comment letter 4-14
3
pages
English
Documents
Le téléchargement nécessite un accès à la bibliothèque YouScribe Tout savoir sur nos offres
3
pages
English
Documents
Le téléchargement nécessite un accès à la bibliothèque YouScribe Tout savoir sur nos offres
April 14, 2005Mr. Andrew DouglasSWIFT s.c.The Corn Exchange55 Mark LaneLondon EC3R 7NEUnited KingdomRE: Consultation Paper on The Proposal for the Removal of Barrier 1 of the Giovannini Report Dear Mr. Douglas:The Futures Industry Association (“FIA”) appreciates the opportunity to comment on “The Proposal for the Removal of Barrier 1 of the Giovannini Report.” The FIA is pleased that The Giovannini Group has recognized the need for an EU-wide standard protocol for clearing and settlement to create an effi cient and safe European clearing and settlement system. We com-mend the work of SWIFT in putting together the consultation paper requested by The Giovannini Group and believe it provides a solid base in moving forward over the next year; however, we believe fi nal recommendations should be developed by a broad industry-wide group, and not by any one standard-setting body. In addition, the FIA believes the specifi c method of standardiza-tion should be a fi nancial services industry-driven initiative that addresses global clearing and settlement across asset classes, and not mandated in scope or timing by any regulatory authority. FIA is a principal spokesman for the commodity futures and options industry. Our regular mem-bership is comprised of approximately 40 of the largest futures commission merchants (“FCMs”) in the United States, and all 40 fi rms have offi ces, affi liates or relationships in Europe and Asia. Among our approximately 170 ...
Voir
April 14, 2005
Mr. Andrew Douglas
SWIFT s.c.
The Corn Exchange
55 Mark Lane
London EC3R 7NE
United Kingdom
RE: Consultation Paper on The Proposal for the Removal of Barrier 1 of the Giovannini Report
Dear Mr. Douglas:
The Futures Industry Association (“FIA”) appreciates the opportunity to comment on “The
Proposal for the Removal of Barrier 1 of the Giovannini Report.”
The FIA is pleased that The
Giovannini Group has recognized the need for an EU-wide standard protocol for clearing and
settlement to create an effi
cient and safe European clearing and settlement system. We com-
mend the work of SWIFT in putting together the consultation paper requested by The Giovannini
Group and believe it provides a solid base in moving forward over the next year; however, we
believe fi
nal recommendations should be developed by a broad industry-wide group, and not by
any one standard-setting body. In addition, the FIA believes the specifi
c method of standardiza-
tion should be a fi
nancial services industry-driven initiative that addresses global clearing and
settlement across asset classes, and not mandated in scope or timing by any regulatory authority.
FIA is a principal spokesman for the commodity futures and options industry.
Our regular mem-
bership is comprised of approximately 40 of the largest futures commission merchants (“FCMs”)
in the United States, and all 40 fi
rms have offi
ces, affi
liates or relationships in Europe and Asia.
Among our approximately 170 associate members are representatives of virtually all other seg-
ments of the futures industry, both national and international, including U.S. and international
exchanges, banks, legal and accounting fi
rms, introducing brokers, commodity trading advisors,
commodity pool operators and other market participants, and information and equipment provid-
ers. All major European derivatives exchanges and clearing organizations are members of the
FIA.
Refl
ecting the scope and diversity of our membership, FIA estimates that our members
effect more than 90 percent of all customer transactions executed on U.S. contract markets.
Mr. Andrew Douglas
- 2 -
April 14, 2005
FIA Promotes Standardization
FIA supports and facilitates standardization of business practices, trade entry, and post-trade pro-
cessing for exchange-trade derivatives (“ETDs”) in order to achieve cost effi
ciencies for market
participants and encourage competition. In the last quarter of 2004, the combined value of trad-
ing in interest rate, stock index and currency contracts on organized exchanges world-wide ex-
ceeded $279 trillion, according to a survey by the Bank for International Settlements. This fi
gure
does not include the considerable amount of trading done in precious metals, energy, grains and
other agricultural products.
Exchange-traded derivatives is very much a global business with contracts traded on more than
60 exchanges around the world. When adopting industry standards, the FIA has had to consider
models that could be applied across all geographic regions and all asset classes: fi
xed income,
securities, and commodities.
In March 2001, the FIA released a white paper which included a “Standard Protocol for Trading,
Clearing and Risk Management” which generally supported moving towards a standard protocol
for the industry with a view to co-ordination of all exchanges and clearinghouses (whether or not
electronic) and, to the extent possible, OTC derivatives.
The white paper instructed FIA to organize a technical committee including representatives from
brokerage fi
rms, exchanges, clearinghouses and end users to identify the potential for common
standards. The FIA Standards Working Group began meeting in the spring of 2002 on standards
for order routing.
FIA helped enhance FIX 4.3 to be ready to support ETDs. Since June 2002,
the FIA has been working with all U.S. futures exchanges to create a standard for post-trade pro-
cessing using FIXML 4.4. All U.S. futures clearinghouses in the Working Group, including the
Options Clearing Corporation, have signifi
cant FIXML projects underway and we have hosted
meetings with European exchanges, clearinghouses and fi
rms to encourage adoption. Some
exchanges have several fi
rms using FIXML for trade messaging in production at the time of this
writing.
The FIA has responded to and supported regulator requests for standardization initiatives by
marshalling industry resources to create market-driven standards. This model of partnering with
industry associations and standards organizations has proven to be highly effective. The Bond
Market Association, International Swaps and Derivatives Association and the FIA play an im-
portant role in bringing a wide variety of perspectives to the table to develop and promote the
adoption of standards. As a result, U.S. regulators to date have not found it necessary to mandate
communication standards.
The Consultation Paper
We applaud the principles applied in creating the consultation paper: leveraging existing activ-
ity, inclusiveness, openness, and neutrality. The consultation paper sought to leverage existing
industry initiatives in order to be “evolutionary rather than revolutionary,” however, it did not in-
clude the considerable work being done by the FIX Protocol Organization and the FIA Standards
Working Group in the post-trade processing space. With regard to neutrality, SWIFT has consid-
erable expertise in the standards area, but is also a major purveyor of a standard. We believe the
Mr. Andrew Douglas
- 3 -
April 14, 2005
process outlined in The Giovannini Report which tasks SWIFT, working with Securities Market
Practice Group, should be broadened to become a collaborative effort of all industry participants
and not delegated to a single organization.
The standards space is very competitive with FIX, SWIFT, ISITC, TWIST, FISD and FpML vy-
ing to become industry standards. Broadening the effort to include these organizations in draft-
ing the fi
nal recommendations would support the principle of openness put forth in the paper. In
addition this collaborative effort should include representatives from interested associations such
as the FIA, Securities Industry Association, Bond Market Association, International Swaps &
Derivatives Association, Futures and Options Association, International Securities Market As-
sociation, and the Federation of European Securities Exchanges. These organizations provide
considerable resources for cross-industry efforts. Coordination of industry-wide testing for Y2K,
Euro conversion and disaster recovery are examples of the ability of these associations to bring
their industries together to support a common initiative.
We understand the purpose of The Giovannini Group is to look at removing barriers to cross-
border business. It is important, therefore, to take into account the ongoing work in the standards
area, the cost of global implementation of standards, and most important, a fl
exible and robust
standard that takes into account the global and evolving nature of clearing and settlement. We
would like to strongly urge The Giovannini Group to broaden this effort to include all standard-
setting bodies and associations representing various market constituencies. A working group
comprised of these entities could be asked to make an inventory of existing standards and identi-
fy gaps that exist. The group could then determine how best these gaps can be fi
lled by extending
current standards rather than creating new solutions or government-regulated standards.
The FIA is extremely supportive of creating a clearing and settlement standard that will be fully
usable and applicable across industries and global in scope. We have a deep interest in standard-
ization efforts in Europe and would like to be involved in the process. Because we have been
addressing this issue in the U.S., we would be willing to share our experience and help organize a
meeting of interested groups.
Thank you very much for the opportunity to comment on this comprehensive and far-reaching
proposal. We are available to assist The Giovannini Group in its work on standardizing message
content in any way we can.
Sincerely,
John M. Damgard
President
cc: Sharon Brown-Hruska
Acting Chairman
Commodity Futures Trading Commission
