News

Current Articles | RSS Feed RSS Feed

Global Regulators Propose Tighter Credit Risk Rules for Banks

By Huw Jones
July 1 2015, Reuters

Global banking regulators have proposed a more comprehensive set of rules for banks to set aside capital to cover losses from their exposures to other lenders and limit fallout in a crisis.

During the financial crisis some banks suffered big losses on their derivatives contracts due to weaker creditworthiness at banks on the other side of their trades.

full article describe the image (free)

SocialTwist Tell-a-Friend Related Posts with Thumbnails

Japan Banks Still Not Pricing CVA Into Derivatives Trades

By Viren Vaghela
July 2, 2015, Risk

A loans-focused business model means credit risk mitigation a low priority for the country's banks.

Despite Japan regulators introducing Basel III in 2013, a year ahead of Europe and with it the requirement to calculate a regulatory credit valuation adjustment charge to mitigate counterparty credit exposure, domestic banks in the north Asian country are not yet pricing CVA into derivatives trades.

full article describe the image (subscription)

SocialTwist Tell-a-Friend Related Posts with Thumbnails

Comment: Europe Rules Further Threaten Market Stability

By Johannah Ladd
July 2, 2015, Financial Times

The Bank of England warned in March that financial stability could be endangered by a lack of liquidity in some markets. Meanwhile, one vital aspect to creating that daily market liquidity is facing a serious regulatory threat.

European legislation aimed at preventing a re-run of the 2008 meltdown has changed the climate of financial markets so fundamentally, that the business of market making is becoming unsustainable.

full article describe the image (subscription)

SocialTwist Tell-a-Friend Related Posts with Thumbnails

Q&A: SRB's Elke König on Resolution Regimes

By Cecile Sourbes
July 1, 2015, Risk

Derivatives should not be regarded as sacrosanct in resolution planning, and structured notes may end up in or out of banks’ loss-absorbing capacity, says Elke König, chair of the eurozone’s Single Resolution Board

One advantage of playing catch-up is that laggards can look at what others are doing and improve on it. The eurozone is hoping to do just that with its bank resolution authority – the Single Resolution Board (SRB), which held its first meeting on March 25. Its US counterpart, the Federal Deposit Insurance Corporation (FDIC), was established in 1933, in the depths of the Great Depression, giving it an 82-year head start, and US banks have been submitting ‘living wills' to the FDIC since 2012.

full article describe the image (subscription)

SocialTwist Tell-a-Friend Related Posts with Thumbnails

Comment: More Haste, Less Speed

By Jim Schwartz and Peter Green
July 1, 2015, FOW

At the G20 Summit in Pittsburgh in 2009, representatives of the G20 nations committed to fundamental reforms of the derivatives market, agreeing that standardised derivatives contracts should, by the end of 2012, be traded on exchanges or electronic trading platforms and be cleared through central counterparties. Now, however, almost six years after the summit, and fast approaching the three-year anniversary of the year-end 2012 deadline, we are still some way from the full-scale implementation of this commitment and even further away from it being applied in a consistent and coordinated manner across different jurisdictions.

It needed no clairvoyance to foresee the risks of derivatives market participants being subjected to overlapping and inconsistent regulation. Almost from the time when regulators started to formulate proposals to implement the G20 reforms, commenters highlighted the potential for market fragmentation and substantially decreased liquidity. Unfortunately, although perhaps inevitably, given the complexity of the reforms, regulators have principally focused more on the development of their own rules and less on how those rules will work in a global context alongside the similar, but different rules, of other jurisdictions. Almost a half-dozen years after the meeting in Pittsburgh, regulators have yet to clarify among themselves which jurisdiction’s rules will apply to a swap transaction between counterparties in different jurisdictions. 

full article describe the image (subscription)

SocialTwist Tell-a-Friend Related Posts with Thumbnails

Comment: Ensuring Swaps Compliance, One Loophole at a Time

By Anthony J. Perrotta, Jr. 
July 1, 2015, TABB Forum

Barney Frank and others apparently had the easy job: crafting the legislation that would become the Dodd-Frank Act and the law of the land. Regulators now have the unenviable task of making it work. Sometimes that means pushing aside personal views for the common good.

The CFTC unanimously voted today to further strengthen the stability of the OTC swaps markets by proposing a rule closing a loophole that allows U.S. banks, subject to the Dodd-Frank Act, to potentially circumvent regulatory requirements by pushing swaps business into non-guaranteed foreign entities. The unanimous vote was a sign of solidarity, but ultimately belies the inherent complexity of a process that has drawn battle lines on both “political” and “common-sense business” fronts.

full article describe the image (subscription)

SocialTwist Tell-a-Friend Related Posts with Thumbnails

Pick-and-Mix Rules Divide Exchanges

By James Rundle
June 29, 2015, Financial News

Clearing houses have emerged as an important component of the post-crash financial system. But a proposal to fundamentally change the way they interconnect has split the industry.

At their heart, clearing houses stand as middle agents between buyers and sellers of bonds, equities, derivatives or any other financial assets and step in to guarantee trades if one party cannot complete. Regulators globally have been pushing more markets to use clearing houses so the risks can be tracked and hopefully contained – unlike deals done privately, over the counter between banks.

full article describe the image (subscription)

SocialTwist Tell-a-Friend Related Posts with Thumbnails

CFTC Casts Margin Net to Catch U.S. Banks' Affiliates

By Peter Madigan
June 30, 2015, Risk

Agency redefines ‘guarantee’, but lawyers caution it may not stick.

Foreign affiliates of US banks that dropped parental guarantees to avoid trading requirements of the Dodd-Frank Act would still be caught by new cross-border margin rules proposed on June 29 – one of a series of potentially divisive provisions in the draft rules. Lawyers are already challenging the ability of US regulators to regulate so-called non-guaranteed affiliates.

full article describe the image (subscription)

SocialTwist Tell-a-Friend Related Posts with Thumbnails

U.S. Swaps Regulator CFTC To Close Cross-Border Loophole

By Douwe Miedema
June 29, 2015, Reuters

The U.S. derivatives market regulator on Monday proposed a rule for safety margins for uncleared swaps to close a loophole Wall Street banks have used to duck new trading provisions by shifting business abroad.

U.S. firms would have to comply with the regulation, which the Commodity Futures Trading Commission adopted unanimously, in most cases, even when doing business abroad.

full article describe the image (free)

SocialTwist Tell-a-Friend Related Posts with Thumbnails

N.Y. Bank Watchdog Sinks Teeth Into Isdafix Rigging

By Gina Chon
June 28, 2015, Financial Times

New York’s banking regulator is probing an emerging benchmark trading scandal relating to the suspected manipulation of US interest rate swaps, according to people familiar with the matter.

The Department of Financial Services investigation into the so-called Isdafix benchmark is in its early stages and has not yet honed in on particular banks, the people said.

full article describe the image (subscription)

SocialTwist Tell-a-Friend Related Posts with Thumbnails
All Posts