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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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CFTC Seeking Comment on Overseas Impact in Swap-Collateral Rules

By Silla Brush
Published September 17, 2014 Bloomberg

The U.S. Commodity Futures Trading Commission has released revised collateral rules for swaps traded directly between banks, manufacturers and other firms while seeking comment on how to apply the regulations overseas.

The request for input on how to apply the rules to foreign banks and overseas units of U.S. firms came as CFTC members voted unanimously today to re-propose the collateral measure. The vote comes a day after a federal judge upheld the agency’s guidelines for how cross-border rules should be applied.

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Iosco Outlines Standards for Uncleared Swaps

By Joe Parsons
Published September 17, 2014 FOW

The International Organisation of Securities Commissions (Iosco) has proposed in a report seven methods to standardise uncleared swaps trades between banks.

The methods put forth by the global regulatory body are intended to promote international risk techniques and legal certainty for over-the-counter derivatives not cleared through a central counterparty.

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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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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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OTC Industry to Aid Bank Resolutions

Published September 11, 2014 Markets Media

The rights of holders of OTC derivatives to terminate the contracts during the course of a bank resolution are likely to be trimmed back, according to regulatory and industry officials.

The Financial Stability Board, the oversight group of the world’s central banks, is working to mitigate the risks caused by early termination by lengthening the time required to suspend such contracts.

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Morgan Stanley in Final SEF Agency Service Development Push

By Daniel O'Leary
Published September 11, 2014 Global Capital

Morgan Stanley is in the final development stages of its swap execution facility agency service and should launch the platform in the coming months.

Senior market officials at SEFs in New York told GlobalCapital the firm was making a final marketing push for the product with its clients. The SEF agency service will launch from the firm’s existing Morgan Stanley Passport e-trading platform, said one SEF official.

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Treasury Monitoring Swaps Loopholes at U.S. Banks

By Andrew Ackerman and Vctoria McGrane
Published September 11, 2014 The Wall Street Journal

The Treasury Department is monitoring U.S. banks that are shifting some trading operations overseas to avoid tough U.S. swaps rules, according to a department official.

Banks, including Citigroup Inc., Goldman Sachs Group Inc. and JP Morgan Chase & Co. have revoked their policy of guaranteeing some swaps issued by foreign affiliates, primarily in London, eliminating ties to their U.S. parent.

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Forward-starting Swap Volumes Fail to Surge, Says Isda

By Peter Madigan
Published September 10, 2014 Risk

Derivatives users have not flocked to forward-starting swaps to avoid having to execute trades on swap execution facilities (Sefs), despite claims to the contrary, according to data presented by the International Swaps and Derivatives Association on September 9.

The research, based on forward-stating swap trade data from October 2013 to August 2014, breaks down interest rate contracts into three categories. The first covered forward-starting swaps that start on one of the next two international money market (IMM) dates on which interest rate futures expire. These have been deemed made-available-to-trade (Mat) by the US Commodity Futures Trading Commission (CFTC) and must be transacted on a Sef.

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Fragmentation Worries OTC Users: Survey

Published September 10, 2014 Markets Media

Fragmentation in the OTC markets is being driven by a lack of cohesion by national regulators on execution, reporting, and clearing of swaps transactions, according to a survey by the International Swaps and Derivatives Association.

“We don’t want market fragmentation,” ISDA CEO Scott O’Malia said at a press briefing on Tuesday at the ISDA North America conference in New York. “In the end-user documentation, we have concerns regarding fragmentation, and the cost, and the quality of the liquidity. That’s a concern for end users, and they believe it’s going to undermine their ability to get access and get good pricing.”

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