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CDS Trades Jump on SEFs

By Richard Henderson
Published April 4, 2014 The Trade

Credit default swaps (CDS) traded on swap execution facilities (SEFs) grew 75% from January to April, according to data compiled by the International Swaps and Derivatives Association (ISDA), while rate swaps have seen little growth.

In March, 8,198 CDS trades were executed on SEFs, up 74.1% from January’s total of 5,112 trades. The highest daily trading value was on 13 March, with 566 trades worth US$17.8 executed on SEFs. The data includes all US dollar CDS product types executed on SEFs across all tenors.

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Industry Seeks Urgent Clarification on Frontloading

By Paloma Migone
Published March 27, 2014 The Trade

Market participants are seeking answers from European regulators on a frontloading obligation for OTC derivatives after it was recently triggered by the approval of the first central counterparty (CCP).

In a joint letter to the European Securities and Markets Authority (ESMA) last week, the International Swaps and Derivatives Association (ISDA) and FIA Europe called for “swift action” on guidance for the industry on frontloading.

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End-Users Believe Sefs Will Hurt Swap Market – Isda Survey

By Tom Osborn
Published March 26, 2014 Risk

A new survey from Isda shows end-users are pessimistic about rules requiring the use of swap trading platforms, and also believe the lag between US and European implementation has split liquidity along geographic lines

New execution rules for over-the-counter derivatives will make the market more expensive, less liquid and less easy to use, according to a survey of swaps end-users conducted by the International Swaps and Derivatives Association – results that raise questions about the regime, says the chairman of Isda, Stephen O'Connor.

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Counting the Cost of Reform -- ISDA End-User Survey

By Tom Osborn
Published March 26, 2014 Risk

The financial system is safer than it was five years ago, but that’s no thanks to the clearing, execution and reporting reforms agreed by the Group of 20 (G-20) nations in 2009, according to end-users responding to a new survey by the International Swaps and Derivatives Association.

Roughly 60% of those firms – the largest group of which were non-financial corporates – believe the system is on a sounder footing, with a shade under 20% disagreeing. But when it comes to ascribing credit, most of it goes to prudential reforms, with more than 78% seeing new bank capital rules as either an important or very important part of the improvement, for example.

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Roundtable: What OTC Reform Means for End-Users

By Duncan Wood
Published March 26, 2014 Risk

Swaps reforms and new prudential rules for banks could hurt end-users, by fragmenting the market, driving up costs and reducing liquidity – that’s the view of end-users themselves, polled by the International Swaps and Derivatives Association on the eve of its 29th annual meeting, and of three Isda board members, who joined Risk for a video roundtable. The participants’ hope is that current stresses are a passing phase.

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ISDA Stymied Over Derivatives Contracts Rewrite

By Philip Stafford
Published March 5, 2014 Financial Times

A global regulatory initiative to rewrite the way derivatives contracts work in a default may be slowed amid concerns that parts of the industry will not sign up to the changes.

The International Swaps and Derivatives Association, a trade association, has been working for nearly a year on contracts that will give failed institutions a temporary stay on investors’ claims on their swaps. The legal rights are triggered by a default on payments.

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BOE Seeks Derivatives Pact to Prevent a Repeat of Lehman Cascade

By Ben Moshinsky
Published March 3, 2014 Bloomberg

The Bank of England is seeking a global pact among banks to suspend default clauses in some derivatives contracts during a crisis, in a bid to ward off bank death spirals that cascade through the financial system.

The U.K. central bank wants lenders and the International Swaps and Derivatives Association Inc., an industry group, to agree to temporarily halt claims on banks that become insolvent and need intervention, Andrew Gracie, executive director of the BOE’s special resolution unit, said in an interview.

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A Safer Way to Trade Interest Rate Swaps

By Matthew Leising
Published February 27, 2014 Bloomberg

In the early days of the interest rate swap market, former Salomon Brothers trader Thomas Jasper remembers, transactions were recorded by hand. “When I was running the swap desk,” he says, “I used to carry my trading book in my breast pocket on one piece of paper.” It was only after the International Swaps & Derivatives Association, which Jasper helped found, created the standard swaps contract known as the master agreement in 1985 that the business began to grow exponentially.

While the master agreement helped bring some order to the market, swaps trading was still opaque. Deals were made over the phone and later by instant message—with no central recordkeeping. Uncertainty over which banks were tied to other banks and investors by swaps deals complicated efforts to respond to the 2008 financial crisis.

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Delayed CDS Rollout Frustrates

By Christopher Whittall
Published February 8, 2014 IFR

The decision to delay the rollout of new legal documentation for the credit derivatives market has frustrated participants struggling with increasingly illiquid trading conditions.

ISDA originally planned to launch the 2014 credit definitions in March, but its credit steering committee – which is overseeing the overhaul  – has since decided a longer timeframe is needed for the transition to the new contract.

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90% of Interest Rate Derivatives Already Cleared -- ISDA

By Chris Hall
Published February 6, 2014 The Trade

The vast majority of interest rate derivatives (IRD) were centrally cleared ahead of compliance with G-20-inspired rules by institutional investors, according to a new report by the International Swaps and Derivatives Association (ISDA). 

The report estimates that around 90% of clearable IRDs were already being cleared by the end of the second quarter of 2013, based on data from The Bank for International Settlements, the Depository Trust & Clearing Corporation, LCH.Clearnet SwapClear, CME Group and the Japan Securities Clearing Corporation.

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