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Derivative trading alarm sends Scandinavia into clearing dispute 

September 7, 2015

Gulf News

A surge in derivative trades in Scandinavian currencies is fuelling a dispute between banks and regulators over planned clearing rules.

Since 2007, trading in interest-rate swaps and forward-rate agreements in Scandinavian currencies has jumped as much as fivefold.

The European Securities and Markets Authority (ESMA) says the development may be creating risks that warrant a regulatory response. ESMA, which is backed by Sweden’s Riksbank, wants to force banks and brokers to use clearing houses for the most liquid interest-rate derivatives traded over the counter.

The proposal has drawn protest from Scandinavia’s financial industry, which says it will fight ESMA. Banks in the region argue their derivative market is too small to require such regulation.

“We’re not convinced this is such a brilliant idea for a small market,” Lars Afrell, deputy director at the Swedish Securities Dealers Association, said. “To put it mildly, we are sceptical about some of the findings."

Read more: Gulf News


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