All Derivatives, All the Time

With the battering that foreign exchange (FX) has taken in the past few years, its reputation for being a relatively fair and unregulated asset class belongs somewhere between the dinosaurs and the stuffed polar bears in the Natural History Museum. Regulation is coming, whether that's through the hyperpolitical process kick-started by UK chancellor George Osborne, or through subtler means.

One of these is, of course, the definition of a derivative in FX. Europe says that forwards count, the UK doesn't, and the Financial Conduct Authority (FCA) has essentially thumbed its nose at European authorities, saying that it won't require forwards to be reported until Brussels makes them.

It's a little churlish, perhaps, given that the FCA will be forced to do this anyway, but such is the way of regulators, it seems.

Settlement and Spend
This week, we have two features from our US and European reporters. Marina looks at the impending deadline for T+2, or two days after trade date, settlement in Europe, while Dan tackles the issue of IT spend. They're both good reads, and a special welcome goes to Mr DeFrancesco, who takes over from Waters stalwart Jake Thomases this month.

Settlement is a perpetual topic of conversation in the markets, it seems. Even as people move to T+2, T+1 is eyed with an appetite, albeit one which is dulled when the apparent eye-watering costs involved are detailed. The Boston Consulting Group study is often cited as the definitive research work in this area, but as Europe shifts its cycles to two days, perhaps it'll prompt further work in this area.

We also have a few news pieces of interest. Chief among them is interdealer broker GFI Group opening its books to BGC Partners, after the latter intervened spectacularly in the coming acquisition by the Chicago Mercantile Exchange (CME) Group, making what it called a "superior offer" to the board, on the understanding that they'd go directly to the shareholders if they were not acknowledged. Elsewhere, the Australian Securities Exchange has made a bid for a stake in Yieldbroker, the Australian derivatives platform that came to symbolize extra-territoriality in American swaps reform. Also on the Antipodean front, the Aussie regulator also gave the nod to the first repository for the country's derivatives market, operated by the Depository Trust and Clearing Corporation in Singapore, and regulated day-to-day by the Monetary Authority of Singapore. This allows Australia to forge ahead with its reporting regime into phase three.

We're now entering a fairly busy time for many of us. On the Waters front, we have the Buy-Side Technology North American Summit on October 7, in New York. The Buy-Side Technology Awards just closed for entries, and will be held on November 7 in London. After that, we have the European Trading Architecture Summit on November 18, followed swiftly by Waters USA on December 8, and the American Financial Technology Awards that evening, both in New York. As always, thanks for continuing to support these events, and we're looking forward to seeing you there.