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Swaps Traders Resist Moves to Increase Use of Platforms

By Michael Mackenzie
Published September 16, 2014 Financial Times

Reforming over-the-counter derivatives remains a work in progress, as investors, banks and trading venues in the US come to grips with a new era of transacting swaps.

From a regulatory perspective, the clearing and reporting of US OTC derivatives largely meets the G20 objectives established in the wake of the financial crisis. The US remains well ahead of Europe in terms of writing swap rules.

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Markit Mulls Delay to Derivative Index Change to Match New Rules

By Abigail Moses
Published September 16, 2014 Bloomberg

Trading of new credit-default swap indexes may be delayed to coincide with changes to rules governing the insurance contracts, according to Markit Group Ltd.

New benchmarks may be postponed to Oct. 6 from Sept. 22, the index administrator said in a statement on its website. Indexes are updated every six months when companies are added or dropped depending on their ratings, cost of protection and ease of trading.

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Deutsches Risk Survey 2014: Regulatory Costs Drive Market Dynamics

By David Wigan
Published September 12, 2014 Risk

While mandatory clearing is not set to come into force for European financial counterparties until mid-2016 and the uncleared margin rules are still at consultation stage, some German derivatives users are already considering how to alter their risk management strategies in light of the incoming rules, as Deutsches Risk’s 2014 survey has found.

More than one-fifth of respondents to the Deutsches Risk 2014 survey, which include banks, asset managers, hedge funds, insurance companies and non-financial corporates, say that the incoming rules will change the way they operate, while nearly two thirds state that clearing will increase their cost of doing derivatives trades by up to 5%.

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EU’s Barnier Seeking U.S. Swaps Deal Before December

By Jim Brunsden, Rebecca Christie and Ben Moshinsky
Published September 12, 2014 Bloomberg

The European Union’s top financial-services official said he’s seeking a deal with U.S. regulators on rules for swaps clearinghouses before a Dec. 15 deadline for EU banks to face tougher capital rules.

The European Commission is working “very intensely” with the U.S. Commodity Futures Trading Commission to find an agreement “in the coming weeks,” Michel Barnier said in an interview in Milan yesterday.

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EU's OTC Derivatives Proposals Threaten Asian Regulatory Clash

By Michelle Price
Published September 11, 2014 Reuters

Tensions are growing between regional regulators over a proposal on collateral requirements that would make it more costly for Asian companies to trade with European banks in off-exchange derivatives -- the often complex financial products used to hedge against price swings in underlying assets ranging from interest rates to commodities.

Banks and investors have already criticised Europe for diverging from agreed international standards and have warned that the European proposal could increase the cost of trading over-the-counter derivatives, such as interest rate swaps, in Asia by hundreds of billions of dollars, threatening systemic stability and potentially forcing EU banks out of the Asian OTC derivatives markets.

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Swap Proposals Seen as Win for Companies, But Concerns Remain

By Vipal Monga
Published September 12, 2014 The Wall Street Journal

A new version of a rule regulating companies’ use of swap contracts looks like good news, but beware the fine print.

Banking regulators last week unveiled a new version of a rule, required under the Dodd-Frank Act, which requires swaps that aren’t routed through central clearinghouses to be backed by cash or other collateral.

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ODRG Calls for Deadline to Remove Derivative Reporting Barriers

Published September 11, 2014 Global Markets

In its latest report to the Financial Stability Board and the G20 on derivatives reform, the OTC Derivatives Regulators Group (ODRG), says little has been done in many countries to remove obstacles that prevent reporting of information to improve transparency in the derivatives markets, mitigate systemic risk, and protect against market abuse.

“The Financial Stability Board should make a clear and unambiguous statement that jurisdictions need to remove all barriers that prevent reporting of counterparty-identifying information,” says the report.

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Regulators Weighing New Rules for Private Trading Venues

By Scott Patterson
Published September 10, 2014 The Wall Street Journal

Market regulators are considering imposing additional steps to require greater transparency and disclosures by private trading platforms and heightened oversight of computerized trading strategies.

The Financial Industry Regulatory Authority will weigh a new set of rules at its Sept. 19 meeting, including a proposal that would require trading platforms, including so-called dark pools, to provide additional details about buy and sell orders. Dark pools are alternative trading venues that currently don't post buy and sell orders, only reporting trades after they take place.

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Global Deal in Sight to Prevent Re-run of Post-Lehman Chaos

By Huw Jones
Published September 9, 2014 Reuters

The $700 trillion (434.16 trillion pounds) financial derivatives industry will make a fundamental change to its contracts this year to help regulators wind down failed banks without destabilising markets, the world's main derivatives body said on Tuesday.

Global financial watchdogs want to be able to put a temporary halt on market participants trying to "close out" derivatives contracts if a bank runs into trouble.

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CLO Surge Prompts Regulatory Concerns

By Tracy Alloway
Published September 8, 2014 Financial Times

Sales of bonds backed by riskier US corporate loans have surged to their highest level in seven years, helping to fuel a leveraged lending boom that is concerning regulators.

So-called collateralised loan obligations, or CLOs, have staged a striking recovery in the years since 2008, when securitised bundles of subprime mortgages were blamed for inflating the housing bubble and exacerbating the ensuing financial crisis.

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