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Swap Market Fears CFTC Deadline

By Mike Kentz
October 27, 2014 IFR

An upcoming US regulatory deadline is distressing swaps users as execution platforms say they will not be able to offer transactions pairing interest rate swaps with certain other derivatives following the cut-off.

Following a roll-off of regulatory relief on November 15, traders hoping to package US Treasury futures, corporate bonds, credit options, mortgage-backed securities, interest rate options, and equity total return swaps with a comparable or offsetting vanilla interest rate swap will likely find themselves with no place to trade.

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Pact Raises Caution Flag on Swaps

By Rick Baert
October 27, 2014 Pension&Investments

Asset owners that use swaps could ultimately face losses and added risk as a result of an agreement among 18 major global banks.

The Oct. 11 agreement to a protocol introduced by the International Swaps and Derivatives Association allows the banks to delay the wind-down of swaps when one of the parties is in financial stress. It will apply to new and existing cross-border agreements among the 18 banks, which together have more than 90% of outstanding notional derivatives worldwide

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Investors Have ‘No Incentive’ to Use Swap Futures, Says Wallin

By Kris Devasabai
Published October 21, 2014 Risk

"If we were short of collateral, we would consider a futurised interest rate swap - but we're not," says Alliance Bernstein's Wallin

So-called real money investors have "no incentive" to ditch over-the-counter derivatives in favour of swap futures unless they face serious collateral constraints, according to James Wallin, a senior vice-president at Alliance Bernstein.

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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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