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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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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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