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SWISS
DERIVATIVES
ISSUE 61 — JUNE 2015
Editorial
Dear Members of SFOA, colleagues and friends,
Contents
Focus
2-3
GMEX joins SFOA
4
Event
5
Interview
Letter from America
6-7
8-11
Jacques de Watteville
keynote at Bürgenstock
State Secretary Jacques de Watteville has agreed to give a brief
keynote speech at the opening of
the Bürgenstock conference on
Wednesday, 23 September 2015.
Mr de Watteville leads the Swiss
State Secretariat for International Financial Matters, represents
Switzerland's interests in international financial and tax matters,
and leads negotiations in these
areas since 1 November 2013.
Official publication of the Swiss Futures and Options Association - SFOA
Focus
Apples and Oranges
In 2013, the juice and nectars market stood at 38.9 billion litres worldwide. Worth about USD 140 billion,
it is dominated by two flavours: apples and oranges (respectively 27% and 29% of volume). While the orange
juice market has been well known to investors for decades, apple juice trading is still in its infancy.
2
China Fresh Apples Production, 1991-2013 (in tons)
Swiss Derivatives Review — Issue 61
Focus
3
© frankieleon, Flickr
Swiss financial market
regulation is in the bag
A few days ago, the Swiss Parliament signed off the
new Financial Market Infrastructure Act (FMIA or
FinFraG).
FMIA is one of three financial regulations acts debated in the Swiss Parliament (see SDR 56, January
2015).
The law introduces international standards for stock
exchanges and other trading venues as well as for
market participants. Hence, FMIA is in line with a general overhaul of financial regulations worldwide to
reduce systemic risk in finance as a result of the financial crisis of 2009.
FMIA’s main thrust are rules for OTC trading in financial derivatives. In addition, FMIA provides for position
limits for commodity derivatives. Exceptions apply for
derivatives on goods that are actually traded.
Most of the law has been approved unchanged. A
notable exception is Article 90 which states that assets held with CCPs from clients that are indirectly
connected are also segregated and therefore protected in case of insolvency. This is an important step to
become equivalent to EMIR-rules.
The law is expected to enter into force in early 2016.
Swiss Derivatives Review — Issue 61
News
GMEX joins Swiss Futures and
Options Association
Global Markets Exchange Group (GMEX) is the latest member of the Swiss Futures and Options Association (SFOA).
4
About GMEX
Global Markets Exchange Group Limited (GMEX) is
authorised and regulated by the UK Financial Conduct
Authority (FCA) to operate GMEX Exchange. GMEX is a
wholly-owned subsidiary of GMEX Group.
About GMEX Group
GMEX Group is a group of companies that offer sustainable and innovative solutions for the new era of
global financial markets, encompassing:

Operation of an exchange for the trading of a Constant Maturity Future for Interest Rate Swaps

Development of related new tradable market and
product indices

Creation and operation of low cost electronic exchanges in equities, debt, FX, derivatives and
commodities in developing and, in a targeted way,
developed markets

Interconnectivity of exchanges to each other creating a global network of liquidity

Business development to enhance liquidity in
partner exchange products

Consultancy on exchange strategy, product development, clearing and regulation

Provision of exchange, clearing house and depository platform technology
GMEX Group stakeholders include Deutsche Börse
AG, Société Générale Corporate & Investment Banking and Forum Trading Solutions Limited through its
investment vehicle.
For more information, visit www.gmex-group.com or
follow us on twitter @GMEX_Group
Swiss Derivatives Review — Issue 61
Event
5
Swiss Derivatives Review — Issue 61
Interview
EEX launches agricultural
futures
In May 2015, the agricultural futures previously listed at Eurex Exchange were successfully migrated and
trade now on the platform of the European Energy Exchange (EEX). SDR interviewed Sascha Siegel, Head
of Agricultural Commodities at EEX.
6
EEX has restructured its agricultural segment in
May. Can you tell us about it?
So now it is a one-stop shop
for the agricultural community?
EEX is better known for energy trading, how does
this fit with the agricultural side?
Is this linked to policy changes in the EU?
About EEX
The European Energy Exchange (EEX) is the leading
energy exchange in Europe. It develops, operates and
connects secure, liquid and transparent markets for
energy and commodity products. At EEX, contracts on
Power, Coal and Emission Allowances as well as
Freight and Agricultural Products are traded or registered for clearing. Alongside EEX, EPEX SPOT, Powernext, Cleartrade Exchange (CLTX) and Gaspoint Nordic
are also part of EEX Group. Clearing and settlement of
trading transactions are provided by the clearing
house European Commodity Clearing (ECC).
Swiss Derivatives Review — Issue 61
Do you think this change will open your products to
new types of actors?
Focus
7
Sascha Siegel
How long before individual farmers naturally hedge
their risk on exchanges like EEX?
Sascha Siegel is Head of
Agricultural Commodities
at EEX and joined the
company in January
2015. Before, he was Vice
President, Product Research & Development at
Eurex in Frankfurt, where
he has built up the agricultural product portfolio
since 2009 and accompanied its development as a
product manager.
© Brian Forbes, Flickr.
Swiss Derivatives Review — Issue 61
Letter from America
Venezuela: No Rule of Law,
Bad Money
Venezuela has been violating the rule of law in the monetary sphere and now pays with a fall in the value
of its currency and skyrocketing inflation rates. Professor Steve H. Hanke recommends dollarization and
as a success story presents the example of Ecuador.
8
Venezuela’s Foreign Exchange Reserves, 2013-2015
The Fall in the Value of the Venezuelan Bolîvar
Swiss Derivatives Review — Issue 61
Letter from America
9
Venezuela’s Annual Inflation Rates
Swiss Derivatives Review — Issue 61
Letter from America
10
Ecuadorian Misery Index, 1992-2014
Swiss Derivatives Review — Issue 61
Letter from America
11
Sources and notes
Chart 1: Banco Central de Venezuela weekly data and
calculations by Prof. Steve H. Hanke, The Johns
Hopkins University. Note: Reserve data after March
2015 are provisional.
Chart 2: Banco Central de Venezuela, Dollar.nu, Dolar
Paralelo, International Monetary Fund (IFS ), Paralelo
Venezuela. Prepared by Prof. Steve H. Hanke, The
Johns Hopkins University. Note: For purposes of
illustrating the decline value of the Venezuelan
bolîvar, relative to the U.S. dollar, the y-axis is inverted.
Chart 3: Banco Central de Venezuela, Dollar.nu, Dolar
Paralelo, International Monetary Funds (IFS ) Paralelo
Venezuela and calculations by Prof. Steve H. Hanke,
The Johns Hopkins University. Note: These annual
inflation rates are implied from the black-market
VEF/USD exchange rate. Note: When the annual
implied inflation rate drops below 25%, the estimate
is unreliable.
Chart 4: World Bank, International Monetary Fund,
and calculations by Prof. Steve H. Hanke, The Johns
Hopkins University
Swiss Derivatives Review
Issue 61 - June 2015
Steve H. Hanke
Steve H. Hanke is Professor of
Applied Economics at the Johns
Hopkins University in Baltimore,
MD. He is also a Senior Fellow
and Director of the Troubled Currencies Project at the Cato Institute in Washington, D.C.
You can follow him on Twitter:
@Steve_Hanke
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Official publication of the Swiss Futures and Options Association - SFOA