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April 9, 2012

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Daily coverage for the global derivatives industry

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Rules are needed for unwinding swaps clearinghouses, experts say
Industry experts are calling on regulators to complete the rules on how a swaps clearinghouse will be unwound if it fails. "It's very important that sooner rather than later regulators make sure we get these things written down so they're respected," said John Williams of law firm Allen & Overy. Bloomberg Businessweek (4/6)

Industry News and Trends

"London whale's" position could be exempt from Volcker rule
Bruno Iksil, a JPMorgan Chase trader in London, amassed a large position in credit default swaps that frustrates hedge funds and raises questions. Regulators continue to debate the Volcker rule, prompting questions about whether the trade of "the London whale" would be permitted under the ban on proprietary trading at major banks. It appears the trade could be exempt, but the situation highlights uncertainty surrounding the regulation. The New York Times (tiered subscription model)/DealBook blog (4/6), Financial Times (tiered subscription model) (4/6), Bloomberg (4/9)

Veolia wins over bondholders with changes, CDS indicate
Credit default swaps covering the bonds of Veolia Environnement, the largest water company in the world, are down 38% this year, according to CMA. The drop suggests the Paris company is winning over bondholders with a plan to reduce debt and shake up management. Bloomberg Businessweek (4/8)

Other News

Credit default swaps on Japanese corporate debt climb
Bloomberg (4/8)

Regulatory Roundup

ECB official outlines approved collateral for cleared swaps
Daniela Russo of the European Central Bank said cash and secured loans, but not equities, will be accepted as collateral to cover cleared swaps contracts. Russo said the International Organization of Securities Commissions' Committee on Payment and Settlement Systems is expected to release more information about clearing swaps. Bloomberg (4/6)

Barnier's plan to rotate rating agencies faces opposition
Michel Barnier, the EU's internal-market commissioner, faces significant backlash against his proposal to bolster regulation of credit rating agencies and implement agency rotation. Barnier appears close to abandoning the plan, experts said. "It looks as if the [European] Commission and [the Economic and Financial Affairs Council of the EU Council] is moving away from rotation to something that is more relaxed," said Sharon Bowles, chairwoman of the European Parliament Economic and Monetary Affairs Committee. The Independent (London) (4/8)

Analysis: Officials find global standards difficult to attain
Officials have been calling for global standards since the early 19th century, but the will to develop and enforce such standards, particularly in financial markets, remains challenging, Phil Davis writes. Financial Times (tiered subscription model) (4/8)

Commentary: FDA for financial products wouldn't work
William Cohan argues that the idea of establishing a federal agency to test financial products is silly. Cohan writes that the efficacy of financial products cannot be assessed in the same manner as consumer electronics or drugs. He notes that financial products do not have an on-off switch or an empirical way to determine how they would affect markets except to see them in action. Bloomberg (4/8)

ISDA News and Events

ISDA's 27th Annual General Meeting -- April 30 to May 2 in Chicago

The pre-eminent annual event for the over-the-counter derivatives industry will go to Chicago's legendary Fairmont Millennium Park this year. ISDA's 27th Annual General Meeting will showcase the association's global scope, active participation by member firms and significant progress in creating safe, efficient derivatives markets. View the agenda and find out how to register.

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