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December 28, 2012

Daily coverage for the global derivatives industry

Top Stories

Central-counterparty concentration gets more attention, Fed says
Managing credit exposure to central counterparties is getting more attention from Wall Street dealers than in the past, according to a Federal Reserve survey. The resources devoted to managing concentrated credit exposure were increased by two-thirds of the dealers over the past three months, the survey found. Bloomberg Businessweek (12/27)

Industry News and Trends

Central banks increase U.S. Treasury holdings worldwide
According to the U.S. central bank, its holdings of U.S. securities maintained for foreign central banks rose by $4.502 billion in the latest week. This is despite foreign institutions' Fannie Mae and Freddie Mac positions shrinking by more than $4 billion. CNBC/Reuters (12/27)

Greece's 4 biggest banks need $36.3B of additional capital
The Bank of Greece said the nation's four biggest banks will need the biggest sovereign restructuring in history, valued at $36.3 billion. The 50 billion euros set aside for Greek banks in the nation's financial rescue is sufficient to "cover the recapitalization and restructuring costs of the Greek banking sector,” the central bank said in a report. Bloomberg (12/27)

Bond markets closely watch legal battle over Argentina's bonds
Argentina's court dispute with bond buyers over the settlement of its 2001 default is being closely followed by the bond markets. More than $1 billion is at stake in the disagreement. The matter is now before a U.S. federal appeals court. The Wall Street Journal (12/27)

Currencies get attention as inflationary policies win backers
Japan is only the most recent country whose politicians and central bankers are embracing inflation to help stimulate economic growth. A race to the bottom for national currencies may be on the horizon but that's a race not everybody can win. The Wall Street Journal (12/27)

Commentary: Game theory didn't warn NYSE about takeover by ICE
The New York Stock Exchange has used game theory to make sure it was in command of its own future, but it never anticipated that it would be taken over by IntercontinentalExchange, former NYSE finance chief Amy Butte writes. "In an odd twist, the combination of the NYSE and ICE may force the CME and Nasdaq OMX Group Inc. together in order to maintain balance in the U.S. markets," Butte writes. Bloomberg (12/27)

Regulatory Roundup

Court fight against CFTC registration of mutual funds to go on
The mutual fund industry is appealing a federal court ruling that upheld the Commodity Futures Trading Commission's authority to require some funds to register. The Investment Company Institute and the U.S. Chamber of Commerce filed the appeal. The Wall Street Journal (12/27), Bloomberg Businessweek (12/27)

Banks' opposition to regulation was undermined by "London whale"
Some banking insiders and industry experts attribute the sector's lack of success in fighting provisions of the Dodd-Frank Act to the "London whale." They say the trader's $6 billion trading loss for JPMorgan Chase focused regulators on closing loopholes and stopped efforts to amend the law. The Wall Street Journal (12/27)

SmartQuote

No one has the right to be sorry for himself for a misfortune that strikes everyone."

--Marcus Tullius Cicero,
Roman philosopher and statesman

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