Banks won't have to hold more capital against rate risks | OTC energy-derivatives e-trading attracts bank interest | Lack of near-term monetary easing raises Chinese swaps cost
April 22, 2016
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Banks won't have to hold more capital against rate risks
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.
Bank for International Settlements (4/21),  Reuters (4/21),  Bloomberg (4/21),  Financial Times (tiered subscription model) (4/21) 
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OTC energy-derivatives e-trading attracts bank interest
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. (subscription required) (4/21) 
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Industry News and Trends
Lack of near-term monetary easing raises Chinese swaps cost
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.
Bloomberg (4/21) 
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CME to take stake in Indian commodity bourse
CME Group plans to take a 15% stake in India's Multi Commodity Exchange, after the government decided to let foreign holdings increase from 5% to 15%.
Business Standard (India) (4/21) 
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NSE to offer 3-month discount on Nifty IT transaction charges
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.
Business Standard (India)/Press Trust of India (4/21) 
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Investors, regulators use tech to identify fraud
Banks and regulators are using computer models to mine the Securities and Exchange Commission's financial database for irregularities that signal market abuse.
Financial Times (tiered subscription model) (4/21) 
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Regulatory Roundup
MiFID II will expand use of ETFs in Europe, panel says
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 Trade News (U.K.) (tiered subscription model) (4/21) 
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Commentary: Risk-weighted leverage ratio will prove ineffective
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. (subscription required) (4/22) 
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ISDA News and Events
Fundamentals of Derivative Operations and Trade Processing
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.

Register: Fundamentals of Derivative Operations and Trade Processing on May 11 in New York
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