The Basel Committee on Banking Supervision has abandoned a rule requiring banks to hold additional capital as a cushion against a rapid increase in interest rates. Instead, the global regulatory panel will encourage national supervisors to monitor lenders' resilience to interest-rate risks. The change to the proposed Basel III rules is in response to industry opposition.
Large banks, including Goldman Sachs Group, JPMorgan Chase, Societe Generale and BNP Paribas, are moving quickly to offer over-the-counter energy derivatives through single-dealer platforms. "As the electronic tide rises, it hits more and more markets, and, in the commodities space, energy was obviously next," Goldman Sachs' Konstantin Shakhnovich said.
Market consensus indicates the People's Bank of China will keep its benchmark interest rate on hold until the fourth quarter, increasing the cost of one-year swaps as much as 5 basis points. "This, along with concerns over the adoption of value-added tax on bond trading, are driving up interest-rate swap costs," said Wu Chunan of China Zheshang Bank.
India's National Stock Exchange says it will give a transaction-charge discount of 25% to 35% for Nifty IT derivatives contracts to stimulate liquidity in the index and to "encourage active participation in derivatives contracts of Nifty IT." The incentive runs from May 1 to July 31.
Europe's revised Markets in Financial Instruments Directive will provide the transparency needed to buoy the use of exchange-traded funds for securities lending and as collateral in Europe, panelists at the SWIFT London Business Forum said. ETFs are used as lending instruments less than 5% of the time in Europe, compared to 25% to 30% in the US.
The Basel Committee on Banking Supervision's proposal to revise the leverage ratio to be based on risk modeling will weaken its ability to reliably reflect the costs of assets and investment risk versus return, writes Thomas Hoenig, vice chairman of the Federal Deposit Insurance Corp.
This conference will provide attendees with an overview of the front-to-back processing of derivatives transactions, focusing on each step in the life cycle of a transaction, from trade execution through to clearing and life cycle management. Attendees will be introduced to new market infrastructure and processes, such as trade execution on a recognized trading platform (SEFs, MTFs) and the processing of a trade into clearing. Also to be covered are reporting obligations, portfolio reconciliation and compression, collateral management and confirmations under new regulations.