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EU derivatives rules sow confusion in metals markets 

February 26, 2014
Alexander Winning, Reuters

New European Union rules designed to bring stability and clarity to opaque derivatives markets are sowing confusion among metals brokers, raising more questions than answers for clients and throwing the fate of smaller firms into doubt.

The bloc's European Market Infrastructure Regulation (EMIR) is a package of reforms drawn up in response to the global financial crisis, in which less regulated market conditions allowed contagion to spread quickly. 

"EMIR is a rule book without totally defined rules," said Malcolm Freeman, chief executive of brokerage Kingdom Futures and a former trader with London Metal Exchange (LME) ring-dealing member INTL FCStone.

"Is it going to protect anybody? No. Will it stop rogue traders? No. So what's it for?"

The reforms state all derivatives transactions must be reported to a trade repository, introduce mandatory clearing for certain over-the-counter (OTC) derivatives and impose higher margin requirements on OTC derivatives that are not centrally cleared.

Read more: Reuters


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