News

CFTC Aims to Close Swaps Loophole for Large U.S. Banks

By Andrew Ackerman
June 9, 2015, The Wall Street Journal

Large U.S. banks could face tighter restrictions on certain swaps booked by overseas branches under steps floated by a top U.S. regulator.

Commodity Futures Trading Commission Chairman Timothy Massad, in a speech, proposed requiring offshore units of large banks to adhere to U.S. rules even in cases where the units’ American parents aren’t explicitly on the hook for the trades.

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Single-Name CDS Solutions Lack Consensus, Says Citi

By Joe Rennison
June 3, 2015, Financial Times

Industry attempts to increase volumes in a deteriorating part of the credit derivatives market lack a common approach, according to Citigroup.

The market for credit derivatives based on specific companies has shrunk substantially in recent years and its demise has coincided with a general decline in the ability of investors to buy and sell corporate bonds.

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Sell-Side Technology Awards 2015: Best Swap Execution Facility (SEF) – Tradeweb

By Anthony Malakian
May 8, 2015, Waters Technology

A little over a year ago it became mandatory to execute certain swaps contracts on electronic platforms known as swap execution facilities (SEFs). There's little doubt that this is one of the greatest changes the capital markets have experienced since the introduction of the Dodd-Frank Act, even if the revolution of electronic trading on SEFs has been slow to take hold.

But that generalization doesn't apply to New York-based Tradeweb, which has carved out a niche for itself in the interest-rate swaps market, which helped it win the inaugural award as the best swap execution facility in this year's Sell-Side Technology Awards, thanks to its TW SEF platform.

When it comes to compression trading, according to Tradeweb's CEO, Lee Olesky, the firm has more than 40 clients that traded $189.5 billion in March 2015 alone, and a total of some $1.02 trillion traded on the platform since its launch in March 2014.

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Comment: The Wall Street Regulators Won

By Linette Lopez
April 24, 2015, Business Insider

Deutsche Bank joins HSBC, Citigroup, UBS, Morgan Stanley, and other big banks that have all made major moves to slim down and run leaner, simpler operations.

In other words, the Wall Street regulators won.

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Citigroup Challenged Over “Opaque’ Lobbying at Fiery Meeting

By Ben McLannahan
April 28, 2015, Financial Times

Investors challenged Citigroup executives at the bank’s annual shareholder meeting on Tuesday, expressing concerns over “opaque” lobbying efforts, which contributed last year to a watering down of post-crisis regulatory reforms.

The big US banks in December campaigned to change new rules on derivatives by adding a rider to a government funding bill. The amendment helped banks including Citi to exploit differences in credit ratings within their subsidiaries to reduce their capital requirements, and the amount of collateral needed to support derivatives trading. Derivatives were blamed by some on Capitol Hill for exacerbating the financial crisis, which led to tens of billions of dollars in taxpayer bailouts.

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Clearing Houses Get Insurance Policy

By Philip Stafford
March 11, 2015, Financial Times

A consortium of 20 top-rated global insurance companies are underwriting a policy for clearing houses that would limit losses for users of derivatives and possibly taxpayers in the event of market turbulence.

The scheme aims to create an extra layer of protection for clearing houses, which have become a critical component of the global derivatives industry since the financial crisis.

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Comment: Rise in Financial Alchemy is Worryingly Familiar

By Tracy Alloway
February 6, 2015, Financial Times

Those searching for evidence of Wall Street’s never-ending wackiness need look no further than the man who is convinced investors are wary of corporate bonds because the debt is just too risky.

As detailed by Bloomberg this week, John “Mac” McQuown wants to create a hybrid security, known as an eBond, that would embed credit default swaps (CDS) into corporate debt. Doing so would automatically impart default insurance to each security, stripping out the so-called credit risk associated with issuers.

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Corbat’s Quest for Boring Clashes With Citigroup Trading Push

By Dakin Campbell
December 31, 2014, Bloomberg

Michael Corbat settled into an armchair at Citigroup Inc.'s Park Avenue headquarters in January and shared his strategy to make the bank boring. The past 11 months have seen him expand in businesses that are far from it.

Corbat, chief executive officer of the New York-based bank, extended his reach into commodities trading as other firms retrenched, kept a proprietary trading desk that takes a looser approach to new rules than some competitors and expanded the company’s derivatives business to make it the nation’s second-largest. At the same time, he has sold or plans to sell consumer units in 19 countries from Japan to Peru.

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Top Democrat Says Regional Banks Key to Wall Street Win on Derivatives

By Amanda Becker and Emily Stephenson
December 16, 2014, Reuters

A top Democrat in the U.S. House of Representatives on Tuesday said unpopular Wall Street banks got a long-sought rollback to Dodd-Frank reforms through Congress last week partly by leveraging the influence of smaller banks that hold greater sway with lawmakers.

"They have been working for a long time, trying different strategies on it," California Representative Maxine Waters said in an interview. "The big banks are in trouble with most legislators... so they put the regional banks in front of them in order to gain more support."

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Libor Banks Ask U.S. Judge to Dismiss 17 Rate-Swap Suits

By Bob Van Voris
November 6, 2014, Bloomberg Businessweek

Banks including Bank of America Corp., Mitsubishi UFJ Financial Group Inc., Barclays Plc and Citigroup Inc., asked a judge to throw out claims they cheated customers on interest-rate swaps and other Libor-based transactions.

The companies asked U.S. District Judge Naomi Reice Buchwald in papers filed in Manhattan federal court yesterday and today to dismiss claims in 17 suits growing out of “over-the-counter” transactions, or deals in which investors engaged in Libor-based deals directly with one or more of the banks.

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Derivatives House and Credit Derivatives House: Citigroup

By Christopher Whittall, Helen Bartholomew
Published December 16, 2013 International Financing Review

The seemingly unending overhaul of banks’ derivatives businesses in response to a changing regulatory regime left the door wide open for those that were first-movers in post-crisis recovery. For defying its critics to finally surge into the top tier across regions and asset classes with a model built to embrace the new regime, Citigroup is IFR’s Derivatives House and Credit Derivatives  House of the Year.

Regulatory intervention took a heavy toll on derivatives businesses in 2013 as the Dodd-Frank Act took effect, pushing over-the-counter swaps into central clearing and towards electronic execution, while tighter capital and leverage rules further depressed margins.

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Banks to Cash In as U.S. Derivatives Reforms Go Live

By Douwe Miedema
Published March 7, 2013 Reuters

Banks have been complaining bitterly about new laws to sort out their industry, even though they were blamed for playing a part in the credit meltdown. But this time round, new U.S. rules look set to help them.

Starting on Monday, hedge funds and other large investors must guide their trading in derivatives through traffic control centers known as clearinghouses.

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Citigroup Says Dodd-Frank Drives Off Overseas Clients

By Michael J. Moore
Published March 1, 2013 Bloomberg

Citigroup Inc. (C) said it could lose overseas customers and Goldman Sachs Group Inc. (GS) may have to limit transfers of capital among its units because of new regulations designed to make the financial system safer.

New derivatives rules set by the Dodd-Frank Act may force foreign clients at overseas branches to comply with U.S. standards, a prospect some don’t find appealing, New York-based Citigroup said today in its annual securities filing.

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Citigroup’s Pandit Shows Love for Dodd-Frank

By Ben Protess
Published March 8 2012 NYT/Dealbook

Is Vikram S. Pandit the anti-Jamie Dimon? Speaking to a packed ballroom at the Waldorf-Astoria hotel in Manhattan on Wednesday, Mr. Pandit, the chief executive of Citigroup, championed an idea that most Wall Street titans would shun: regulation is good.

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EMCF to Push Into OTC Clearing

By Philip Stafford
Published August 26 2011 FT

European Multilateral Clearing Facility, the Dutch clearing house, is to expand into the clearing of products traded off-exchange amid increasing competition in its core business of clearing cash equities.

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Ex-Fed Official, Now Citigroup Director, Attacks Dodd-Frank.

By Michael S. Derby
Published: April 6 2011 WSJ

A member of Citigroup Inc.’s board who was once a Federal Reserve official accused U.S. lawmakers on Wednesday of using the financial crisis to mount an attack on the banking system’s largest players.

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Schapiro's SEC Seen Ineffectual As Republicans Race To Scuttle Dodd-Frank

By John Curran and Jesse Hamilton
Published: March 31 2011 Bloomberg

On a stormy night in October 2009, Mary Schapiro, the newly appointed head of the U.S. Securities and Exchange Commission, returned to her alma mater, Franklin & Marshall College in Lancaster, Pennsylvania, to be inducted into the hall of fame for student athletes. Receiving her award, she grasped the podium, confessed she was near tears and spoke of how she had never even seen a lacrosse game before attending college.

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4 Wall Street Banks Still Dominate Derivatives Trade

By Ben Prentess
Published: March 11 2011 NYT DealBook

A few select titans of Wall Street continue to dominate the banking industry’s role in derivatives trading, according to a report issued by the Office of the Comptroller of the Currency.

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New York Fed Reorganizes Bank Supervision For Dodd-Frank Mandate

By Caroline Salas and Bradley Keoun
Published: March 21 2011 Bloomberg

The Federal Reserve Bank of New York, which oversees some of the largest U.S. financial firms, has reorganized its bank supervision group to strengthen its oversight capabilities.

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US Banks Plead To Limit Range Of Swap Rules

By Gregory Meyer and Aline van Duyn
Published: March 16 2011 FT

US banks are urging regulators writing new rules for the derivatives markets under 2010's Dodd-Frank Act to keep their hands off the banks' swaps businesses in London and other overseas financial centres.

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