In other FinTech news, KBC Asset Management will be turning to SimCorp for IBOR support and the CFTC has set margin requirements for uncleared swaps.
NSX Re-Launches for Equities, ETFs
As expected, the National Stock Exchange (NSX) has re-launched trading operations for equity securities and exchange-traded funds (ETFs), and reports that it is offering “low-price market access fees,” officials say.
The relaunch follows the SEC’s approval on Dec. 14 to resume trading operations, which includes a phased roll-out of all equity and ETF symbols beginning Dec. 22 and slated to be completed on Dec. 31, 2015, officials say.
The NSX has returned under the direction of a new ownership group and management team, which recapitalized and restructured NSX after it ceased trading operations in May 2014. The exchange is led by Mark Sulavka, the chairman, CEO and president of the NSX, which is a national securities exchange and self-regulatory organization registered with and regulated by the SEC.
“We are here for one reason and one reason alone: to provide market solutions that bring about real and positive changes that traders and institutional firms have been asking for over the course of several years, but the industry’s response has only been to ‘talk the talk,’ ” says Sulavka in a prepared statement. “We, however, are going to ‘walk the walk,’ and act on several specific ideas and concepts that continue to be requested by industry leaders.”
The NSX, based in Jersey City, N.J., was founded as the Cincinnati Stock Exchange (CSX) in 1885, and later became the first all-electronic exchange in the U.S. in 1980, officials say. NSX and its wholly-owned routing broker-dealer are regulated by the SEC and FINRA.
KBC Asset Management to Use SimCorp IBOR
A major investment manager in Belgium, KBC Asset Management will be using the investment book of record (IBOR) offerings of investment systems vendor SimCorp, according to vendor officials.
The firm has signed a license agreement with SimCorp to use the investment management solution, SimCorp Dimension, as the IBOR that will support the firm’s front and middle office operations “across all asset classes, including trading, portfolio management, compliance, performance, risk, and settlement,” say SimCorp officials.
KBC Asset Management NV, as fund manager, has its registered office in Brussels, and it has two fully owned subsidiaries: KBC Asset Management SA, based in Luxembourg and KBC Fund Management Ltd in Ireland, KBC officials say. These entities function as specific competence centers within the KBC Asset Management group.
The company also owns KBC Asset Management Ireland Branch in Dublin, Ireland. In addition, KBC Asset Management NV has developed a second core market in Central Europe.
KBC Asset Management oversees assets of approximately €205 billion ($225 billion) in funds and unit-linked life insurance and has a fund market share in Belgium of more than 35 percent, according to the firm.
CFTC Sets Margin Requirements for Uncleared Swaps
Earlier this month, the CFTC approved the final rule on margin requirements for uncleared swaps for swap dealers (SDs) and major swap participants (MSOs) that will require parties to collect margin that will provide them with collateral, according to the regulator.
The new regulation addresses margin requirements for uncleared swaps that are not subject to regulation by the Federal Reserve Board, the Office of the Comptroller of the Currency, the Federal Deposit Insurance Corp., the Farm Credit Administration or the Federal Housing Finance Agency (CSEs), CFTC officials say.
“The rules would apply to those SDs and MSPs that are not subject to oversight by the prudential regulators (covered swap entities or CSEs),” according to the CFTC. The rules would impose margin requirements on trades between CSEs and SDs or MSPs and trades between CSEs and financial end users. “The rules would not impose margin requirements on commercial end users,” CFTC officials add.
For initial margin, “the rules would require daily two-way margin (posting and collecting) for all trades between CSEs and SD/MSPs,” according to the CFTC. “The rules would require daily two-way margin for all trades between CSEs and financial end users that have over $8 billion in gross notional exposure in uncleared swaps.”
For variation margin, the rules would “require daily cash payment for all trades between CSEs and SD/MSPs,” according to the CFTC. “The rules would require daily posting for all trades between SD/MSPs and financial end users.”
The CFTC rules permit initial margin to include cash, sovereign debt, government-sponsored debt, investment grade debt including corporate bonds, equities, gold, and shares of certain funds with appropriate haircuts, according to the regulator. The rules would require variation margin to be in cash for all trades between CSEs and SD/MSPs. The rules would also permit variation margin that is “of the same nature as permitted” for initial margin to be used for all trades “between SD/MSPs and financial end users,” according to the CFTC.
“[Initial margin] requirements would be phased-in starting September 1, 2016 and ending September 1, 2020 from the largest participants to smaller ones,” according to the CFTC. “[Variation margin] requirements would be effective September 1, 2016 for the largest participants and March 1, 2017 for the rest.”
The new rules would require initial margin to be held via independent custodians, CFTC officials say. “The rules would not permit rehypothecation of required [initial margin].”
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