Philippe Buhannic, Co-Founder, Chairman and CEO of TradingScreen has had his feet firmly planted at the executive level in the financial industry for many years now, including in positions as a managing director at Credit Suisse First Boston (CSFB) and as chairman and CEO of Fimat Futures USA Inc. He recently talked with JLN Managing Editor Christine Nielsen about the current environment and outlook for the industry, including an anticipation for the futurization of swaps, a topic which has garnered a good deal of attention recently as Dodd-Frank regulation starts to take hold and new ways of doing business must be built.
InterviewsInterest Rate related interviews conducted by Christine Nielsen or other John Lothian News (JLN) editors.
Jae-Joon Lim is director, business development at Korea Exchange, home of the most traded contract in the world, the Kospi futures and options. At the 2012 Emerging Manager Forum in London, Lim discussed the Kospi, as well as OTC clearing of Korean yun denominated interest rate swaps, due to launch this fall. Interview by John Lothian News editor-in-chief Jim Kharouf.
The interest rate market will get some more competition at the end of the year with the launch of the NASDAQ OMX NLX futures exchange. JLN editor-in-chief Jim Kharouf spoke with exchange CEO Charlotte Crosswell, at IDX 2012 in London, about the new exchange’s move into euro and sterling-based short-term interest rate and long-term interest rate contracts, the trading and clearing platform and who will be participating in the new market.
Watch at MarketsWiki.tv.
NYSE Euronext continues to develop its interest rate offerings, challenging competitors in the space, such as CME Group. Paul MacGregor, executive director, head of fixed income, NYSE Liffe (the global derivatives business of NYSE Euronext) sat down recently with JLN’s Managing Editor, Christine Nielsen, to discuss the outlook for the interest rate market and new products on the horizon for the exchange.
Michael Bodson is the chief operating officer, as well as the president and COO of the three Depository Trust & Clearing Corp. (DTCC) operating subsidiaries: The Depository Trust Company, National Securities Clearing Corporation and Fixed Income Clearing Corporation. On Apr. 23, it was announced that Bodson would succeed the retiring Donald F. Donahue as CEO of DTCC, effective July 1, 2012. Bodson will also become CEO of the three operating subsidiaries. Bodson talked this week with Douglas Ashburn, editor-at-large of John Lothian News and lead project manager for MarketsReformWiki and JLN managing editor Christine Nielsen.
Q: The business and regulatory climate has changed considerably in the few years you have been with DTCC. Could you talk about what has happened?
A: The re-regulation of the industry has had far-reaching impact and plays to the strengths of the asset the industry has created in DTCC. It really leverages our capabilities in terms of processing, risk management, in data, and our network globally. The most obvious example is the global trade repository for swaps, which built on the warehouse we had done for credit default swaps. That acted as a backbone for the mandate to create the GTR system globally.
As the regulations continue to be rolled out and as the industry continues to analyze the impact, there will be more opportunities to leverage what we have in place. We are working closely with the industry in terms of understanding where we can add value and leverage the investments we have made. Lastly, being a central counterparty and risk manager, the appreciation for – not only ourselves, but all the CCPs in the world – how we help mitigate risk and how we bring stability to the financial market has gone up in appreciation tremendously. That also puts pressure on us in terms of how regulators and market participants will expect us to perform at a high level. That is the most important thing we do. Failure of a CCP would really cause a ripple effect in the entire financial infrastructure. They have raised the bar on our performance, and we have to act accordingly, and that is a challenge we are up to meeting.
Q: And that challenge will be your main focus going forward with DTCC?
A: In anything we do, we can’t lose sight of what we handle on a day-to-day basis. We handle 100 million transactions. If we go down, the markets don’t function, and we understand that is a major obligation and responsibility. So, we can’t fall in love with any new opportunity and lose sight that what we do on a day-to-day basis is critical to the functioning of the world’s largest market.
For the rest of the interview, visit MarketsWiki at http://jlne.ws/I7fA2y
Tom Callahan of NYSE Liffe U.S. Reflects on NYPC’s First Anniversary & Discusses Competition in the Exchange Space
NYSE Liffe U.S. recently released a video touting its products and mapping out expectations for the next year. JLN Managing Editor Christine Nielsen talked with NYSE Liffe U.S. Chief Executive Tom Callahan about main points of focus, the competitive landscape and the soon-to-be-launched DTCC GCF Repo Index.
Bluford Putnam has served as managing director and chief economist of CME Group since May 2011. He is responsible for leading economic analysis on global financial markets by identifying emerging trends, evaluating economic factors and forecasting their impact on CME Group and the company’s business strategy. He also serves as CME Group’s spokesperson on global economic conditions and manages external research initiatives. He recently talked with JLN Managing Editor Christine Nielsen.
Q) The head of the Philadelphia Federal Reserve Bank warned recently against efforts to accelerate the nation’s economic recovery, citing the threat of inflation. According to Charles Plosser, the Fed has taken several steps to help revive the economy, and with a very accommodative monetary policy already in place, officials must guard against the medium- and longer-term risks of inflation. Would you agree with his assessment?
A) FOMC members and the market participants have deep divisions over the current relative balance of the risks of higher inflation versus slipping back into recession. At the current time, my perspective is that both risks are now very low. If the FOMC, however, keeps the Federal funds rate near zero through the end of 2014, as they have suggested they may do, then I think the risks of inflation will trump recession risks. But my view is that the FOMC may not follow its own guidance if my U..S economic outlook proves correct and 2012 is a strong growth year with the unemployment rate in the 7.5 percent territory and falling by the fourth quarter. The Fed provides rate guidance, not commitments.
Q) How would you describe the current economy, and the outlook for the economy in the near term?
A) The 2012 outlook for the U.S. economy is the best it’s been in years. We see 3.5 percent to 4 percent real GDP growth in 2012, with the unemployment rate falling through 8 percent and to 7.5 percent by the fourth quarter.
The really important thing to understand about 2012 is that it’s not 2011. Those things that scared you to death in 2011 have pretty much diminished.
Read the full interview on MarketsWiki.
Jim Rucker is the credit and risk officer of MarketAxess Holdings Inc. (MKTX). He joined the company at its inception, after a 20-year career with Chase Manhattan Bank, one of the three financial entities that founded MarketAxess. Earlier this month, MKTX issued a release outlining its views on the European Commission’s Markets in Financial Instruments Directive II (MiFID II). Rucker spoke with JLN’s Doug Ashburn about MiFID, swap execution facilities (SEFs), and emerging regulatory issues.
A: We are doing things on a number of different levels. First of all, just trying to understand what is happening on the regulatory side: educating ourselves on draft regulations, working with regulators and legislators to both understand and influence the shape of regulations. That is the first piece. The second is that we spend a lot of time out talking with our clients about the regulations and the impact on their businesses – both on the buy-side and sell-side.
We have been making changes to our platform to comply with regulations, to the extent that we know them. Some areas are clearer than others. For instance, SEFs connecting into central clearing counterparties is fairly obvious, so we have been able to do a lot of work already in that area. We have connected into two of the clearing houses. When it comes to trading protocols, however, the rules are much less certain. We have done a lot of work already to create a range of flexible protocols for CDS trading, but we need to wait until we see the final regulations before we complete that.
On September 15, 2011, NYSE Liffe U.S. reached the 10-million contract mark in its interest rate complex, first introduced in March of this year. Tom Callahan, CEO of the exchange, talked with John Lothian News (JLN) Managing Editor Christine Nielsen about the exchange’s growth in these contracts amid a tumultuous economic environment and evolving regulatory landscape.
Launched on March 21, 2011 with 10 clearing member firms, New York Portfolio Clearing (NYPC) – a joint venture of The Depository Trust & Clearing Corporation (DTCC) and NYSE Euronext – clears U.S. interest rate futures and cross-margins such positions against fixed income cash instruments through DTCC’s subsidiary, the Fixed Income Clearing Corporation (FICC). Ira J. Krulik, chief operating officer of NYPC spoke this week with JLN Managing Editor Christine Nielsen. He shared what he believes are the advantages of NYPC’s risk management, “one-pot” cross-margining and clearance operations and its settlement efficiencies, in addition to his thoughts on where the NYPC may be headed from here.
- Already, there are 11 approved clearing members, and several more in the pipeline.
- NYPC hopes to add options on futures by the end of this year.
- Locked-in delivery makes the process seamless.
1) How did you come to be at the NYPC?
Ira Krulik: After over 30 years in the futures industry, I was approached at the 2010 annual Futures Industry Association (FIA) conference about my interest in the new venture. Once I understood who the parent organizations were and what they were planning to do, the concept became more intriguing. They were giving clients additional choice in the marketplace with a real value-add attached. Upon returning from the conference, I had the opportunity to meet with Walt Lukken, who had recently been named CEO of NYPC; but I spoke with my most important counsel, Mrs. Krulik, about the opportunity and she said, ‘Go for it!’