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One Trade a Day is Not a Liquid Market, ISDA Argues

By Tom Osborn
Published August 5, 2014 Risk

The first shots were fired yesterday in what promises to be a tense battle over the definition of liquidity in Europe's over-the-counter derivatives market. Only swaps that trade multiple times a day should be considered liquid, according to the International Swaps and Derivatives Association - regulators have implied even instruments that trade only once every other day might count.

The debate is important because liquidity plays a crucial role in the Markets in Financial Instruments Directive and its accompanying regulation (Mifid II and Mifir). Swaps deemed liquid will be forced onto one of three different categories of trading platform, and subjected to pre- and post-trade transparency requirements. 

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ISDA Asked New CDS Question on BES

By Christopher Whittall
Published August 5, 2014 IFR

The ISDA Determinations Committee has been asked a second question with regard to the fate of the US$900m of net notional CDS referencing embattled Portuguese lender Banco Espirito Santo.

The new general interest question, which appeared on the ISDA website late on Monday and will be ruled upon on Wednesday in a session starting at 12pm London time, asks whether a bankruptcy credit event has occurred with respect to BES.

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ISDA Declares Argentina in Default, Bonds Extend Losses

By Davide Seigliuzzo
Published August 1, 2014 Reuters

The International Swaps and Derivatives Association (ISDA) on Friday declared Argentina in default, which could trigger payments worth up to USD1bn on credit default swaps.

ISDA's determinations committee voted unanimously that a "failure to pay" event occurred on July 30, when Argentina missed a coupon payment on some restructured foreign-law bonds.

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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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