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Deutsche Pullback Shows CDS Challenges

By Christopher Whittall
October 11, 2014 IFR

Deutsche Bank has significantly scaled back single-name credit default swap trading in Europe as it struggles to meet regulatory hurdles on leverage. It is a move that is symptomatic of a wider malaise in a market wallowing in low volumes and spiralling costs.

As the market adjusts to trading a brand new CDS contract, participants say the industry giant is conspicuous by its absence in single names, capping off a two-year period that has seen an exodus of senior traders and a fall in market share in CDS trading.

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Out-of-step Regulators Are Walking Swaps Market Into Trouble

By Tim Cave
Published October 13, 2014 Financial News

The European swaps industry is facing up to what some market practitioners have called a “doomsday” moment later this year.

The cost of European banks’ exposures to swaps in foreign jurisdictions could soar in mid-December because of a failure by European and US regulators to formally recognise each other’s post-crisis rulebooks.

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U.S. Long-Term Debt Rule Will Be Stricter for Big Banks

By Ryan Tracy
Published October 9, 2014 The Wall Street Journal

The U.S. will likely adopt a minimum long-term debt requirement for big banks that is stricter than guidelines agreed to by international regulators, Federal Reserve Gov. Daniel Tarullo said Thursday, addressing soon to be released rules designed to make bank bailouts less likely.

Mr. Tarullo, the Fed’s regulatory point man, said the rule the Fed is currently drafting “will probably be a little bit more rigorous with respect to some of the qualifying instruments,” referring to the types of debt that would qualify for the minimum.

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Banks Face Basel Clampdown on Risk-Model Variation

By Boris Groendahl and Rebecca Christie
Published October 9, 2014 Bloomberg

Global regulators are preparing to narrow banks’ options for assessing credit risk in a bid to prevent the understatement of possible losses.

The Basel Committee on Banking Supervision will publish a report by early November on “excessive” variability in the models banks use to assign risk and measure capital needs, Secretary General Bill Coen said in an interview at the regulator’s headquarters in Basel, Switzerland. The document has been prepared for the Group of 20 nations.

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Swaps Traders Resist Moves to Increase Use of Platforms

By Michael Mackenzie
Published September 16, 2014 Financial Times

Reforming over-the-counter derivatives remains a work in progress, as investors, banks and trading venues in the US come to grips with a new era of transacting swaps.

From a regulatory perspective, the clearing and reporting of US OTC derivatives largely meets the G20 objectives established in the wake of the financial crisis. The US remains well ahead of Europe in terms of writing swap rules.

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ODRG Calls for Deadline to Remove Derivative Reporting Barriers

Published September 11, 2014 Global Markets

In its latest report to the Financial Stability Board and the G20 on derivatives reform, the OTC Derivatives Regulators Group (ODRG), says little has been done in many countries to remove obstacles that prevent reporting of information to improve transparency in the derivatives markets, mitigate systemic risk, and protect against market abuse.

“The Financial Stability Board should make a clear and unambiguous statement that jurisdictions need to remove all barriers that prevent reporting of counterparty-identifying information,” says the report.

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Global Deal in Sight to Prevent Re-run of Post-Lehman Chaos

By Huw Jones
Published September 9, 2014 Reuters

The $700 trillion (434.16 trillion pounds) financial derivatives industry will make a fundamental change to its contracts this year to help regulators wind down failed banks without destabilising markets, the world's main derivatives body said on Tuesday.

Global financial watchdogs want to be able to put a temporary halt on market participants trying to "close out" derivatives contracts if a bank runs into trouble.

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Hong Kong Regulators Seek Industry Input on Derivatives

By Michelle Price
Published July 18, 2014 Reuters

Hong Kong moved one step closer to implementing the G20 post-crisis reform agenda on Friday with the publication of a long-awaited consultation on the treatment of derivatives trades.

The paper, jointly-issued by the Hong Kong Monetary Authority (HKMA), the city's de facto central bank, and the Securities and Futures Commission (SFC), will help establish detailed rules on how information relating to privately-negotiated derivatives trades are reported to the regulators.

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Don’t Outsource Risk, ASX Head Warns

By Andrew White
Published July 18, 2014 The Australian

Australian Securities Exchange chief executive Elmer Funke Kupper has called for regulators to take a conservative approach to one of the signature G20 reforms — moving the $600 trillion over-the-counter derivatives market to central clearing houses.

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LEI Body Names Chief Executive for Identifier Push

By Alexander Campbell
Published July 14, 2014 Operation Risk and Regulation

The Global Legal Entity Identifier Foundation (GLEIF) has named Stephan Wolf as its first chief executive, following an inaugural board meeting late last month. Based in Basel, GLEIF was set up following a 2011 call by the G-20 group of leading economies for a uniform system of identifiers for financial markets, and is working towards objectives laid out by the Financial Stability Board (also located in Basel) in 2012.

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