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JSCC to Gain DCO Status from US Regulator Before Year-end

By Viren Vaghela
October 17, 2014 Risk

Japanese clearing house will soon be able to clear for US clients, attendees hear at a recent event where the CFTC's outgoing policy chief spoke

The Japan Securities Clearing Corporation (JSCC) is poised to become the second Asia clearing house to be awarded derivatives clearing organisation (DCO) status, with the outgoing director of the clearing and risk division at the US swaps regulator, Ananda Radhakrishnan, telling the audience at a recent event in Tokyo that he could see no issues with the entity being granted a licence.

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British Banks Award Only 38 Percent from Mis-sold Swaps Refund Pot

By Matt Scuffham
Published October 8, 2014 Reuters

Britain's biggest banks have paid out less than 40 percent of the 4 billion pounds ($6.4 billion) set aside to cover the mis-selling of complex interest rate hedging products, according to data from the financial regulator.

The Financial Conduct Authority (FCA) last year ordered banks to review 29,500 cases for possible mis-selling after finding "serious failings" in how interest rate swaps were sold.

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Market Agrees Protocol to Slow Close-out of Positions in Failing Banks

By Hazel Sheffield
October 13, 2014 GlobalCapital

A slew of major global banks have agreed to sign a protocol by the International Swaps and Derivatives Association that imposes a stay on cross-default and major termination rights within standard ISDA derivatives contracts if a counterparty defaults.

Goldman Sachs, JPMorgan, Deutsche Bank and BNP Paribas are among the 18 banks to sign the protocol, which updates the existing ISDA Master Agreement to incorporate contractual stays on cross-default rights that apply in the US bankruptcy code and other close-out regimes. This means that adhering counterparties can opt into certain overseas resolution regimes through the change in their contract.

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SEFs Chafe at Footnote 195

Published October 1, 2014 Markets Media

Some market participants are concerned that professionals in the embryonic swaps execution industry may get buried in paperwork related to the agreements that swap counterparties must adhere to.

A footnote (Footnote 195) of the Commodity Futures Trading Commission’s swap execution facility rules requires that SEFs become a central source of paper ISDA master agreements for non-cleared products executed on their platforms.

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Russia Limits Swap Reporting Scope

By Catherine Contiguglia
Published September 30, 2014 Risk

Dealers have welcomed the Russian central bank's decision to narrow the type of parties required to report, which follows its exemption of foreign counterparties in June

Dealers have welcomed a postponement and rethink of Russian derivatives reporting requirements, saying it could make it simpler to apply close-out netting in the country. Uniquely, Russian authorities made compliance with the reporting rules a prerequisite for netting to be allowed.

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ISDA Seeks Green Light on Margin Model

By Philip Stafford
Published September 26, 2014 Financial Times

Derivatives markets participants are expecting to receive the green light from regulators to develop an industry initiative designed to head off potential pricing confusion as new rules come into force.

The International Swaps and Derivatives Association, an industry trade body, said this week it had finalised a standard model to calculate the margin needed to back trades that would not be processed by clearing houses.

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Trillions Saved as Swaps Margining Standards Agreed

By Christopher Whittall
Published September 25, 2014 IFR

The derivatives industry has taken a major step towards harmonising margining standards across the market, in a move that will slash the amount of high-grade collateral needed to be held against uncleared swaps under beefed up regulatory standards by trillions of dollars.

The International Swaps and Derivatives Association announced at its European conference this week that industry participants had reached an agreement on a basic methodology for a standardised initial margin model (SIMM), while warning that the regulatory timetable for introducing IM requirements next year is overly aggressive.

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CDS-OVERHAUL/ISDA-Volatility Likely for Delayed CDS Rebirth

By Christopher Whittall
Published September 22, 2014 Reuters/IFR

The rebirth of the US$21trn credit default swap market will be delayed by two weeks, Markit and ISDA confirmed last week, in a sign that the industry is struggling to get ready for the most substantial overhaul to CDS in over five years.

Markit said the first day of trading on the new series of its CDX and iTraxx CDS indices under the new documentation - which aims to restore faith in the instruments - would take place on October 6 rather than September 22 as originally slated.

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ASX Plans Stake in Electronic Market Operator

By Simon Osborne
Published September 18, 2014 The Trade

The Australian Securities Exchange (ASX) has announced that it has put forward an offer to buy a stake in Yieldbroker, a firm that operates electronic markets in trading Australian and New Zealand debt securities and interest rate derivatives.

Yieldbroker’s markets include Australian government and semi-government bonds, treasury notes, corporate bonds, floating rate notes, New Zealand government bonds, interest rate swaps, overnight index swaps, forward rate agreements and bank bills.

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Regulators Weigh Delay for Separating Banks’ Swaps Units

By Jesse Hamilton and Silla Brush
Published September 19, 2014 Bloomberg

U.S. banks may get another year to shift some swaps trading from their government-insured units as regulators respond to demands to give them more time, according to two people familiar with the talks.

A delay until July 2016 in applying the Dodd-Frank Act separation requirement is being weighed in discussions between bank lobbyists and officials from the Federal Reserve and Office of the Comptroller of the Currency, according to the people, who requested anonymity to talk about the matter.

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