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November 7, 2012
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Daily coverage for the global derivatives industry

  Top Stories 
  • Banks criticize SEC's capital rules
    Banks say the Securities and Exchange Commission's capital rules are too strict, and some won't offer client clearing for credit derivatives in the U.S. The chief concern, they say, is that under SEC rules, if a client were to miss a single margin payment, the entire clearing unit of the bank would be considered in default. A regulatory source said the banks were misreading the rules. (subscription required) (11/6) LinkedInFacebookTwitterEmail this Story
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  Industry News and Trends 
  • Banks replace credit-derivatives traders with machines
    Credit-derivatives traders are finding themselves out of work as banks are replacing them with machines that use algorithms. The banks win in two ways: The machines reduce costs significantly, and make compliance with new regulations easier, Mary Childs writes. Bloomberg (11/6) LinkedInFacebookTwitterEmail this Story
  • Critics scrutinize ICE's plan to clear sovereign CDS
    The Securities and Exchange Commission appears ready to let IntercontinentalExchange clear credit derivatives tied to European government debt. Critics, however, say the exchange should be more forthcoming about how it would deal with "wrong-way risk," in which a sovereign bond's value falls at the same time as the creditworthiness of a bank that sold credit default swaps on the debt. The Wall Street Journal/Dow Jones Newswires (11/6) LinkedInFacebookTwitterEmail this Story
  • Asset manager touts corporations over banks for liquidity
    Vanaja Indra, senior solutions specialist at asset manager Insight Investment, said at the OTC Derivatives Clearing Summit Europe that corporations, flush with cash, could replace banks as the prime supplier of liquidity for pension funds and other derivatives users that don't have collateral needed for clearing. "I don't think, personally, we can rely on banks to provide the collateral-transformation service that's needed -- or that would be stable in a stressed environment," she said. (subscription required) (11/6) LinkedInFacebookTwitterEmail this Story
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  Regulatory Roundup 
  • Fight for position limits has obstacles for CFTC
    The Commodity Futures Trading Commission is expected to appeal a September court ruling that struck down its position-limit rule. "The obvious option is to appeal, and [Chairman] Gary Gensler is reportedly contemplating a challenge to the judge's ruling," said Holland West, a partner at Dechert. "The CFTC will have additional options, such as challenging the ruling on remand or going through the regulatory process of creating a record to determine that specific position limits are necessary." However, the CFTC faces significant challenges, experts say. (subscription required) (11/7) LinkedInFacebookTwitterEmail this Story
  • EU's OTC clearing mandates will take time, U.K. official says
    A Bank of England official says it is unlikely that the first clearing mandates for over-the-counter derivatives will be in effect in Europe before August, given necessary regulatory and legislative steps. "At that point, it is possible there will be [central counterparties] that have been authorized and that [the European Securities and Markets Authority] will pretty quickly, or around the same time, confirm that the central-clearing mandate applies for some or all of the products those CCPs clear," said Edwin Schooling Latter, head of payments and infrastructure at the U.K. central bank. (subscription required) (11/6) LinkedInFacebookTwitterEmail this Story
  • Committee official warns Basel III isn't enough
    The Basel Committee on Banking Supervision plans to overhaul capital rules for assets on banks' trading books and review capital rules for securitized debt, aiming to de-emphasize banks' reliance on assessments from credit rating agencies. However, Secretary General Wayne Byres warned that Basel III rules are not enough to ensure security of the financial system. "Basel III is necessary, and banks are reasonably well positioned to meet the new capital requirements -- but it is not sufficient," Byres said. Bloomberg (11/6), City A.M. (London) (11/7) LinkedInFacebookTwitterEmail this Story
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[T]he night pleases us because it suppresses idle details, just as our memory does."
--Jorge Luis Borges,
Argentine writer

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