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Fed Heeds Banks’ Warning on Where Next Crisis May Come From

By Silla Brush and Jesse Hamilton
April 10, 2015, Bloomberg Business

JPMorgan Chase & Co. and BlackRock Inc. have argued for years that a key response to the last financial crisis could help fuel the next one. Global regulators are starting to heed their warnings.

At issue is the role of clearinghouses -- platforms that regulators turned to following the 2008 meltdown to shed more light on the $700 trillion swaps market. A pivotal goal was ensuring that losses at one bank don’t imperil a wide swath of companies, and the broader economy.

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Clearing Houses Get Insurance Policy

By Philip Stafford
March 11, 2015, Financial Times

A consortium of 20 top-rated global insurance companies are underwriting a policy for clearing houses that would limit losses for users of derivatives and possibly taxpayers in the event of market turbulence.

The scheme aims to create an extra layer of protection for clearing houses, which have become a critical component of the global derivatives industry since the financial crisis.

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Swap Dealers Making Industry Model to Price Derivatives Deals

By Philip Stafford
March 9, 2015, Financial Times

The world’s largest swap dealers are working on an industry utility to allow them to independently calculate the full price of bilateral derivatives deals and head off a potential upcoming pricing confusion.

Dealers such as JPMorgan, Goldman Sachs and Deutsche Bank are involved in discussions over the creation of an open source model to work out the margin they will need to post for privately-negotiated deals between banks.

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SEC Scrutinizing Bank Efforts to Comply with Capital Rules

By Jody Shenn
February 18, 2015, Bloomberg

The Securities and Exchange Commission is scrutinizing banks’ efforts to appear safer to regulators and shareholders.

The agency is looking for improper behavior related to how banks value complicated assets and to transactions they use to shift risks to other entities, said Michael Osnato, head of the complex financial instruments group in the SEC’s enforcement division.

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JPMorgan Bankers Charged in Germany Over $64 Million in Swap-Sale Losses

By Karin Matussek
February 9, 2015, Bloomberg News

Two JPMorgan Chase & Co. employees were charged in Germany over the sale of swaps to the city of Pforzheim that resulted in 57 million euros ($64 million) of losses, prosecutors said.

The two men were charged with aiding in aggravated breach of trust for selling “highly speculative” swaps to the municipality, Mannheim prosecutors said in an e-mailed statement Monday. The indictment was filed two years after three city officials were charged over the deal.

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Warren, Cummings Ask Wall Street for Answers on Dodd-Frank Rollback

By Victoria McGrane
January 29, 2015, The Wall Street Journal

Elizabeth Warren and her allies are keeping up the pressure on the contentious Dodd-Frank rollback that made its way into a must-pass $1.1 trillion spending bill at the end of last year.

Ms. Warren (D., Mass.) and Rep. Elijah Cummings (D., Maryland) sent letters to four top Wall Street banks Thursday asking for details about how the firms will alter their derivatives trading operations in the wake of the change. Mr. Cummings is the top Democrat on the House Committee on Oversight and Government reform and Ms. Warren a member of the Senate Banking Committee.

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Banks Must Bear the Risk of Derivatives Losses, CME Paper Says

By Matthew Leising
January 20, 2015, Bloomberg

CME Group Inc., the world’s largest derivatives market, wants its bank members to bear responsibility for ensuring there is enough cash on hand in the case of a default.

The debate over how clearinghouses are managed and the level of resources available has gone back and forth between the Chicago-based exchange owner and its largest bank members such as JPMorgan Chase & Co. CME said in a white paper published today it has set aside the equivalent of 5.25 percent of the money its bank members have put into a collective default fund. In September, JPMorgan said CME’s contribution, referred to as skin in the game, should equal 10 percent.

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Top Democrat Says Regional Banks Key to Wall Street Win on Derivatives

By Amanda Becker and Emily Stephenson
December 16, 2014, Reuters

A top Democrat in the U.S. House of Representatives on Tuesday said unpopular Wall Street banks got a long-sought rollback to Dodd-Frank reforms through Congress last week partly by leveraging the influence of smaller banks that hold greater sway with lawmakers.

"They have been working for a long time, trying different strategies on it," California Representative Maxine Waters said in an interview. "The big banks are in trouble with most legislators... so they put the regional banks in front of them in order to gain more support."

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JPMorgan to HSBC Are Accused of Euribor Rate Rigging by EU

By Gaspard Sebag
Published May 20, 2014 Bloomberg

JPMorgan Chase & Co. (JPM:US), HSBC Holdings Plc (HSBA) and Credit Agricole SA (ACA) were accused today by the European Union’s antitrust arm of colluding to manipulate interbank lending rates.

The trio received antitrust complaints alleging they participated in a cartel to rig Euribor. The so-called statement of objections is the next step in the EU enforcement process after the lenders dropped out of settlement talks last year.

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JP Morgan Puts Derivatives Reg Costs at US$1bn

By Christopher Whittall
Published February 26, 2014 IFR

The new global regulatory framework for derivatives will cost JP Morgan around US$1bn in revenues per year, shaving 5% off its overall markets revenues by 2016.

The figures published in investor presentations yesterday give one of the clearest indications yet of the impact of central clearing, electronic trading, reporting and initial margin rules, which are set to change the face of the derivatives industry.

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