The Nature of the OTC Beast

The US Commodities Futures Trading Committee (CFTC) expects to have its final rules for swaps execution facilities completed in approximately five months and have have swap dealers operating in the new environment 90 days after that.

The more I follow the heavy lifting that remains in this rule-making process, the more obvious it is that the rules will take much longer than the remaining five months to hammer out. 

Even when the new rules in place, I doubt the markets will operate anywhere close to how the regulators intended.

MiFID II First Takes

Yesterday the European Commission published its proposed version of the second draft of Markets in Financial Instruments Directive (MiFID II) and its associated Markets in Financial Instruments and Amending Regulation (MiFIR). Between these two documents there are approximately 250 pages of the best regulatory reading since The Dodd-Frank Wall Street Reform and Consumer Protection Act. I haven't had a chance to go through the documents in their entirety yet, but I've jotted down a few thoughts in this week's Friday Musings.

 

Hidden New York

I've been trying to drown out the sounds of #OccupyWallStreet and rest of the sounds of my morning commute for the past few weeks listening to a number of The Bowery Boys podcasts. The hosts, Greg and Tom, give fantastic 30- to 60-minute discussions on the people, places and things that went in making New York City the vibrant city that it is today.

My two most recent favorite podcasts are the ones they have done the Police Riots of 1857 and The Great Fire of 1835. Maybe it's the absurdity of one and the proof that the city can come back from almost anything that makes me like them so much.

If you have the time to download a few episodes from iTunes, you won't be disappointed. They've done so many that you'll be sure find something that interests you. My favorite thing to do is simply download a bunch of them and just listen to them back-to-back on long drives.

Does Half A Standard Work?

Today's Friday Musing looks at whether the US Securities and Exchange Commission's Rule 15c3-5 on pre-trade risk check goes far enough to protect US markets from high-frequency trading and fat-finger mistakes.

Warning Lights for Market Circuit Breakers

In this week's Friday Musings, I've taken a quick look at Center for Innovative Financial Technology's (CIFT's) recent white paper entitled "Federal Market Information Technology in the the Post Flash Crash Era: Roles for Supercomputing."

Although the paper's authors discuss how they went about calculating these new market indicators, I'm far more interested on how firms may be able to implement them on their own so that they can avoid trading exposure when a circuit breaker trips.