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Boca Briefing – Day 2

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Modern Money

Highlights from Day Two of the 39th Annual International Futures Industry Conference in Boca Raton, Fla.

Swinburne calls for more compromise from U.S. on cross-border regulations: U.S. regulators need to do a better job of compromising as they continue the march to implementing global derivatives reforms, according to Kay Swinburne, a member of the European Parliament. “I’m not sure that the U.S. and other large countries are used to the concept of compromise. So when it comes to substituted compliance, compromise is really important,” said Swinburne, who is a member of the Committee on Economic and Monetary Affairs.

Wetjen sees political traction for derivatives-transaction fee: Mark Wetjen, acting chairman of the Commodity Futures Trading Commission, says a proposed fee on derivatives transactions appears to be gaining support among lawmakers. “Maybe I shouldn’t say this, but I will: I do get the sense that there’s more interest in this as each year passes — not so much from market participants but from other parts of the government,” Wetjen said.

Cybersecurity takes center-stage: Concerns about cybersecurity that may have resided solely in an exchange’s IT department just a few short years ago are now front-and-center for some of the leading figures in the industry. IntercontinentalExchange Chairman and CEO Jeff Sprecher says the threat is particularly alarming because of the spaghetti-like way so many exchanges are interconnected. Nasdaq CEO Bob Greifeld said the number of cyberattacks on his exchange decreased about 30% in the second half of 2013. “I have been taking meetings and walking the halls at the SEC or the CFTC for years. Now I find myself more and more walking the halls of the FBI,” Greifeld added.

Exchange leaders debate vertical-silo model for futures exchanges: The chief executive officers of CME Group and Nasdaq OMX Group debated whether the vertical-silo business model of many futures exchanges is in the best interests of its customers. Nasdaq CEO Robert Greifeld said customers are not in favor of the model, while CME Group CEO Phupinder Gill argued that undoing the current futures model would hurt product innovation.

Execs tout futurization of swaps: Regulations in the U.S. and Europe are changing the way derivatives users hedge their exposures and are propelling the futurization of swaps. “The futurization of swaps is an interesting development, but the root of that is really providing a more cost-effective way for end users of these swaps to get the same kind of financial exposure from the derivatives, but with the benefit of having it under the futures regulatory and margin framework,” said John Omahen of SunGard.