ICE Receives Authorization as Benchmark Administrator

Intercontinental Exchange, Inc. announced that ICE Benchmark Administration Limited (IBA) has been authorized as a regulated benchmark administrator under the EU Benchmarks Regulation (BMR). Authorization was granted by the UK’s Financial Conduct Authority (FCA) on April 27, 2018. IBA was founded in 2014 and administers the following systemically important benchmarks: ICE LIBOR, the LBMA Gold & Silver Prices and ICE Swap Rate. IBA also operates the ISDA SIMM Crowdsourcing facility.

Firms Strive for GDPR Readiness as Deadline Approaches

With less than one month remaining until the May 25th deadline, organizations should be well on their way towards General Data Protection Regulation (GDPR) compliance. Privacy’s “new normal” will require them to demonstrate, on an ongoing basis, how they collect, use, retain, disclose and destroy personal information in line with the new GDPR requirements. This has a significant impact on the IT organization, as the custodian of this information, becoming a substantial transformational activity for the organization going forward. Those who cannot show compliance with the principles of GDPR by the deadline may face fines up to four percent of global turnover, according to a story in Bloomberg news. GDPR compliance will be an ongoing effort of adopting new guidelines, operationalizing privacy compliance and, eventually, optimizing and getting value from these processes. On May 25, firms must be able to present a minimal viable product to EU regulators, customers and vendors. The “day one” capabilities include: an active and engaged Privacy Governance Model, a drafted and piloted Record of Processing Activities, a data Protection Impact Assessment (DPIA) workflow that addresses the prior-to-processing tenet of GDPR, an assigned and onboarded data protection officer, data subject right processes and assignments in place, updated procurement standards, templates, addendums, etc., a project management office methodology to align with the Privacy Program, an updated privacy intranet portal with intuitive use cases and helpful FAQs, board and committee awareness/messaging, and a risk-aligned privacy compliance roadmap dictating what further efforts need to be rolled out.

IOSCO Seeks Comments on Proposed Good Practices for Audits

The Board of the International Organization of Securities Commissions (IOSCO) is requesting feedback on its proposed good practices for audit committees to support audit quality. IOSCO published its Consultation Report on Good Practices for Audit Committees in Supporting Audit Quality earlier this month, which is intended to assist audit committees of issuers of listed securities in promoting and supporting audit quality.  The findings by audit regulators indicate a need to improve audit quality and consistency to audit execution. While the auditor is primarily responsible for achieving this objective, IOSCO believes that effective audit committees can also contribute to supporting audit quality and increasing market confidence in the quality of information in financial reports. IOSCO considers the accuracy, integrity, and comparability of issuer disclosure to be essential for maintaining investor and market confidence. The consultation report proposes good practices regarding features that an audit committee should have in order to be more effective in its role, including delineating the qualifications and experience that audit committee members should possess.  The report also proposes good practices that audit committees may consider. The report seeks feedback on the proposed good practices, and the role of audit committees and audit quality. Comments should be submitted on or before July 24, 2018.

Clearstream Extends T2S Clearing Model to Four Additional Markets

Deutsche Börse’s post-trade services provider Clearstream has successfully migrated the Belgian, Dutch, French and Italian markets onto its new TARGET2-Securities (T2S) Investor-CSD model. It brings the first real cross-border volume onto the ECB’s pan-European settlement platform. Approximately 80% of the custody and settlement volume of T2S markets is now available through Clearstream’s Investor-CSD service, according to the latest 2016 full year figures published by the European Central Bank. Clearstream is the first CSD to deploy a fully-fledged Investor-CSD strategy that allows its customers to access all T2S markets, in central bank money, and the international market through a single point of access. The roll out takes place on a market-by-market basis, further T2S-connected markets will follow over the coming months.

Bank of England Expects Big Libor Switch to Start

Financial markets should start accelerating efforts to ditch Libor in favor of the Bank of England’s revamped interest rate benchmark being launched next week, a senior BoE official said according to a story in Reuters news. Last year banks, and other market participants in London, backed the daily Sonia or Sterling Overnight Index Average as a substitute for sterling-denominated Libor to price trillions of pounds in swaps and derivatives contracts. Sonia was run by a trade body in the past, however, starting on Monday, it will be calculated and published by the BoE and will be based on transactions that represent about 90 percent of the market, and is based on actual transactions, rather than quotes made by banks, which were open to manipulation. Sonia will draw on about 50 billion pounds ($70.91 billion) worth of daily funding transactions between lenders and customers, three times the amount of transactions that underpin Sonia at present. Market participants have been waiting for the BoE to make Sonia more robust before ditching Libor and shifting trillions of pounds in liquidity. The New York Federal Reserve began publishing its dollar Libor replacement, the Secured Overnight Financing Rate or SOFR, on April 2.

US and UK Regulators Propose Working Group to Address Brexit Issues

The importance and prominence of U.S. and UK financial markets and the transition in the UK’s regulatory relationship with the EU due to Brexit, provides a need to formalize bilateral regulatory cooperation engagement.  To this end, regulators are announcing the formation of a US-UK Financial Regulatory Working Group with the objective to further promote financial stability; investor protection; fair, orderly, and efficient markets; and capital formation on both sides of the Atlantic. The Working Group would be a forum for Her Majesty’s Treasury and the Treasury Department of the United States, along with staff from applicable U.S. and UK financial regulatory authorities, to exchange views on the regulatory relationship between the United States and the UK. The Working Group is anticipated to meet twice a year, with additional technical meetings and calls, as appropriate, between the biannual meetings.  The Working Group will be used as a platform for furthering financial regulatory cooperation, with the general operational objective to improve transparency, reduce uncertainty, identify potential cross-border implementation issues, work towards avoiding regulatory arbitrage and towards compatibility within each other’s national laws and regulations.  Bilateral contact will continue, as appropriate, outside the Working Group on any issue related to ongoing financial regulatory cooperation.

Trading Technologies Extends Platform into Tokyo

Trading Technologies International, Inc., a global provider of professional trading software, announced the availability of execution and client connectivity services in Tokyo via its TT platform. This move provides users in the Asia/Pacific region with increased accessibility to low-latency execution through TT’s worldwide network of colocated data centers. TT currently offers connectivity to Osaka Securities Exchange (OSE) through the JPX colocation space, and proximity connectivity to Tokyo Commodity Exchange (TOCOM) and Tokyo Financial Exchange (TFX) will be offered in the near future through the AT TOKYO CC2 Premium rack colocation space. Last year, TT announced colocated access to the London Metal Exchange (LME) in London and the Hong Kong Exchange (HKEX) in Hong Kong. In 2018, TT plans to offer connectivity through B3’s data center in Brazil and make additional enhancements to its global infrastructure.

London Stock Exchange Group Names David Schwimmer CEO

London Stock Exchange Group plc (“LSEG”) announced the appointment of David Schwimmer as Chief Executive Officer. He will join the Group on August 1, 2018 and will be a member of the Board of Directors. David Warren, Interim CEO and Group CFO, will continue as Group CFO and a member of the Board. David Schwimmer joins LSEG after a twenty-year career at Goldman Sachs. He began his career at Goldman Sachs in the Financial Institutions Group, focusing on Market Structure, Brokerage and Trading. He also served as Chief of Staff to then President and COO, Lloyd Blankfein, and spent three years in Moscow as Co-Head of Goldman Sachs’ business for Russia/CIS.

LSEG Technology Rolls Out HKEX Orion Central Gateway

LSEG Technology announced the go-live rollout of the HKEX Orion Central Gateway (OCG). Working with HKEX, LSEG Technology’s MillenniumIT has delivered and integrated the OCG technology with the Orion Trading Platform enabling all users to electronically connect to HKEX’s securities trading systems. The upgraded direct order gateway will increase capacity and allow HKEX to offer a more robust, low-latency technology service. HKEX originally launched its “HKEX Orion Technology Initiatives” in 2012 as part of a major transformation of its technology infrastructure. The programme included transforming data centres, networks, as well as the core trading infrastructure. LSEG Technology delivers scalable technology including broker, exchange, market data, risk management, surveillance, clearing and settlement products to customers around the world.

China, Hong Kong Stocks Skid as Regulatory Moves Weigh on Developers, Banks

Stocks in China and Hong Kong skidded more than 1 percent today on worries that slowing credit growth and tightening regulatory requirements will start to weigh on the Chinese economy later in the year. Real estate and financial firms led the declines in both mainland and Hong Kong markets as Chinese authorities continue to tighten the screws on riskier types of financing in a bid to reduce systemic risks. First-quarter GDP data on Tuesday is expected to show the economy carried most of its growth momentum from last year into early 2018, with analysts predicting an expansion of 6.7 percent on-year, only marginally softer than the 6.8 percent reported in the fourth quarter, according to a Reuters poll. That resilience could give authorities’ confidence to continue their regulatory crackdown.

In the latest effort by Beijing to reduce risks in the financial system, China’s central bank published rules on Friday to restrict the issuance of short-term financing notes by brokerages. “The concern over China’s economy lingers as financing activities by the real estate sector and local governments have been restricted amid Beijing’s deleveraging campaign,” China Merchants Securities wrote in a report. Worries over trade tensions between China and U.S. also persisted, the brokerage added.