Rate, Equity, Commodities and Foreign Exchange).

AFME’s general position on all aspects of non‐equities transparency apart from structured finance is set out in Briefing Paper [BN10‐03]. This paper specifically covers the market in Foreign Exchange (FX) Derivatives.

GFMA’s Global Foreign Exchange Division (GFXD) and the Managed Funds Association (MFA) submit a proposed safe harbor to the CFTC’s proposed rule interpreting the definition of “eligible contract participant” (ECP) contained in the Commodity Exchange Act (the “CEA”). We urge the CFTC and the SEC to adopt the Proposed Safe Harbor as a new final paragraph of the Proposed CFTC ECP Rule.

See also: GFMA and MFA Submit Comments to the CFTC and SEC on the Definition of Eligible Contract Participant (10 January 2012) 

The Association for Financial Markets in Europe (AFME) welcomes this consultation paper from the Committee of European Securities Regulators on standardisation and exchange trading of OTC derivatives, and the opportunity to respond. AFME’s Foreign Exchange (FX) Division comprises 21 global FX market participants, collectively representing more than 85% of the FX market.

The FX market is the world’s largest financial market. Effective and efficient exchange of currencies underpins the world’s entire financial system. As many of the current proposals may have a significant impact upon the operation of the global FX market it is vital that the potential consequences of regulatory action are fully understood and that new regulation improves efficiency and reduces risk, not vice versa.

We are aware of the joint response to this paper being submitted by AFME, BBA, ISDA, ASSOSIM and the NSA and are supportive of the views set out in their paper. We have sought here to focus on responses to the points within the consultation paper that are of particular relevance to the FX market.

 GFMA provides comments to the Bank for International Settlements (BIS)and the International Organization of Securities Commissions (IOSCO) on the March 2011 Committee on Payment and Settlement Systems and the Technical Committee of the International Organization of Securities Commissions consultative report on principles for financial market infrastructures.

The Global Foreign Exchange Division (GFXD) welcomes the opportunity to comment on the Canadian Securities Administrators Consultation Paper 91-402 regarding trade repositories. On behalf of its members, the GFXD would like to take the opportunity to set out a number of issues around the implementation of a trade repository for foreign exchange transactions and to respond on the specific questions raised in the document. The GFXD would also welcome the opportunity to discuss these in more detail with you with the aim of aligning and coordinating development work as closely as possible to the benefit of both regulators and industry.

The Global Foreign Exchange Division (GFXD) welcomes the opportunity to comment on behalf of its members on the Hong Kong Monetary Authority (HKMA) and Securities and Futures Commission (SFC) consultation on the proposed regulatory regime for OTC derivatives.

The FX market is the world’s largest financial market. Effective and efficient exchange of currencies underpins the world’s entire financial system. Corporations and investors regularly participate in the market for operational needs: to reduce risk by hedging currency exposures; to convert their returns from international investments into domestic currencies; and to make cross-border investments and raise finance outside home markets.

The Global Foreign Exchange Division welcomes the opportunity to submit comments to the Reserve Bank of Australia regarding the OTC Derivatives Central Clearing Consultation Discussion Paper dated June 2011.

The discussion document seeks comment with regard to whether central clearing is appropriate for certain classes of derivatives. In respect of foreign exchange transactions, we have significant concerns about introducing any clearing requirement and welcome the Council agencies’ recognition that clearing may only be appropriate for certain, limited, FX products, namely options. Even with respect to options, we believe it is unclear whether the FX options market, given its size in Australia, poses sufficient systemic risk to justify implementation of a local CCP. We also agree with the Council agencies’ belief that products subject to a clearing mandate should, as much as possible, be harmonised with other jurisdictions’ requirements. This is particularly relevant given the global nature of the FX market and the level of trade conducted with off-shore market participants.

Ultimately, we believe that these transactions, and in particular FX forwards and swaps, should be excluded from the requirements of mandatory clearing. We believe the applicability of clearing to the FX options market requires further analysis, in terms of the structure of any CCP and the potential risk and liquidity requirements associated with it. The FX industry has been working with regulators, central banks and CCPs in the context of the CPSS IOSCO Principles for Financial Market infrastructures to understand the key challenges faced in clearing FX options in order to help inform market solutions in this regard.

The Association for Financial Markets in Europe (AFME) welcomes this consultation paper from the European Commission on derivatives and market infrastructures, and appreciates the opportunity to respond. AFME’s Foreign Exchange (FX) Division comprises 21 global FX market participants, collectively representing more than 85% of the FX market.

The FX market is the world’s largest financial market, and effective and efficient exchange of currencies underpins the world’s entire financial system. As many of the current legislative proposals may have a significant impact upon the operation of the global FX market it is vital that the potential consequences of regulatory changes are fully understood, and that new regulation improves efficiency and reduces risks, not vice versa. The following comments summarise our observations on the points within the consultation paper that are of particular relevance to the FX market.

The coalition of financial services firms and trade associations (Trade Associations) provides comments to IOSCO on their August 2011 IOSCO-CPSS Consultation Report on OTC derivatives data reporting and aggregation requirements.

The Trade Associations support the IOSCO-CPSS position that “a system of legal entity identifiers (LEIs”) would be an essential tool for the aggregation of OTC derivatives”.

The Global FX Division provides comments to the Bank for International Settlements (BIS) and the International Organisation of Securities Commissions (IOSCO) on the Consultative Report on OTC derivatives data reporting and aggregation requirements, Aug 2011.  The Global FX Division notes the selection of a preferred partner for trade repository services arises from the general preference of the industry for the use of global trade repositories, rather than multiple, fragmented local repositories. This is because they provide the chief benefits of enhanced regulatory oversight and efficiency of data capture. This is particularly the case for the FX market which is characterised by vastly higher number of transactions and participants when compared to other asset classes given its position as the basis of the global payments system.

GFMA provides comments to the U.S. Commodity Futures Trading Commission (CFTC) on swap data recordkeeping and reporting requirements for pre-enactment and transition swaps (also known as historic swaps), as issued by the Commission to implement provisions of Title VII of the Dodd-Frank Wall Street Reform and Consumer Protection Act.  Members of the Global Foreign Exchange Division (GFXD) are committed to supporting the establishing of an single data repository (SDR) to accommodate the foreign exchange asset class.

GFMA and 7 other Associations provide comments to EU Commissioner, Michel Barnier, and Treasury Secretary, Geithner, in relation to extraterritoriality in international regulators’ work on derivatives business.

This is a joint letter on extra‐territorial effects in EU and US regulation of derivatives with International Swaps and Derivatives Association (ISDA), European Banking Federation (EBF), Alternative Investment Management Association (AIMA), Futures and Options Association (FOA), Investment Management Association (IMA), and Wholesale Market Brokers’ Association (WMBA) and London Energy Brokers’ Association (LEBA).

The Global Foriegn Exchange Division (GFXD) of GFMA provides comments to the Commodity Futures Trading Commission (CFTC) on swap data repositories, swap data recordkeeping and reporting requirements,  real-time public reporting of swap transaction data, RIN 3038-AD20 – 17-CFR Part 49, RIN 3038-AD19 – 17-CFR Part 45, RIN 3038-AD08 – 17 CFR Part 43.  This letter is supplemental to GFXD's previous submissions on the proposed swap data repository (SDR) rules and is intended to clarify and further explain certain comments.
 

The Association for Financial Markets in Europe (AFME) welcomes the Committee on European Securities Regulators' consultation paper on transaction reporting on OTC derivatives and extension of the scope of transaction reporting obligations, and the opportunity to respond. AFME’s Foreign Exchange (FX) Division comprises 21 global FX market participants, collectively representing more than 85% of the FX market.

The FX market is the world’s largest financial market. Effective and efficient exchange of currencies underpins the world’s entire financial system. As many of the current proposals may have a significant impact upon the operation of the global FX market it is vital that the potential consequences of regulatory action are fully understood and that new regulation improves efficiency and reduces risk, not vice versa.

We are aware of the joint response to this paper being submitted by AFME, ISDA and& ASSOSIM and are supportive of the views set out in their paper. We have sought here
to focus on responses to the points within the consultation paper that are of particular relevance to the FX market.