Everyone involved in the futures and options business is watching one of the most dynamic and successful parts of the financial services sector deal with an unprecedented amount of change and unpredictability.
These issues will come to the fore as the leaders of the exchange- traded markets meet this month in Busan, South Korea for the WFE’s Annual Derivative Conference, IOMA . KRX, our host, is well-known as the home of the KOSPI futures, but it also boasts the foreign exchange and treasury contracts that rank in the global top ten, and it plans to introduce interest rate swap contracts this year. Chairman Bongsoo Kim, a long time member of the WFE Board of Directors, is interviewed this month on further development in the Korean markets.
As the other articles in this month’s Focus illustrate, firms are looking to connect the dots from the short term interest in finalizing the most comprehensive regulation for any industry, to the long term interest of market participants, businesses, regulators and governments that would result in a global derivatives market that is more transparent, more automated, more efficient in how it uses capital, and simply better at managing risk.
David Sagnier, the founder and CEO of ID’S (RFQ-hub), rightly reminds readers that beyond the lobbying and regulatory fixes is the goal that technology will allow firms “to analyze the true cost of investment; a task which hitherto has been laborious within an OTC environment.” At a recent data conference in Boston, it was noted that trading was no longer measured by it P/L, but also now has to measure the collateral and the use of the balance sheet, risk, the cost of managing data, and finally decide how these measures are defrayed over the global financial institution.
Nick Ronalds, Managing Director, Equities, ASIFMA, provides an overview of the main milestones, and on-going struggles as the balance between the short term rule making and the long term health of economies and markets are weighed. Whether you agree with the views of the Securities Industry and Financial Markets associations or not, they have exerted a great influence on the direction and pace of regulatory change.
For example, when it comes to margins for ETDs, the WFE has gone on record to support maintaining the proven and cost-effective solution for investors in liquid, transparent markets. Grégoire Naacke, Economist at the WFE, lays presents other highlights from the WFE derivatives databases. Based on statistics and facts, solutions should be found that meet both short term and long term market needs.