TRANSFORMING THE dERIvATIvES LANdSCAPE - Futures and ...

Execution and trade 

capture in the new 

regulatory environment 

What are SEFs and OTFs? 

Challenges and issues in 

achieving compliance 

TRANSFORMING 

THE derivatives LANDSCAPE 

ISSUE 1 | 2011

welcome 

Welcome to FOA InfoNet 

Grappling with regulation, or rather with its possible impact, is the major headache faced 

by the industry today. And it is no longer the regulatory or legal specialists in the field who 

are having to keep an eye on what regulators and politicians are up to and report to their 

business heads. Those same business heads themselves are more engrossed than ever with 

what is happening in Brussels and on Capitol Hill. And it is easy to see why. 

Making sense of the, sometimes conflicting, flow of proposals emanating out of the various authorities in 

Washington as they seek to establish the rules around the Dodd-Frank Act, and then comparing those with what 

the European regulators are drafting, is a full-time job. So much so, that one of the speakers at the InfoNet session 

covered in this issue has embarked on a new career doing just that. Roger Barton, who was Managing Director of 

Tradeweb at the time, has since set up a consultancy service providing regulatory advice for market infrastructures 

and banks looking to assess the impact the impending changes will have on their businesses. 

Much has been written and commented upon about the clearing of OTC derivatives. Up until recently, less has 

been discussed about the bringing of the same OTC derivatives into a more transparent and structured execution 

environment. With the emergence of details on swap execution facilities (SEFs) and their securities equivalents, 

the industry has been taking note of what will be required under the CFTC rules in the way of transparency, 

multilateral execution, transaction reporting and so on. The fact that these rules are not always in line with what 

the SEC has written is, in itself, something of a trial. As EU rules on organised trading facilities (OTFs) – which may 

include SEF-type structures – have yet to be penned, this adds to the scratching of heads. 

As this report illustrates, the future shape of execution of OTC derivatives (not to mention what this means for 

firms and exchanges in the listed derivatives space) is far from clear. So we can expect a great deal more debate on 

the topic. 

It also links neatly with the subject of the next InfoNet gathering – The FCM Business Model in the Changing 

Global Environment. What role will execution brokers from the ETD world have to play as OTC products move to 

new platforms? What role can traditional FCMs play in the cleared OTC business? And what do these seismic shifts 

in market infrastructure mean for their revenue streams? If you are unable to make the next meeting on 10 May, 

the report that follows that event will provide some answers. 

In the meantime, as ever, feedback is always welcome. And you can provide it or find out more about 

forthcoming events by contacting Bernadette Connolly: connollyb@foa.co.uk; +44 20 7090 1334, or by visiting 

www.foa.co.uk/events 

Emma Davey, Director Membership and Member Services 

davey@foa.co.uk 

InfoNet is sponsored by: 

Platinum Sponsor 

In partnership with 

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3

transforming the 

derivatives landscape 

Contents 

4 InfoNet post-event report: 

Transforming the derivatives landscape. 

What will execution and trade capture look 

like in the new regulatory environment? 

17 FOA News 

18 FOA Events Calendar 

The InfoNet team 

Emma Davey 

Director, Membership and Member Services, FOA 

davey@foa.co.uk 

+44 (0)20 7090 1348 

Bernadette Connolly 

Corporate Events Manager, FOA 

connollyb@foa.co.uk 

+44 (0)20 7090 1334 

David Setters 

Contango Markets 

david@contango.co.uk 

+44 (0)7710 271291 

A report on the fifth FOA InfoNet: 

Transforming the derivatives landscape. What will execution 

and trade capture look like in the new regulatory environment?’ 

Moderator 

Emma Davey 

Director, Membership 

and Member Services, 

FOA 

Guest speaker 

Roger Barton 

Managing Director, 

Tradeweb 

Guest speaker 

Stuart Anderson 

Vice President, 

Black Rock Multi 

Asset Client Solutions 

Industry panel 

Dr Jeremy Bezant 

Partner and Chief 

Marketing Officer, 

RFQ-hub 


Steve Grob 

Director of Group 

Strategy, Fidessa 


Benjamin Smith 

Senior Manager, 

Oliver Wyman 

4 

Emma Davey We’ve heard a lot about the clearing of 

OTC derivatives in the past year or two. That has been the 

major driver from a regulatory point of view in terms of 

reforming derivatives markets. Less has been said to date, 

however, about the execution part of the chain. 

Regulators on both sides of the Atlantic are keen to 

see OTC derivatives, not only cleared through CCPs, 

but also executed on recognised execution facilities 

or trading platforms of one form or another. But the 

market is still waiting for details on all of this. 

The comment period for SEFs, or swaps execution 

facilities, heralded by the Dodd-Frank Act, ended on 8 

March. There is not much clarity over OTFs, the organised 

trading facilities put forward by regulators in Europe. 

By a number of accounts, only about 5 per cent of 

OTC derivatives are currently traded electronically. 

How much of the rest of the market will shift? Will it 

actually shift? Are the systems capable of doing the 

things that the regulators want them to do and so on? 

An interesting issue has been around the regulatory 

appetite for disciplining the market and imposing 

thresholds for when something should migrate and 

when it shouldn’t. But no thresholds have actually been 

set, so again, there’s a lot of confusion there.

Are regulators best qualified to be doing that kind 

of thing? 

Our two guest speakers tonight are Roger Barton, 

Managing Director of Tradeweb, and Stuart Anderson, 

Vice President of BlackRock Multi Asset Client 

Solutions. The panel includes Dr Jeremy Bezant, partner 

and Chief Marketing Officer of RFQ-hub, an electronic 

multi-asset request for quote and electronic trading 

platform for listed and OTC derivatives. Jez was also 

previously Head of Structured Products and Derivatives 

for Aviva investors, and part of his role there was 

oversight and execution of their derivatives trading 

globally, so he has two angles to come from. Steve Grob 

is Director of Group Strategy at Fidessa and Ben Smith is 

a Senior Manager from Oliver Wyman and a co-author 

of a recent Morgan Stanley/Oliver Wyman report on the 

future of capital markets infrastructure. 

Stuart Anderson One question that continually comes 

up when looking at OTC regulation is what are the main 

differences between the European process under EMIR 

and the American process under Dodd-Frank? As a dual 

national of British and American descent, I consider 

myself neatly placed to answer some of these questions. 

The accepted wisdom is that regulation is driven by a 

rational appraisal of the national market infrastructure 

and a desire to avoid problems that in some cases have 

been caused by the OTC markets over the past few 

years. It follows then that any differences in approach 

and implementation must come about through the 

individual peculiarities of the local swap markets and 

the legal framework in which they operate. I’m not so 

sure this is the case, however. My suspicion is that these 

regulatory variations are more driven by fundamental 

differences in the national character of Europeans and 

Americans. Let me explain. 

The first and most obvious difference between Dodd- 

Frank and EMIR is one of timing. The Dodd-Frank Wall 

Street Reform and Consumer Protection act was signed 

by President Obama on 21 July 2010. The CFTC and the 

SEC have 12 months from this date to write the detailed 

second stage legislation, and they’re progressing 

currently at a furious pace. Although Gary Gensler 

recently made comments that the implementation 

period for the regulation could extend significantly 

beyond the initially indicated 60-day period, it seems 

likely that the vast majority of those rules will in fact 

be drafted by the July 2011 deadline. The European 

time line is progressing at a slightly slower pace and 

more in line with the G20 governmental commitments 

to clear and execute trades on platforms by the end 

of 2012. EMIR itself was drafted and proposed on 15 

September 2010 and despite being more narrowly 

focused on OTC derivatives than Dodd-Frank, it’s not 

expected to be finalised until halfway through 2012, 

with implementation possibly stretching well beyond 

this. But this considerable difference in timing really 

shouldn’t come as a surprise to any of us, when we 

consider the French desire to spend an entire evening 

eating a single meal, compared with the American 

obsession with fast food. 

Further proof, if we need any, comes in an 

examination of the space race. On 25 May 1961 

President Kennedy made a commitment to put a man 

on the moon by the end of the decade. Just as with 

Dodd-Frank, the timeframe was extremely ambitious 

and many people said unachievable. Of course there 

“What are the main differences 

between the European process 

under EMIR and the American 

process under Dodd-Frank?” 

were setbacks and delays along the way, like the Apollo 

1 fire which killed three pilots, but they persevered 

and learnt from their mistakes and achieved their 

goal on 20 July 1969, almost exactly 41 years to the day 

before Dodd-Frank was signed into being. In contrast, 

the European Space Agency is operating at a slightly 

slower pace, as you would expect. As part of the Aurora 

programme, they proposed to send a man to the moon 

by 2018, but to date their achievements have been 

limited to crashing the unmanned SMART-1 probe onto 

the lunar surface in 2006, so let’s just hope the same 

fate doesn’t await EMIR. 

Of course some of the variation in timing can be 

attributed to the budgets of the respective agencies. 

This brings me to my second point of funding. There’s 

currently a political fight going on in the US Congress 

between the Democrats and the Republicans around 

funding for the CFTC and the SEC. Democrats seem 

likely to beat back the bill passed recently that cuts 

the CFTC budget by over a third, but even including 

these cuts, the agency’s annual budget is well in excess 

of $100 million. On top of this, if Gary Gensler gets 

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6 

his way, CFTC staffing levels will increase to almost 

1,000 people. In Europe, the newly created European 

Securities and Market Authority (ESMA), which will 

serve as the overarching regulatory authority, has an 

annual budget of just E17 million and employs some 

58 staff. Recognising, perhaps, the gap with their US 

counterparts, this figure is set to grow to 89 by 2013. 

Once again, a cursory look at the two space agencies’ 

funding levels should have prepared us for this 

disparity. NASA’s budget for 2011 came in at $19 billion 

and employed around 18,000 staff, and the European 

Space Agency, in contrast, employed 2,000 staff and had 

an annual budget of E4 billion. This might explain why 

Europe is still crashing probes into the lunar surface, 

while America is talking about putting a man on Mars. 

While on the subject of finance, it would be useful to 

look at the different approaches taken to collateral for 

buy-side firms in the US and Europe. There’s been much 

discussion of the problems that cash-only requirements 

for variation margins cause pension funds and life 

funds, which typically have a very low allocation to 

cash. In the US, CCPs like IDCG and CME made early 

noises around alternatives to cash, but for various 

reasons they have never reached fruition. In Europe, 

CCPs face many of the same problems in allowing noncash 

collateral. The LCH has been engaging actively 

with us to try to develop a solution. Eurex recently 

announced that they too are seeking to incorporate 

some possibilities of non-cash collateral, by utilising 

their liquidity line to the Bundesbank and the General 

Collateral (GC) pooling repo service to transform 

non-cash collateral into cash. CME has likewise made 

proposals around a non-cash model. Although these 

efforts have some way to go before coming to fruition, 

it’s interesting that this has become a focal point for 

many buy-side European firms, while being largely 

overlooked in the US. 

Is this down to different investment characteristics 

in pension funds on either continent, or is it simply 

that Americans have grown used to a cash requirement 

for pretty much everything in life? A recent IMF 

report showed US GDP per capita to be a full $15,000 

higher than its European equivalent, so it’s clear that 

Americans simply have more cash to play with, to the 

point where funding of variation margin apparently 

becomes a non-issue. 

Some of the difference in attitude may come from 

the segregation models being enforced. CFTC rules 

mandate a futures commission merchant model for 

margin segregation. This essentially requires gross 

margining through a client omnibus account, in 

which all clients are open to the default risk of their 

fellow clients, with no transparency or choice over 

who those fellow clients are. EMIR goes further than 

this in placing a minimum requirement to segregate 

clearing member funds from those of its client, but 

importantly, with an additional requirement to offer 

more detailed segregation at the client’s request. In the 

event of a default, fully segregated accounts, or those 

held in restricted omnibus accounts not containing 

the defaulting client, will be protected from the loss 

mutualisation. Some market commentators have made 

the point that different bankruptcy regimes in place 

in Europe and the US explain these differences but it’s 

maybe no coincidence that EMIR was published exactly 

two years to the day after Lehmans filed for bankruptcy. 

The US seems to have taken the view that when all else 

“Regulators on both sides of the 

Atlantic are keen to ensure that 

regulatory arbitrage is kept to 

a minimum wherever possible.” 

fails, you can always sweep $8 billion from the UK to the 

US to shore up the balance sheet. Europe on the other 

hand seems to have learnt its lesson and is fully focused 

on protecting its pension fund contributions. 

Another clear difference in regulation comes 

through the back loading requirement. Should clearing 

requirements be retrospective in nature and apply to 

historical positions? Gary Gensler clearly stated in his 

testimony before the Senate banking committee that 

new rules should apply only on a retrospective basis to 

transactions entered into after the rules take effect. In 

Europe the situation isn’t so clear, with some parties 

arguing for back loading and others arguing against 

it. Again, this different approach to historical trades 

seems to have more to do with national character than 

anything else. To quote Margaret Thatcher: ‘Europe will 

never be like America, Europe is a product of history, 

America is a product of philosophy.’ 

It’s not surprising that a nation that sees anything 

which took place prior to 1776 as being ancient history, 

should choose to ignore historical trades in its financial 

regulation, while countries in Europe, which still get

fairly worked up about battles that took place over 500 

years ago, take a more inclusive approach. 

Finally, there are different approaches to the 

recognition of third-party CCPs and trade repositories. 

EMIR permits a CCP or trade repository established in a 

non-EU country to provide clearing or reporting services 

to entities established in the EU, if ESMA recognises the 

legal and supervisory arrangements of that country to 

be equivalent to the European requirements. The US 

has a similar option in exempting US CCPs from US 

regulation, but is far less flexible with regards to the 

trade repositories. 

Currently US regulation does not specifically provide 

for recognition of any non-US repository. Non-domestic 

trade repositories are another addition to the expanding 

list of things that the US doesn’t recognise. For instance, 

it doesn’t recognise the Chinese claim to Taiwan. It 

doesn’t recognise that World War II began before 1941, 

or that football should be a game played with a ball and 

players’ feet, and it certainly doesn’t recognise that if 

you’re going to call a competition the World Series, it 

should really involve more than one country. 

Of course, there are many similarities between Dodd- 

Frank and EMIR. Regulators on both sides of the Atlantic 

are keen to ensure that regulatory arbitrage is kept to a 

minimum wherever possible. It goes without saying that 

this is an important goal; however, the world isn’t limited 

to Europe and America. Much of the outcome of these 

two processes will influence the direction Asia takes over 

the next year. 

I began by saying that my dual US-UK nationality gave 

me a unique insight into the different regulations, but I 

should also point out that I’m married to an Australian. 

So with that in mind, I’d like to end by adopting the 

antipodean attitude to central clearing and pass over to 

Roger, with the observation that as none of this seems to 

involve sport of any kind, I’ll be in the bar knocking back 

a beer while you work out the details. Unfortunately, I’ve 

been asked to join the panel, so I’ll have to wait. 

Roger Barton The first question is what exactly 

are SEFs and OTFs? And the answer, despite a lot of 

discussion, argument and analysis, is that we still don’t 

really know. 

This is particularly the case for OTFs. We do have 

more knowledge about SEFs, and we certainly know 

more than we did. Dodd-Frank states that all clearable 

derivatives will need to be executed through exchanges 

or SEFs and of course, cleared through CCPs. The 

CFTC and SEC have set out a range of principles and 

requirements for SEFs; most of them the same, but not 

quite. They include the requirement that all trading 

must be multi-lateral. So, single dealer platforms are 

not permitted. And it’s proposed that both request 

for quote and central limit order book systems are 

permitted. They are also very specific on what trading 

models SEFs will be permitted to offer; down to the 

level of, in an RFQ system, how many dealers buy-side 

customers will be required to request quotes for. 

Unlike the European proposals, it is proposed that 

there’s a block trade exemption, for somewhere in the 

region of 5 per cent for the largest trades. Those block 

trades may be done bilaterally by voice, provided that if 

they’re clearable derivatives they need to be registered 

subsequently with an SEF. 

On the vexed issue of ownership and governance of 

SEFs, the proposals are still outstanding. Suffice to say 

that there will clearly be a limit on dealer ownership of 

SEFs and a minimum proportion of public directors on 

their boards. 

The European proposals are at a higher level and 

currently, much less clear. There’s a proposal to 

introduce a new regulatory heading for platforms, 

called Organised Trading Facilities (OTFs) that covers 

all organised trading venues which aren’t exchanges 

or MTFs. So the scope potentially covers electronic 

platforms, voice platforms, single dealer platforms, 

multi dealer platforms; it’s really something of a catch 

all. And then the proposals go on to say that all clearingeligible 

derivatives with, to use their term, ‘sufficient 

liquidity’, will need to be executed either through an 

exchange or an MTF or a multi-lateral OTF, and again, 

cleared through CCPs. 

Unlike the US, the European Commission clearly 

has no appetite to get as prescriptive on the specific 

trading models that would be permitted; in fact, they 

specifically shy away from that, apart from specifying 

multi-laterality, so single dealer platforms don’t look like 

they will qualify. They do, however, set out minimum 

pre- and post- trade transparency requirements which 

are intended to apply across all venues, across derivatives 

and fixed income products. Potentially, these proposals 

relating to transparency are far reaching. 

The European Commission clearly aims to achieve 

the G20 commitments for moving derivatives execution 

onto electronic platforms. In their consultation paper, 

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8 

they specifically reinforce Europe’s commitment to 

the G20 aims. At the same time, the Commission states 

explicitly that it intends to make minimal changes to 

the way business is done. In practice, it’s going to be 

difficult to achieve both of those objectives. If there’s 

going to be a substantial proportion of derivatives 

execution moved onto regulated electronic platforms, 

the European Commission or the Parliament will at 

some stage need to be more prescriptive about the way 

that business is done. 

In any case, the direction of travel of the regulation 

and the legislation is clear, and has been since the 

G20 commitments were announced. What is not yet 

clear is some of the detail, the timescales and whether 

implementation will occur in one fell swoop or happen 

over time. 

The intention is to increase transparency and market 

efficiency, and certainly electronic trading has a proven 

track record in achieving both of those. But of course, 

there are a lot of risks. The most obvious is that in such 

a major change, there’s always likely to be unintended 

consequences, particularly if the regulation and 

legislation is introduced over a short period of time, 

which is currently the intention in the US. 

There are also risks, particularly relating to the 

transparency arrangements. If these are incorrectly 

calibrated – to use the regulators’ words – then that will 

likely damage liquidity. 

And then, finally, not allowing sufficient flexibility 

as to how business is conducted will potentially reduce 

competition and restrict freedom of action for the users. 

So there are a number of risks which the regulators are 

looking to address, but what they’re looking to achieve 

is quite clear. 

ED It’s quite difficult to deal with the execution 

and trade capture issues that the developments are 

bringing up, when there is this lack of clarity. Ben, I 

wondered if you could give us some headlines around 

your research. As already agreed, there’s not much 

clarity, but how certain is the future from the research 

that you’ve undertaken? 

BS We’re talking here about OTC trading rules 

and we’re focusing on the execution side. I’ll try to 

lay out the high-level issues and where we see the 

trajectory. Where the end state is, is still quite unclear. 

Both for the US and the EU it’s pretty clear that 

there’s going to be some sort of codification of 

platforms and some sort of multi-lateral RFQ or CLOB 

systems in place for what are called standardised 

available to trade OTC derivatives. 

What that means in practice is hugely unclear. 

How many RFQs? Is one enough? What counts as 

standardised? What is available for trade? Does a 

contract that’s standardised and clearable have to be 

traded on an electronic platform if there’s no liquidity 

in that product? 

There are a lot of questions as to what SEF and 

OTF platforms will look like. The knock-on effect 

is on the pre-trade pricing transparency. How does 

that get integrated into the trading world, how does 

it get reported, how do people see it, is it clear to 

other people? And then there is post-trade pricing 

transparency, what are the rules around that? 

It is clear there’s going to be post-trade pricing 

transparency in some sense, but how immediate is 

that going to be? Is there going to be some sort of 

time delay? What are the operational implications of 

implementing post-trade trade reporting, and that goes 

for small trades all the way up to block trades? 

Then there’s a whole issue around execution. What 

are the rules on block trades? How are they executed? 

Can they be done bi-laterally? What’s the threshold? 

What’s the reporting time for a block trade and how 

does that affect how the sell-side of the banks facilitates 

large trades? 

The trajectory seems to be towards a certain level of 

pre-trade pricing transparency, certainly a level of posttrade 

pricing transparency, and then a clearing and a 

risk management layer which has also been debated a 

lot. How quickly we get there is unclear because of the 

lack of clarity on legal definitions and on the trading 

infrastructures which might emerge. 

ED One of the most interesting questions as we 

look ahead at the regulatory agenda is on accessibility. 

Dodd-Frank requires SEFs to provide market participants 

with impartial access to the market. But there 

are practical and cost issues there, too. Jez, as a platform 

provider and with your background as an end user, what 

are the issues regarding accessibility and how real is it? 

Are SEFs going to be fully accessible to all and sundry? 

JB Naturally you’re going to get a proliferation 

of ways that people can achieve these objectives, but I 

go back to my own experience and why I’m doing what 

I’m doing now. A lot of the regulatory response we’ve 

seen is looking harsher than it needs to be. The industry 

began to solve this problem itself a number of years ago.

I remember standing in front of the board at Morley 

[Fund Management] as it was then, and articulating 

how the OTC world worked and the parallel chart of 

how the exchange traded world worked. I said, look, 

what we really want to do is get as much of that into 

the exchange traded world as possible by mirroring 

everything, wherever possible, including the collateral 

leg. This is pretty much what the regulator wants the 

industry to do now. 

We worked very hard at that and spent a lot of time 

and money doing it. The bits that were missing though 

are the bits we’re talking about now; the pre-trade 

component and the execution. Ironically, all of the 

operational issues we experienced [at Morley] were 

entirely down to trades being executed and done on a 

spreadsheet or an email or some sort of ‘chat’ system, 

and then just sent and forgotten about and difficult to 

process as a result. 

“One of the unintended consequences 

is going to be the proliferation 

of places you can trade.” 

My view was that if you standardised that as much 

as possible, and in fact you went for a detailed quote up 

front, a lot of the operational issues would disappear 

(as you would have the fully executed trade details from 

the point of execution) and you would get something 

more like the exchange traded world we’re seeking. 

It’s ironic that over four or five years later we’re being 

forced into that. One of the unintended consequences is 

going to be the proliferation of places you can trade. 

One big issue that we’re going to see is a difference 

between the regulatory approach in the US, a rulesbased 

approach, and the regulatory approach in 

Europe, which is typically more principles-based. That’s 

probably why they’ve got fewer people. You don’t need 

as many people in Europe if it’s principles-based. If it is 

rules-based, you have to monitor it all the time, so it’s 

more intensive.. 

So the debate is really about whether you’re 

instructed to trade in a certain manner or not. 

Certainly there are already some specific SEF trading 

rules from the CFTC. That’s not the only SEF in the US 

of course, because there’s an SEC SEF as well, which 

will have different rules and which seem bespoke to 

their markets. 

We haven’t seen as much about the OTF in Europe. 

I’m pretty sure it’s not going to be as prescriptive but 

it’s not yet clear. However, we should really focus on 

what people are trying to achieve and why they’re 

trading OTC. Predominantly it’s because they can’t get 

what they need from the listed world or they’re trading 

something that’s so bespoke. For example, you may 

be running a pension book where you need certain 

liabilities matched that you can’t get from the market 

because it’s [the risk is] too far out. Then you need a 

bespoke contract. 

People don’t choose to trade OTC because it’s fun. 

It’s really complicated and it’s not a nice place to be 

if you have to deal with it from an operational point 

of view. 

If we asked what we need to do to help the asset 

manager – and it generally is the asset manager we 

should think about with the infrastructure they will 

require and the need to minimise operational risks – 

we wouldn’t be doing as much as we may have to do 

under the proposed regulations. It’s going to be more 

complex because of the proliferation of places you can 

trade, just as with MiFID in the cash market. You used 

to know exactly where to go to trade a BP share. There 

are a number of MTFs where you can trade a stock, so 

you can’t easily see the liquidity every place a stock 

is traded, so it’s a lot easier just to pick up the phone. 

That’s going backwards and if played out will be a 

huge unintended consequence in price discovery and 

execution for derivatives. 

ED Steve, looking at fragmentation and the 

cost of connectivity, if we’ve got this proliferation of 

platforms, what are the lessons we should be learning 

from the equities market? 

SG Just before I answer that, let me make one 

more general point about regulation. It strikes me that 

whenever there’s a war, we always have the wrong type 

of army, and the reason for that is because we built 

the army up to fight the last war, not the current one. 

That’s exactly what regulation is like. It’s always looking 

backwards trying to solve the previous problem. There 

needs to be a reality check about regulation and what 

it’s really trying to solve. 

But there is indeed a lot to be learned. One of the 

biggest lessons for the broker community was the 

need to have to chop orders up and send them out 

intelligently across multiple platforms and venues. 

There’s a cost involved in that, whether it’s in 

9



10 

technology, in downstream workflow or in processing 

and yet there is no new order flow coming in the front 

door. So the first fundamental problem is that the 

people who have to bear the cost for this, aren’t actually 

making more money out of it. 

We’ve also found that by introducing competition, 

you very quickly get to a race to zero with all sorts 

of clever maker/taker models in terms of pricing, 

which make it almost impossible for smaller MTFs to 

be financially viable. How is that good for the overall 

stability of the system? In fact it has led to the national 

exchanges and monopolies having to club together and 

form global monopolies, because they can no longer 

make any money. There are a lot of lessons and I don’t 

think any of them are very positive 

ED Stuart, as an end user, would you like to pick 

up on the concerns that Jez mentioned? 

SA The cost issues are the obvious ones. You 

mentioned the timeframe that this was being pushed 

through in. We seem to have been having these 

conversations for well over a year now and, given the 

change this is bringing to the industry, there’s not 

much time to adapt to all these models. 

We made the point about the cost of building 

systems and requirements for the banks, and brokers 

being mandated to build connectivity to all the 

exchanges and all the clearing houses; they don’t have 

a choice over that. 

They have a much larger resource base than most 

asset managers and even as a large asset manager, 

BlackRock has faced challenges with the requirements 

both in terms of financial cost for building the systems 

and of manpower. I shudder to think of the effect it’s 

having on some of the smaller asset managers. There’s 

real concern from many people around the amount of 

work required to adapt to the regulations. 

There’s going to be a real rush to market, whether it’s 

in 2012 or even earlier. There’s a danger that everyone 

gets caught up in a last-minute rush to get ready. 

It simply won’t be possible to do that. That’s where 

unintended consequences and risk enter the market. 

JB While we’re all thinking there’s going to 

be a lot of work in a very short space of time and it’s 

going to be expensive for pretty much everybody, 

including the tax payer who has to pay to keep the 

regulators running, I do think that the number of OTC 

transactions this is going to affect is very small. 

Therefore the cost for the number of actual trades is 

going to be high. If you’re trading and processing OTCs 

and have to pay for all this and deal with the complexity 

around margining, whether or not you can do cross 

margining and other things you need to achieve and 

currently can achieve in the OTC world, it’s going to 

push more business into the exchange environment. 

That’s good for a lot of people who are looking at this, 

because the costs are known in the current exchange 

world. It used to be an order of magnitude less when 

you compare it to OTC. That is ultimately a positive. 

The volume of OTC contracts is less now than 

previously and I think we’ll see even fewer going 

forward. Of those that remain, they’ll probably be too 

infrequently traded to qualify for a lot of the SEF rules 

and it’s unlikely they’ll ever get into a CCP because 

they’ll be deemed too illiquid. They’ll just be bilateral 

as before. 

We’ll see a lot of exchange traded business, quite a bit 

of traditional bilateral OTC trading and something in 

“The industry should get their voice 

across to regulators, but that doesn’t 

solve the problem of a heavy handed 

approach to regulation.” 

the middle that people think is a bit difficult to trade 

initially and will probably not be traded very much. 

ED There is, though, the regulatory threat. If 

it’s not cleared and they don’t like you not clearing it, 

if you’re not executing it where they want you to, the 

regulators might simply ban it. 

JB You’re right, but the method of deciding 

what is eligible for a CCP is completely unclear. Now it 

seems the ECB wants to decide, it doesn’t want ESMA to 

decide. But of course, if you think something is eligible 

and you go to the CCP and they say it was OK yesterday 

but not today, you’re back to your bilateral agreement. 

That doesn’t help anybody. 

SG What happens if the parties involved are 

from different jurisdictions or if you have products, for 

example, like mixed swaps which maybe involve equity 

and a currency hedge? In the US, you’d come under the 

SEC and the CFTC. The whole thing could be a mess 

quite quickly. 

BS The real cost is the cost of slippage or the 

effect on liquidity and the cost to the end user to 

execute contracts. The extra amount of capital that a

ank has to use and put to work to facilitate trades, I 

don’t see that shifting to exchanges. 

The OTC world has grown over the past five years 

by about 17 to 18 per cent in terms of notional values, 

compared to the exchange space, which has grown by 

less than 10 per cent. 

The reason behind that is the bespoke contracts the 

end users want have become more sophisticated. By 

that I mean people using bespoke contracts to hedge 

specific risk and take it out of their portfolio have 

become more sophisticated. OTC is the easiest and, at 

present, probably the cheapest way to do that. 

So the idea that the implementation of some of the 

trading platforms will be the real cost to bear doesn’t 

take into account other factors that are more to do with 

the cost of liquidity and the cost of capital, especially 

when you consider Basel III. The banks will need to put 

up more capital against the trade to facilitate it. I don’t 

think you’ll solve that by moving on to an exchange. 

ED Picking up on the impact on liquidity and also 

on costs, I suppose one issue we have is that the OTC 

model doesn’t fit with the exchange traded model, i.e. 

exchanges make money through high volumes going 

through their systems. The ISDA view is that fewer 

than 2,000 standardised interest rate swaps, the most 

liquid OTC contract, are traded on average every day. 

Sixty-seven of those are executed among the G14 largest 

dealers. In terms of value they are large numbers, but 

in terms of numbers of transactions it’s very small, 

and we’re talking about having anything from one to 

numerous SEFs. 

BS That’s a great point. We put the number between 

2,000 and 3,000 trades per day in liquid interest rate 

swaps in the three- to five-year bracket. That’s not 

mirrored on exchange. On the other hand, FX swaps for 

example are a totally different instrument. We must 

be careful talking about parallels between the OTC and 

the exchange world. We should not miss the microstructures 

of the asset classes that are traded. 

ED But isn’t that what the regulators are doing? 

Aren’t they’re mixing those two things up? They’re 

taking a very simplistic view of what the exchange 

model provides and saying, ‘well, you must be able to do 

that over here?’ 

RB It’s a combination of factors. In the OTC 

markets there are a large number of instruments, a small 

number of relatively large trades and a relatively small 

number of participants. In short, the trading pattern is 

lumpy. This is why the OTC market has grown up as it 

has, with dealers putting up capital to take positions, on 

a request-for quote basis. The traditional all-to-all central 

limit order book tends not to meet the requirement. 

The chance of an end user wanting to buy and an end 

user wanting to sell the same instrument at exactly the 

same time is very limited. 

At one stage the regulators, particularly in the US, 

came close to saying that everything should go central 

limit order book. They were no doubt influenced by 

the fact that this is the way it is in the futures business. 

But they backed off and allowed a wider variety of 

different protocols. The more different protocols that 

are allowed, the more competition and choice there is. 

At the same time, however, there is potentially more 

fragmentation along with greater cost. A balance needs 

to be struck. 

ED Fragmentation might be good for 

competition, but lack of standardisation of systems 

and of products from an operational point of view, 

when you’re trying to improve your risk management 

processes with more business coming at you from 

different sources, raises the issue of increasing risk 

rather than reducing it. 

RB If the prevailing method of execution 

continues to be request for quote, then the fragmentation 

issue, while it’s clearly a problem and increases 

cost in terms of connectivity, is not as great if the 

prevailing method of execution is central limit order 

book because ultimately, the dealers providing the 

request for quote systems tend to be the same dealers. 

Alan Burr, Burr and Company With respect to 

Steve’s remark about regulators, they need industry 

support to come up with the most appropriate 

solutions. Could you comment on that? 

SG Regulation goes as fast as the slowest element. 

It’s always backwards looking and people will find 

ways around it if there’s too much. If you look at MiFID 

II, there were something like 4,000 responses to the 

consultation paper, some of which were larger than 

the consultation paper itself! Someone’s got to plough 

through all that and make some sense out of it. The 

industry should get their voice across to regulators, 

but that doesn’t solve the problem of a heavy handed 

approach to regulation. 

RB One response to the MiFID consultation paper 

was from the Authorite des Marches Financiers (AMF) 

in France. They made the point that transparency for 

11



12 

all derivative products should be the same as equity 

transparency. They know equity transparency because 

they know equity products. Regulators take what they 

know and apply that to other products in the same 

way that the CFTC probably does with futures. So if 

the industry, individually or collectively, can spell out 

the danger of doing this and an alternative that makes 

sense, then I think that helps address the issue. Of 

course, this is perhaps easier said than done. 

JB I think you’re absolutely right. A few years ago 

we found that there weren’t many buy-side participants 

prepared to engage, but we’ve seen in the US much 

more buy-side interaction to the point where they got 

together and decided on a ‘this is the way we’d like 

it to be’ approach. But there’s still less engagement 

in Europe, particularly in the UK. That’s not due to a 

shortage of industry organisations, but we’ve let the 

dealer community drive everything. 

“Regulators and politicians are very 

open to the opinions that we’re 

trying to get across to them.” 

ISDA is still dominated by dealers but they do try to 

get the buy-side to join. We joined, but not many people 

have followed, so the lobbying is all dealer-driven. The 

buy-side, and maybe it’s just natural shyness, is not 

prepared to stamp its feet. It’s not a surprise that it 

hasn’t gone all their way. 

The initial regulatory response was down to the fact 

that with Lehman and then AIG they had absolutely no 

idea where all of the CDS contracts were, no idea where 

all the risk was. 

They don’t want to be caught out again. So they’ve 

decided that the first thing you need to tell them is 

what you’ve traded and who you’ve traded it with. 

So they’ve asked that we report our trades to them. It 

doesn’t necessarily have to be public, but report it. That 

is a fundamental and understandable desire. 

Most of this trading is still done on the telephone or 

on spreadsheets or on various chat or email systems. 

A lot is done on the telephone with very little written 

down until it gets to a point at (in some cases) seven 

in the evening in operations, in the middle office or 

trade support, when someone finally ends up booking 

the trade. Then you wouldn’t get your confirmation, 

if it was an OTC, for six weeks or longer four or five 

years ago. 

So, the solution is electronic trade capture, isn’t it? 

You need to capture your trade at the point of execution 

and report it somewhere. And the other thing was 

uncollateralised transactions. ‘End users’ such as airline 

companies don’t necessarily want to collateralise 

because it’s really just a hedge on pricing. But other 

people didn’t collateralise their transactions even 

though they could and perhaps they should’ve done, 

and of course, when things like Lehman happened, 

they lost money. So enforcing some element of margin 

or collateral is also quite sensible where it should be 

appropriate to protect, perhaps, pension funds. 

If the regulator would remain focused on those 

things, we would not need a lot of the infrastructure 

being forced on us. It would be a lot simpler to navigate 

because we could all follow those principles. 

SA You’re absolutely right about the buy-side voice 

being muted. Partly that’s a desire not to put a head up 

above the parapet, and partly it’s a resource issue. It’s 

only been the larger asset managers who can put aside 

resource to look into this in the detail required. 

The upside for firms like ours is that regulators and 

politicians are very open to the opinions that we’re 

trying to get across to them, purely because banks 

are not the most popular people in the world at the 

moment and they’re looking for an alternative point of 

view. They don’t trust what the banks are telling them. 

Quite rightly, I might add, in a lot of cases. 

On the other side there is a conflict of interest 

between the industry as a whole, the buy side and the 

banks, and the politicians and the regulators. Asset 

managers are trying to protect the requirements of 

their customers, the banks are trying to protect their 

profit margins, and the politicians are trying to get 

re-elected. They have to make proposals and laws about 

things that they maybe don’t fully understand and they 

have to do so within a very tight timeframe. BlackRock 

fully supports central clearing as a way of reducing 

systemic risk and we’re doing our best to ensure the 

regulators and politicians listen to and understand the 

needs of our clients. 

Robert Ray, CME Group One issue absent from the 

whole discussion is the cost of doing an OTC when it’s 

on the balance sheet versus off the balance sheet. I don’t 

know if that’s something that’s just below the radar or 

too complex to understand. What is your view on that?

JB If it’s the off balance sheet you’re talking 

about, I’ve seen all sorts of interesting structures. For 

example, I know there was a Lehman CDO, which was 

with an SPV and there was cash collateral, but the cash 

collateral was in the same bank’s liquidity fund, and 

when everything unwound, everything disappeared 

when the money was moved over to the US. It’s very 

easy to move this stuff around on and off balance 

sheets if you’re in a different regulatory environment, 

but if you’re a fund manager you can’t, you’re directly 

exposed to these things. I always said to the teams 

I worked with, if you don’t understand what you’re 

buying, who’s selling it to you, and what’s going to 

happen when you need the money back, we shouldn’t 

be entering into that transaction. 

BS The on balance/off balance sheet issue is 

something Basel III is going to address. The rules 

around clearing are not going to be the driver of 

clearing, it’s going to be the effects of Risk Weighted 

Assets (RWA) on the bank’s balance sheet. If I have to 

carry massive RWA charges on my trading book because 

of the counterparty regulations that come out of 

Basel III, I’ll start to incentivise my corporate clients to 

clear. So it’ll be less around ‘Is there a big cost?’, it’ll 

be more, ‘how do I start incentivising my corporate 

and my asset management clients to start, to get 

over the clearing hurdle?’ Just remove the RWAs and the 

capital charges from my balance. It’s unclear 

how that’s going to work. The collateral number 

could be in the trillions of dollars, if you start 

collateralising everything. 

David Feltes, CME Group I wanted to ask about 

regulatory arbitrage. Clearly the CFTC is going at one 

pace and with the EU going at a different pace, at what 

point does the panel see capital flows changing and 

trading behaviours, geographies etc? 

SG It’s a huge issue particularly with the 

consolidation among the big exchanges. Deutsche 

Börse and NYSE Euronext probably touches on 12 to 

15 countries and every single one will have a slightly



14 

different view on what’s right or wrong. You even saw 

that NYSE Euronext moved some of their operations 

to London, because it would be under FSA regulation 

rather than, say, Dutch regulation providing advantages 

as to how they operate. It’s happening at venue level 

and also at the banks and brokers. The whole idea of 

national exchanges is dead, so the idea of national 

regulators should go with it in my view. I think we need 

something else. 

There’s a great document that Ben’s firm produced 

about anticipating the next financial crisis. It makes 

the point that all the operations move eastwards 

because they become much more regulatory friendly 

and then we have a great big blow up. I thought it 

was a great document. There’s a lot of interesting ideas 

in there. 

RB Regulatory arbitrage in financial services 

is clearly an issue, particularly in derivatives, which 

are more mobile than a lot of products. That’s why 

we’ve seen the European and US regulators trying as 

best they can to maintain consistency. There will be 

differences, but how important those differences are, 

we’ll have to wait and see. But of course, what will also 

happen is that both the US and Europe will look to cast 

the regulatory net wide enough to try to avoid that 

regulatory arbitrage. 

There’s no doubt that all US customers will have 

to adhere to US regulations wherever they trade and 

the same in Europe. But it’s quite likely that even 

overseas customers, if they’re transacting with a US 

bank, will also have to adhere to the US requirements. 

Territoriality will be a whole can of worms which 

we’re yet to get into. It will add cost and complexity to 

the system. 

ED Stuart, from an end user perspective, to what 

extent do you see what you do shifting geographically 

and from a product point of view and so on? 

SA I haven’t read the paper, but I’m going to read 

it and then go short in 2015 heavily by the sound of it. 

Regulatory arbitrage is a real worry. It’s the uncertainty 

that’s damaging the market at the moment, not knowing 

which set of regulations you are going to be caught up 

in. When is a European counterparty trading with a US 

counterparty caught up in US regulation? When are 

they covered by EMIR? Everyone’s been concentrating on 

that for the last six months, without really getting any 

answers. Now the regulators are becoming aware of the 

problems and they’re looking at it. 

But the elephant in the room is going to be Asia 

over the next year. They’re in the very early stages of 

this process. What happens if they turn round at the 

end of 2012 and say, you know what, we’re not doing 

any of it? I’m not saying that’s going to happen, but 

there’s certainly risk that regulatory arbitrage is created 

between the US, Europe and the rest of the world. 

JB I’d agree. You’ve got listed products, you’ve 

got classic OTC, which doesn’t fit and doesn’t need to fit 

into the regulatory infrastructure that is being created, 

and the stuff in the middle. I’d say there won’t be much 

of that in Europe and the US, but there’ll be more OTC 

trading in Asia. 

There seems to be a territorial thing about the SEC 

and CFTC rules. If you’re trading with a US firm or 

you are a US firm’s subsidiary, you are caught by the 

US rules. There’s also a suggestion that if it affects the 

national interest of the US, you’ve got to abide by the 

“The elephant in the room is going to 

be Asia over the next year. They’re in 

the very early stages of this process.” 

US rules as well. That presumably means if it’s a dollar 

denominated security you come under US regulation. 

Where’s that going to stop? Are we all going to be 

regulated by the SEC and CFTC rules at some point? 

RB And interestingly they’re different at this stage. 

ED We’ve got the issue of access to the various 

trading execution facilities and we’ve also got the issue 

of access to clearing. Roger, your platform has started 

cleared swaps. How does that work from a platform 

point of view, in terms of you getting access to wherever 

you want to point your products or where your clients 

want them to point? 

RB Tradeweb is linked through to the different 

clearing houses. It has an agnostic approach so we’ll 

send trades to whichever clearing house customers 

want to clear. We’ll link through to LCH, CME, ICE 

and so on. My suspicion is that’s the way that other 

SEFs will go. At this stage, customers are waiting until 

clearing becomes mandatory before they actually do 

clear. The links are ready to go. They’ve been used for 

test trades and get used occasionally, but they won’t be 

used extensively until closer to the time that it becomes 

mandatory for buy-side customers to clear. What will be 

important, and it’s raised a lot of controversy in Europe,

is that open access is reciprocated. 

Clearing houses will be in an extremely strong 

position as far as derivatives are concerned, so if 

derivatives have got to be cleared through clearing 

houses, it’s important for them to be agnostic 

about trading platforms and to take trades from 

different platforms for OTC derivatives on a fair, no 

discrimination basis. 

SG Regarding the comments about using 

clearing for competition in the exchange space and 

the CME’s introduction of more margin offsets in the 

US, you can anticipate an offset price war going on at 

a clearing level. People charge margin to help manage 

risk, and if they say ‘we’ll offset all of this together 

because I want your clearing business’, there’s a risk 

that introducing more competition actually doesn’t 

help overall market safety. 

Robert Ray, CME Group Basically what you’re 

looking at is the tight interaction between the cash and 

the futures market. If you have a position in both, you 

try to link that up so that you understand what the true 

risk is to the firm. 

In that case it’s not a race to the bottom because 

you’re not using it from a marketing standpoint, 

you’re using it from a market efficiency standpoint. 

That really sprang from the 1987 crash when there 

was no linkage between OCC and the futures or the 

stock market, and as a result, everybody was trying to 

move credits at one cut-off time and debits at another. 

You had a mismatch, and that’s when you had the 

famous, ‘the window is open’ situation. The equity 

market was significantly further ahead then – in 

terms of its integration with the derivatives market 

and recognising it’s a singular market place – than 

the fixed income market was. What you’re seeing is 

a catching up in being able to do that, that probably 

started back around 2003. 

BS The linkage between the cash and derivatives 

markets is pretty straightforward. There is a little 

nervousness on the idea of cross margining around 

different products and I’m not wholly convinced that 

there’s really a more efficient risk management way 

to cross-margin different types of products, not cash 

and derivatives, but across the derivative asset classes. 

There’s been some talk about that and that is maybe a 

more concerning issue. 

Question from the audience On cross-margining, 

if you look at the way sell-side banks use their recently 

documented OTC trades, where they effectively offset 

their collateral requirements across every single 

product and asset class into effectively one call or one 

posting of collateral. Do you not think that crossmargining 

for linked positions where there’s a natural 

hedge, be that a future against an IRS, makes a lot of 

sense, certainly compared to the OTC market, and the 

limited step of offsetting, let’s say euro dollars against 

bonds, does make obvious sense? 

BS The cash to the derivative market, I fully agree 

with. There is a link there that needs to be considered 

but I’m more hesitant with respect to clearing firms 

marketing that. Those correlations break down more 

quickly. A couple of years ago, correlations all went to 

one and everyone dropped a couple of hundred million 

dollars in the course of a few weeks. I get the whole idea 

of multi-asset netting but we just need to be careful. 

There’s a difference between netting off assets within 

your balance sheet as you’re looking at the risk of your 

balance sheet and managing that, and margining a 

CCP account, which should be risk-free at that level 

of margin. 

RB There are two issues here. Firstly, there are 

clearly legitimate offsets between, for example, futures 

and OTC derivatives and there’s a range of legitimate 

netting offsets. As a general comment, we currently do 

not even come close to recognising the full extent of 

these offsets in our margining models – there is plenty 

more scope. What there should be concern about is 

the extent to which those offsets are over-used as a 

marketing tool. 

JB If you have a fund with a lot of different 

assets in it and you’re suddenly faced with different 

CCPs for each instrument, that makes it operationally 

very complicated. With margin moving in and out, you 

could be posting a lot of margin you don’t need to if you 

had the risk against just one CCP. 

The buy-side is multi-asset, increasingly so. That’s 

not going to change and they want more of the people 

they deal with to be multi-asset as well. We haven’t seen 

that response on the sell-side. We’re multi-asset in the 

way we provide our systems; we have to be because our 

clients want that. 

So we’re going to find ourselves in a similar situation 

to what Roger was describing, in terms of providing 

links to multiple CCPs. If you look at how we work in 

futures and options, you have one clearer and a back 

up clearer, it’s simple and understood, and that’s really 

15



what we’re trying to mirror. But at the moment you’ve 

got rates, credit and equities all geographically split; we 

haven’t really finished yet. 

ED What impact does that have from a risk 

management and a middle office point of view for the 

users, and also for their brokers? 

JB That’s down to another layer of people in 

the middle to try and offer all those places you want 

to possibly trade, what you want to trade, who you 

want to trade it with, when you want to trade, which 

jurisdiction it is and which CCP is behind it and 

whether you’ve got to risk assess your CCP as well, 

because there’s going to be so many of them. That’s a 

complicated thing and it’s not going to be the dealer 

who is responsible for deciding everything. 

In a fund management firm the dealer has a key job 

to decide which counterparty to trade with, and in the 

OTC world that’s very difficult to do at the moment. So 

step forward operations or middle office, whatever you 

want to call it, who are going to need to be involved. 

I’ve already had lots of conversations with my clients 

about this. They say we need what you do because this 

is very complicated. We need to map it all. Operational 

complexity is going to be the biggest issue this year, 

more so than trading complexity because of the plethora 

of places to go, let alone actually who you trade with. 

RB That’s right. It’s not just operational 

complexity in terms of those linkages, it’s operational 

complexity in getting the documents in place, in 

enabling, in getting the facilities operational; it’s an 

extremely large amount of work to set that all up. 

Again, it’s a question of balance. It would be easier 

if there was one pan-galactic exchange and clearing 

house; and dealer, come to that. But of course, that also 

has its disadvantages. 

ED To sum up, we don’t really know what’s going 

to happen, we don’t know when it’s going to happen, 

it’s all going to be terribly complicated and a lot of you 

are going to be very busy over the coming years. So God 

bless us all. 

Fidessa advert 

16

FOA News 

Regulatory activities 

The FOA has a strong and continued focus on regulatory developments in the UK, the EU and, at a high level, the US 

and is responding to an increasing flow of consultation and discussion papers: both directly and in association with 

other industry associations. Copies of responses can be found at www.foa.co.uk 

Recent responses to regulatory consultation papers: 

Regulator Consultation Date submitted 

FSA 

CP11/4: The Client Money and Asset Return (CMAR): 

Operational Implementation 

March 2011 

FSA DP11/1: Product Intervention March 2011 

HM Treasury A new approach to regulation: building a stronger system April 2011 

EU Commission 

EU Commission 

Upcoming responses: 

Review of the Markets in Financial Instruments Directive 

(MIFID) 

Consultation on Legislative Steps for the Packaged Retail 

Investment Products Initiative 

February 2011 

February 2011 

EU Commission Consultation on Financial Sector Taxation 19 April 2011 

EU Commission Green Paper: The EU corporate governance framework 27 July 2011 

Operations 

The FOA maintains a comprehensive library of terms of business documentation covering a wide range of asset 

classes and client types. Although the existing documentation can be used for some of the existing OTC clearing 

facilities such as NYSE Liffe’s BClear service, some of the new OTC client services will require the drafting of 

new provisions to allow such services to be accommodated under the FOA standard terms. To this end, the FOA, 

in conjunction with Clifford Chance, is working with some of its library subscribers to develop the required 

documentation. FOA members wishing to find out more information should contact Hugo Jenkins at the FOA, on 

jenkinsh@foa.co.uk. 

FOA Public affairs 

FOA Chief Executive Anthony Belchambers continues to participate frequently in conferences and public meetings. 

In recent weeks he has spoken at the annual TradeTech conference at the ExCel centre, London and a Risk Magazine 

conference on Clearing and Settling OTC Derivatives, among other events. 

FOA provides the secretariat for the Associate Parliamentary Group on Wholesale Financial Markets and 

Services. Last month, it organised a working dinner for MPs and members of the House of Lords on the Future of 

Commodities Regulation. As a member of the European Parliamentary Financial Services Forum in Brussels, it also 

participated in a training session for the researchers in the European parliament, on commodities. 

FOA Members 

The FOA is pleased to welcome the following recent new members: 

BNY Mellon Clearing International Dewey & LeBoeuf Stellar Trading Systems 

17

EVENTS 

FOA Events Calendar 

IDX 2011 

Tuesday 7 & Wednesday 8 June – The Brewery 

The FIA and FOA are pleased to present the fourth International Derivatives Expo. Last year’s event included 

exhibits showcasing the latest in products, services and technology for the derivatives industry, 25+ sessions with 

high-profile speakers, information-packed workshops and valuable networking opportunities. 

Opportunities are available for Partnerships, Sponsors & Exhibitors. 

IDX Gala Dinner 2011 

Wednesday 8 June – The Artillery Gardens at the HAC 

The IDX Gala Dinner will once again be held in aid of Futures for Kids. The Dinner also provides a valuable 

networking opportunity for those attending IDX and the wider international financial community. 

Sponsorship opportunities and table reservations available for both FOA & non-FOA members. 

Compliance Forum 

Thursday 20 June – The Royal Bank of Scotland 

Topic to be confirmed 

Compliance Forum 

Thursday 28 July – UBS 

Topic to be confirmed 

FFK Events 

2nd Annual Quiz Night 

STOP PRESS: NOW SOLD OUT 

Thursday 12 May – Balls Brothers, Minster Court 

Walk to Work 

Friday 20 May 

Join FFK supporters on a walk to the City of London. 

Starting points – Tunbridge Wells (35 miles), Dunton Green (20 miles) and Chislehurst (10 miles). 

Golf Day 

ONLY A FEW PLACES REMAINING 

Monday 4 July – Brocket Hall 

Poker Night 

Thursday 22 September – London Capital Club 

18 

For more information on all events, please contact Bernadette Connolly on: connollyb@foa.co.uk or 

+44 20 7090 1334

DATE ANNOUNCED FOR 

THE NEXT FOA INFONET 

Trading Issues in ETD Markets 

Tuesday 12 July 2011 

6.00pm to 9.30pm 

Glaziers Hall, London Bridge SE1 

Topics to be discussed will include: 

HFT developments 

The future of proprietary trading 

Access, transparency and liquidity 

Regulatory development and their impact on liquidity providers 

Who can attend? 

This event is open to executives at FOA member firms and to specially 

invited guests of the FOA and InfoNet sponsors. 

For further information or to reserve a place: 

Contact Bernadette Connolly on +44 20 7090 1334 or e-mail connollyb@foa.co.uk

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