Slide 1: US Financial Reform Legislation & Regulations
US Financial Reform Legislation & Regulations Impact on the Derivative Markets August 4th, 2010 The information set forth herein is summary in nature and should not be relied upon as legal or other advice. Application of the legislation should be discussed with your legal counsel.
Slide 2: Citi Speakers
Citi Speakers U.S Financial Reform Legislation Overview—Suni Harford, North America Head of Capital Markets U.S Financial Reform Legislation Details—Robert Klein, Silas Findley, Legal, Capital Markets Citi Clearing—Chris Perkins, Product Head of Prime Finance Clearing Citi OTC Services—Bikram Singh,
Slide 3: U.S Financial Reform Legislation—Overview
U.S Financial Reform Legislation—Overview The Wall Street Reform and Consumer Protection Act demands changes that are far-reaching and will affect a wide range of market participants. The mechanics of implementation will be determined by the forthcoming rulemaking process, however, the broad implica
Slide 4: U.S Financial Reform Legislation—Overview
U.S Financial Reform Legislation—Overview The most dramatic changes will occur in the OTC Derivatives markets. The legislation can be broken down into 3 Key Segments— Oversight, Structure and Infrastructure Oversight Structure Infrastructure Regulators Swap Push Out Participants • Provides for signi
Slide 5: U.S Financial Reform Legislation—Details
U.S Financial Reform Legislation—Details Swap Definition The bill establishes broad coverage by defining a ―swap‖ as any agreement, contract, or transaction that is, or in the future becomes, commonly known as a swap, followed by specific examples. The bill also defines ―security based swaps‖ as
Slide 6: U.S Financial Reform Legislation—Details
U.S Financial Reform Legislation—Details Exchange Trading & Reporting If a class of transactions is subject to clearing requirement, it must be traded on an exchange or swap execution facility. Trading requirement does not apply if no exchange or execution facility makes the product available fo
Slide 7: U.S Financial Reform Legislation—Details
U.S Financial Reform Legislation—Details Business Conduct Standards— Continued Act requires new standards with respect to special entities (States, municipalities, and State and Federal agencies Pension plans, governmental plans, and endowments). A swap dealer that acts as an ―advisor‖ to a spec
Slide 8: Citi Clearing
Citi Clearing OO —SC“‘;SSCésC citi
Slide 9: Citi Clearing—Built Around Client-Centric Principals
Citi Clearing—Built Around Client-Centric Principals Our Derivatives Clearing solution delivers key enhancements to provide our clients a solid foundation for migrating and growing their cleared OTC portfolios Central clearing houses will require margin from all participants and additional guarant
Slide 10: Citi's Derivatives Clearing Differentiators
Citi’s Derivatives Clearing Differentiators Citi’s platform-agnostic approach with competitive fees and margin optimization positions us to be the premiere derivatives clearing service provider Agnostic and Comprehensive OTC Connectivity: Citi is willing to connect clients to their choice of any O
Slide 11: Citi OTC Middle & Back Office Services
Citi OTC Middle & Back Office Services
Slide 12: Financial Reform Bill—Impact to OTC Trading, Operations & Technology
Financial Reform Bill—Impact to OTC Trading, Operations & Technology Regulatory rulemaking over the next year will define how market participants operate. Over time, need for some functions like confirmations will decrease as more products are centrally cleared but client needs for multiple connecti
Slide 13: Citi OTC Services—Built to suit Client's Middle & Back Office needs
Citi OTC Services—Built to suit Client’s Middle & Back Office needs Operational Servicing to Clearing, Citi offers automated end to end OTC servicing solutions. Clients get complete transparency into trade processing based on a robust reporting and reconciliation framework Confirmatio n Collateral P
Slide 14: Part of Our One-Stop Operational & Clearing Services
Part of Our One-Stop Operational & Clearing Services Citi’s comprehensive and integrated servicing and clearing solution supports all of our clients’ needs. 40+ years experience, 96+ markets; Institutional Security Fund Portfolio Services, Custody, Fund Administration & Services (GTS) Middle & Back
Slide 15: Appendix
Appendix citi
Slide 16: Delivering Standardized Access & Service Across US Credit CCPs
Delivering Standardized Access & Service Across US Credit CCPs CCPs will continue to evolve and mature during the regulatory rule making process post legislative enactment Venue ICE Trust CME (CDS) ICE Clear Eurex Clearnet SA Region US US Europe Europe Europe Products CDS Single Name* CDS Single Nam
Slide 17: Delivering Standardized Access & Service Across US Rates CCPs
Delivering Standardized Access & Service Across US Rates CCPs CCPs will continue to evolve and mature during the regulatory rule making process post legislative enactment Venue LCH LCH CME (Rates US) IDCG Region Global US US US Products IRS: IRS: IRS: USD & EUR IRS: USD USD, EUR & GBP up to 50 years
Slide 18: Road Map to Clearing
Road Map to Clearing Whilst clients have taken a wait-and-see approach to client clearing, we recommend pro- active engagement with participants in order to establish the ground work ahead of regulation 1. Pro-active Engagement 2. Regulation/Legislation 10. Ready to Clear 3. Legal Structure Familiar
Slide 19: Citi OTC Valuation Service
Citi OTC Valuation Service Citi offers clients world class experience and expertise to secure independent valuations ranging from vanilla to the most complex instruments. Clients are offered full transparency into the pricing methodology and have the flexibility of customizing market data inputs int
Slide 20: Sample OTC Middle & Back Office Reconciliations
Sample OTC Middle & Back Office Reconciliations Function Recon Service From/To Frequency Timing Data Reconciled (Sample Fields) Trade Capture End of Day Daily EOD Sample Fields for CDS –Global Trade ID Position –Cpty Entity Code CITI Client OMS –Transaction Type reconciliation –Trade Date –Maturity
Slide 21: Sample Middle & Back Office OTC Reports
Sample Middle & Back Office OTC Reports Clients can choose from daily, weekly and monthly reports across trade capture, affirmation, confirmation, valuation, payments, collateral and accounting services. Ad Hoc reports can be generated upon request Trade Capture Payments and Settlements Accounting