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Swaps Trading Between Europe and U.S. Declines

Published July 30, 2014 Markets Media

The International Swaps and Derivatives Association, the trade body for over-the-counter derivatives markets, said European dealers have been choosing not to trade with US dealers since swap execution facilities were introduced in the US.

Electronic trading platforms for swaps that provide access to US persons have been required to register as SEFs with US regulators and comply with new rules since October last year. On February 15 this year the first OTC interest rate swaps and credit index instruments became mandated for trading on SEFs in a process called made available to trade (MAT).

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Ending ‘Too Big to Fail’ Could Rest on Obscure Contract Language

By Jesse Hamilton and Silla Brush
Published July 29, 2014 Bloomberg

Wall Street and global financial regulators, trying to squash the lingering perception that banks remain “too big to fail,” are looking to an obscure change in derivatives contracts to solve the problem.

The main industry group for the $700 trillion global swaps market is rewriting international protocols to impose a “stay” or pause designed to prevent trading partners from calling in collateral all at once when a bank nears failure.

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Futures Regulator O'Malia to Be Swaps Group Chief

By Scott Patterson
Published July 23, 2014 Wall Street Journal

A departing Republican futures regulator will take the helm of a major Wall Street trade group in August.

Republican Scott O'Malia of the Commodity Futures Trading Commission will become chief executive of the International Swaps and Derivatives Association Inc., a multinational group of institutions known for pushing back against federal regulation of swaps trading.

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ISDA Weighs in on Canada Insolvency Review

By Daniel O'Leary
Published July 17, 2014 Global Capital

The International Swaps and Derivatives Association wants greater clarity on a number of issues surrounding amendments to Canada's insolvency code and its relationships with derivatives, including an expanded definition of financial collateral and clarification of termination rights.

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Loan System Promising Automation Ready for ISDA Approval

By Kristen Haunss
Published July 8, 2014 Bloomberg

Efforts under way since 2007 to automate the $750 billion market for junk-rated corporate loans may soon pay dividends just as Moody’s Investors Service warns managers may not be able to refund investors trying to flee.

The International Swaps and Derivatives Association may start reviewing as soon as this month whether electronic notifications aimed at automating quarter-end payments and interest ratesare ready to be used instead of fax machines, Bhavik Katira, chair of an ISDA group responsible for the initiative, said in an interview. Messages focused on cutting the time its takes to settle a trade from the current three weeks could also be sent for approval this year.

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ISDA Publishes Recommendation for Updated FpML

By Beth Shah
Published July 10, 2014 Global Capital

The International Swaps and Derivatives Association has published recommendations for an updated version of the Financial products Markup Language, also known as FpML version 5.7.

Several enhancements have been made to the standard, with it now covering execution of package transactions. The addition also impacts exiting credit limit check messages and clearing messages.

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Concern Over Siloed Approaches to Collateral

By Staff
Published July 2, 2014 The Trade

While regulation increases collateral needs, particularly as the derivatives market moves toward central clearing, market participants are cobbling together fragmented systems, manual processes, and siloed approaches to ensure compliance, creating significant inefficiencies, says Sapient Global Markets in a recent whitepaper.

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ISDA Asked If Event Clause Triggered on Argentina Debt Swaps

By Abigail Moses
Published June 23, 2014 Bloomberg

The International Swaps & Derivatives Association said it was asked to rule whether a clause in credit-default swaps on Argentina has been triggered after the government said it won’t make bond interest payments.

Schulte Roth & Zabel LLP, a U.S. law firm, requested the ruling for a “potential repudiation/moratorium event,” according to a letter dated June 20 on ISDA’s website. The firm, which said it’s counsel for a holder of a contract that was set to expire that day, said that even if Argentina makes the payment, the stated intention not to pay would constitute the event under ISDA’s 2003 credit derivatives definitions.

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Isda Warns on Dangers of Equity Derivatives Clearing

By Anish Puaar
Published June 11, 2014 Financial News

The International Swaps and Derivatives Association has fired an early warning to European regulators on the introduction of clearing rules for equity derivatives, claiming that proposed regulations could lead to “operational hazard” and potential monopolies for clearing houses.

The warning from Isda comes as the European Securities and Markets Authority prepares an industry consultation on the types of derivatives that should be cleared under Europe’s derivatives market overhaul.

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ISDA Warns Against Mandatory Clearing for OTC Equity Derivatives

By Daniel O'Leary
Published June 10, 2014 Derivatives Week

The International Swaps and Derivatives Association warned Tuesday mandatory clearing for over-the-counter equity derivatives could see volumes migrate to the exchange-traded market, diminishing the role for the OTC contracts in risk management.

ISDA's comments follow the approval March 18 of Sweden's Nasdaq as the first central counterparty under the European Market Infrastructure Regulation. The clearinghouse was authorised to clear several single-name, basket and equity index futures and options, alongside an assortment of interest rate derivatives.

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