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CDS Notional Continues Decline by 27%

By Beth Shah
Published August 26, 2014 Global Capital

ISDA reported that there was a 33% decrease in the notional cleared for CDS and 41% less executed on swap execution facilities, compared with the previous week. Rates also saw a decrease, with 18% less volume cleared, and 21% less executed on SEFs last week.

The total notional cleared only dropped to 74% in both asset classes, with a 6% drop in CDS, and 5% decline in rates. The total notional executed on SEFs also dropped in CDS and rates; 13% to 56%, and 5% to 47%, respectively.

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Less Is More As Market Evolves

By Mike Kentz
Published August 22, 2014 IFR

For years running up to the 2008 crisis, over-the-counter swap dealers and clearing houses boasted of growing notionals in their derivatives books as a way to exhibit their trading and risk management prowess. That the ballooning numbers also served to inflate the perceived importance of the OTC derivatives market was simply a pleasant by-product.

But Dodd-Frank, Basel III and a swathe of other regulations have flipped the narrative on its head. Dealers and clearing houses alike are now scrambling to show they can reduce overall notionals and trade counts through compression, as investors look to minimise operational costs and dealers slash exposures that become painfully expensive under the new regulatory framework.

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ISDA Sets Argentina CDS Auction Date After Yen Bond Inclusion

By Davide Scigliuzzo and Christopher Whittall
Published August 21, 2014 Reuters

The International Swaps and Derivatives Association (ISDA) has set an action date of September 3 to settle Argentina's credit default swaps after including two controversial yen-denominated bonds in the list of deliverable securities.

In a 14-to-1 vote, members of ISDA's determinations committee decided Thursday to allow the yen bonds to be delivered in the auction that will determine the payout for the US$813m net notional of CDS, rejecting a challenge that they should be left out.

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ISDA Publishes New CDS Protocol

By Mike Kentz
Published August 21, 2014 IFR

The ISDA 2014 Credit Derivatives Definitions Protocol will help participants to close the legal gap between existing transactions and new ones, which will be governed by a new set of legal standards for CDS that are scheduled to launch on September 22. 

The 2014 Credit Definitions are aimed at addressing flaws in the old legal documentation for CDS contracts that were exposed during the sovereign debt restructuring in Greece and the introduction of bank bail-in debt.

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Banks Push for Delay to Introduction of Derivatives Rules - Sources

By Michelle Price
Published August 21, 2014 Reuters

The international banking industry has asked regulators for more time to implement derivatives rules that could add $800 billion to the global financial industry's cost of doing business, people familiar with the matter said.

The International Swaps and Derivatives Association (ISDA), which represents the over-the-counter derivatives market, has written to the Basel Committee on Banking Supervision and the International Organization of Securities Commissions (IOSCO), the global regulatory banking and securities bodies, requesting a delay to rules that aim to make trading derivatives safer, the people added.

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CDS Notional Drops by 30%

By Beth Shah
Published August 18, 2014 Global Capital 

ISDA reported that there was a 31% decrease in the notional cleared for CDS and 32% less executed on swap execution facilities, compared with the previous week. Rates saw an increase, with 11% more volume cleared, and 14% more executed on SEFs last week.

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ISDA Moves to Protect Netted Capital During Bank Resolution

By Hazel Sheffield
Published August 14, 2014 Global Capital

The International Swaps and Derivatives Association has clarified the meaning of appropriate protection for netted capital under the Bank Recovery and Resolution Directive in response to queries by government officials in the European Union.

"The BRRD talks about a member state ensuring 'appropriate protection' but does not say what this means. The industry wants to be sure that the safeguards that the BRRD says should be implemented are in fact implemented effectively," Edward Murray, consultant at Allen & Overy

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ISDA Plays Down Speculative Activity

Published August 12, 2014 FOW

The International Swaps and Derivatives Association (ISDA) has published a report arguing that the amount of speculation in the over-the-counter (OTC) derivatives market is commonly misrepresented.

It makes the case that 65% of turnover activity is conducted as dealer-to-client and that "These participants, comprising non-dealer financial institutions and non-financial customers, use derivatives primarily to hedge risks and reduce volatility on their...

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ISDA: Dealer Derivs Activity Vital for Liquidity, Customer Hedging

By Beth Shah
Published August 11, 2014 Global Capital

Derivatives volumes pertaining to trades between reporting dealers is critical for market liquidity and the facilitation of client trades as it allows end users to put on risk-reducing and cost-effective hedges, according to a research study from the International Swaps and Derivatives Association.

According to the publicly available data published by the Bank of International Settlements, 35% of over-the-counter interest rate derivatives market turnover relates to dealer market-making and the hedging of customer transactions.

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Banco Espírito Santo Ruled Not to Be in Bankruptcy Event

By Ben Edwards
Published August 6, 2014 Wall Street Journal

A panel of the International Swaps and Derivatives Association Wednesday ruled that the Portuguese central bank's decision to break up Banco Espírito Santo BES.LB -40.30%won't trigger a payout on insurance-like contracts linked to the stricken lender's debt.

ISDA was asked late Monday to rule whether the Portuguese Central Bank's decision to split BES into two would qualify as a so-called bankruptcy credit event, meaning that any contracts on BES debt—known as credit default swaps—would be activated.

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