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CDS Notional Marginally Drops Following Six-Week Increase

By Beth Shah
October 20, 2014 GlobalCapital

Overall credit default swap notional that was reported to swap data repositories last week decreased by 4% from the previous week, according to data from the International Swaps and Derivatives Association. This follows six weeks of a consistent uptick in CDS notional, with a combined increase of 160%.

Overall interest rate derivatives trading that was reported, also saw a marginal decrease of 6% from the previous week.

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CDS Notional Spikes Again Following Five-week Uptick

By Hazel Sheffield
October 14, 2014 GlobalCapital

Overall credit default swap notional that was reported to swap data repositories last week spiked by 41% from the previous week, according to data from the International Swaps and Derivatives Association. This follows five weeks of a consistent uptick in CDS notional, with a combined increase of 119%.

Overall interest rate derivatives trading that was reported, also saw an increase of 24% from the previous week.

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Market Agrees Protocol to Slow Close-out of Positions in Failing Banks

By Hazel Sheffield
October 13, 2014 GlobalCapital

A slew of major global banks have agreed to sign a protocol by the International Swaps and Derivatives Association that imposes a stay on cross-default and major termination rights within standard ISDA derivatives contracts if a counterparty defaults.

Goldman Sachs, JPMorgan, Deutsche Bank and BNP Paribas are among the 18 banks to sign the protocol, which updates the existing ISDA Master Agreement to incorporate contractual stays on cross-default rights that apply in the US bankruptcy code and other close-out regimes. This means that adhering counterparties can opt into certain overseas resolution regimes through the change in their contract.

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Banks Ink Swaps Deal With U.S. Regulators

By Andrew Ackerman
Published October 12, 2014 The Wall Street Journal

The largest lenders in the U.S., Europe and Japan on Saturday agreed to new procedures to help inoculate the global financial system against the failure of giant banks.

Top executives of 18 large U.S., European and Japanese banks, meeting at the Federal Reserve in Washington, agreed in principle to wait up to 48 hours before seeking to terminate derivatives contracts and collect associated payments from a troubled financial institution.

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Financial Crisis Overhaul for Credit Swaps

By Philip Stafford
Published October 6, 2014 Financial Times

The credit derivatives market was adjusting on Monday to its biggest overhaul in more than a decade following the introduction of new definitions to incorporate events from the financial crisis.

More than 1,400 institutional investors, hedge funds and banks have signed up to the provisions for credit default swaps (CDS), which were developed by banks, market infrastructure operators and the International Swaps and Derivatives Association (Isda).

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Swaps Said to Be Losing Special U.S. Bankruptcy Status

By Jesse Hamilton and Silla Brush
Published October 3, 2014 Bloomberg

Firms holding swaps contracts with a bank filing for U.S. bankruptcy protection would have to wait at least 24 hours before demanding collateral under new practices that may be adopted by the industry this month.

The revision could make it easier for banks to satisfy government requirements for the “living wills” they must produce to show how they’d unwind their businesses in an orderly fashion if they veered toward collapse.

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SEFs Chafe at Footnote 195

Published October 1, 2014 Markets Media

Some market participants are concerned that professionals in the embryonic swaps execution industry may get buried in paperwork related to the agreements that swap counterparties must adhere to.

A footnote (Footnote 195) of the Commodity Futures Trading Commission’s swap execution facility rules requires that SEFs become a central source of paper ISDA master agreements for non-cleared products executed on their platforms.

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New Definitions See Contract Basis Open Up on Final CDS

By Hazel Sheffield
Published September 30, 2014 GlobalCapital

Significant basis has opened up between 2003 and the new 2014 credit default swap contracts on sovereign and financial names, just a week after new CDS definition came into effect on September 22.

While CDS on 2014 definitions was expected to trade wider than those on 2003 rules, International Swaps and Derivatives Association data shows the basis that has opened up on financial names runs the gamut from 200% for UBS and Credit Suisse to 53% for HSBC, according to Gavan Nolan, director of credit products at Markit in London. Nolan told GlobalCapital that excluding Swiss banks, the biggest basis is on Italian and Spanish names. BBVA, Santander and UniCredit are all trading around 90% wider on the new definitions. Sovereign CDS has also been affected, though not to the same extent, he added. Nolan said this may show that the markets view banks based in the periphery as more vulnerable to a government intervention and, therefore, more likely to trigger CDS.

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ISDA Seeks Green Light on Margin Model

By Philip Stafford
Published September 26, 2014 Financial Times

Derivatives markets participants are expecting to receive the green light from regulators to develop an industry initiative designed to head off potential pricing confusion as new rules come into force.

The International Swaps and Derivatives Association, an industry trade body, said this week it had finalised a standard model to calculate the margin needed to back trades that would not be processed by clearing houses.

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FSB Backs Derivatives Crisis-Clause

By Philip Stafford
Published September 29, 2014 Financial Times

Global regulators have backed a plan by the global derivatives industry to allow authorities more time to decide on a resolution plan if a bank gets into financial difficulty.

The Financial Stability Board on Monday accepted a proposal overseen by the International Swaps and Derivatives Association, an industry trade body, to insert a so-called “stay” on the bank’s derivatives contracts, which are frequently worth billions of dollars in notional value.

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