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- CFTC sets clearing rule for swaps dealers
The Commodity Futures Trading Commission unanimously approved a rule to require Wall Street's largest swaps dealers to guarantee certain swaps at clearinghouses beginning in March. The rule outlines which interest-rate and credit default swaps must be processed through a clearinghouse. "Central clearing lowers the risk of the highly interconnected financial system," CFTC Chairman Gary Gensler said. "It also democratizes the market by eliminating the need for market participants to individually determine counterparty credit risk, as now clearinghouses stand between buyers and sellers." Bloomberg
(11/29), FuturesMag.com
(11/28), International Financing Review (free content)/Reuters
(11/29)     
- Concerns emerge about fragmentation of derivatives trade data
The Commodity Futures Trading Commission has approved CME Group's application to operate a swaps-data repository. CME joins IntercontinentalExchange and Depository Trust and Clearing in offering such services. However, the situation is prompting concerns about fragmentation of over-the-counter derivatives trade data, according to this article. The Trade News (U.K.)
(11/27)
| Industry News and Trends | | |
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- ISDA questions requirements for uncleared swaps
ISDA has expressed concerns about margin requirements for uncleared over-the-counter swaps. The group says the rules could drain the global financial system of more than $10 trillion in liquidity. "Corporates, sovereigns, supranational organizations and investment firms use [uncleared swaps] in their financing and funding activities, and they are needed for the proper functioning of the housing markets," ISDA CEO Robert Pickel said. "ISDA believes that current margin proposals for noncleared swaps could have a harmful impact on those vital markets and on systemic resiliency." Read the ISDA initial-margin analysis and the accompanying news release. International Financing Review (free content)
(11/29), FOIntelligence.com (subscription required)
(11/28), IndexUniverse.eu
(11/27)
- Exchange group seeks consistent, global ETD standards
Margin and capital requirements for exchange-traded derivatives should be consistent, and global policymakers should agree on common standards, the World Federation of Exchanges said in a letter to the Financial Stability Board. Among other recommendations, the federation wants elimination of a five-day margin period of risk for ETDs. The Trade News (U.K.)
(11/28)
- Argentina gets more time to battle $1.3B bond payment
A U.S. appeals court ruled that Argentina doesn't have to pay $1.3 billion to foreign creditors holding defaulted bonds while it fights a lower-court decision. The earlier ruling ordered Argentina to make the payment next month. The appeals court will take up the case in February. BBC
(11/28)
- LCH.Clearnet gets 6 more months to meet one-minute rule
The Commodity Futures Trading Commission has given LCH.Clearnet Group until March 31 -- a six-month extension -- to comply with a rule that requires clearinghouses to accept trades in less than a minute. "LCH has represented that it will use the extension period to install, and to perform full regression and performance testing of" its system "to accept or reject trades within 60 seconds after submission," the CFTC said. Bloomberg Businessweek
(11/28)
| Regulatory Roundup | | |
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- France warns against evading levy by using derivatives
The French government warned market participants that they could face regulatory action if they use derivatives to evade a tax on equity trades. "We will be very careful on the risk of bypassing and tax evasion through synthetic instruments and take appropriate measures where needed," said Laurent Martel, tax adviser to Finance Minister Pierre Moscovici. Risk.net (subscription required)
(11/29)
- German and U.K. officials delve into Libor issues
A German banking regulator told lawmakers that banks more than likely manipulated the London Interbank Offered Rate. At a hearing, parliamentarians also questioned Deutsche Bank officials about rate rigging. Meanwhile, U.K. officials are seeking feedback on a plan to restructure Libor. Among changes proposed are legal authority applied to the way the rate is set and criminal penalties for manipulation. Separately, Barclays dismissed five employees and disciplined eight others after an internal investigation of Libor rigging. Bloomberg
(11/28), Reuters
(11/28), Bloomberg Businessweek
(11/28), The Wall Street Journal
(11/28)
- Volcker rule finalization is unlikely before next year
Regulators are not expected to meet a Dec. 31 deadline for issuing the final draft of the Volcker rule. Previous drafts have been several hundred pages long, and the rule requires approval by five agencies, including the Federal Reserve and the Federal Deposit Insurance Corp. CNBC
(11/28)
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