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February 8, 2013

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Daily coverage for the global derivatives industry

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Late accord leads European Parliament to approve EMIR
The European Commission crafted a compromise on over-the-counter derivatives rules at the last minute, turning an expected rejection into approval by the European Parliament. The deal means nonfinancial users of swaps will be subject to the law eventually, instead of right away; such users typically utilize swaps for hedging. Official sign-off on the European Market Infrastructure Regulation is set for Feb. 19. The Trade News (U.K.) (2/7), Reuters (2/7), Financial Times (tiered subscription model) (2/7)

China has little incentive to comply with FATCA, experts say
The U.S. aims to sign an intergovernmental agreement with as many nations as possible to implement the Foreign Account Tax Compliance Act. China, however, has little incentive to sign, and even if it does, it will be difficult for Chinese financial institutions to comply with FATCA, experts say. "Under Chinese law, there are a lot of bankruptcy-protection rules, so that under the current FATCA rules, it would be very difficult for Chinese financial institutions to try to comply," said Anthony Tong, a tax consultant at PricewaterhouseCoopers. Risk.net (subscription required) (2/8)

Industry News and Trends

Debate continues about who bears losses when banks fail
The nationalization of SNS Reaal and the asset liquidation of the former Anglo Irish Bank have revived debate about who faces the biggest hit after a bank collapse. Financial Times (tiered subscription model) (2/7)

Analysis: Aluminium swaps may not be widely embraced
European banks are offering swaps designed to protect aluminium users from larger surcharges than they already face, but volume may be affected because a worldwide surplus of aluminium may make extra fees unpalatable, Veronica Brown and Susan Thomas write. Reuters (2/7)

Volcker rule forces banks to change private-equity business
The Volcker rule, set to be finalized this summer, is poised to significantly reduce Goldman Sachs' investment in its private-equity funds. Meanwhile, a spokeswoman for Bank of America says the company has decided to exit the private-equity business. Citigroup is looking at its options, a spokeswoman said. The Wall Street Journal (2/7)

Regulatory Roundup

South Africa makes headway on OTC derivatives regulation
A Financial Stability Board report says authorities in South Africa have been making progress on over-the-counter derivatives rules. However, the FSB says many issues still need to be resolved. For example, South African authorities are concerned about how the proposed reform would affect cross-border trading. Business Day (South Africa) (2/8)

Senate panel sets hearing to check Dodd-Frank progress
Next week, the Senate banking committee will hear from seven regulatory officials on their progress in instituting Dodd-Frank Act rules. Elisse Walter, chairman of the Securities and Exchange Commission; Gary Gensler, chairman of the Commodity Futures Trading Commission; and Richard Cordray, director of the Consumer Financial Protection Bureau, are among those scheduled to testify. Reuters (2/7)

Asian regulators tighten oversight of interest-rate setting
Regulators in Hong Kong, Japan and other Asian financial centers are cracking down on the way key interest rates are determined amid a global investigation into possible manipulation of the London Interbank Offered Rate and other similar rates. The Hong Kong Monetary Authority, for example, is phasing out a few versions of the Hong Kong Interbank Offered Rate. HKMA has also taken away control of rate setting from an industry group. The Wall Street Journal (2/7)

Commentary: White is wrong for SEC chief
Mary Jo White's history as a lawyer for Wall Street firms is likely to make her too soft on the financial industry, despite her having been a federal prosecutor more than a decade ago, Susan Antilla writes. White may be too concerned about how pressuring the banks will affect her eventual return to the private sector, Antilla writes. Bloomberg (2/7)

Editorial: White is a worthy nominee to lead SEC
Mary Jo White is President Barack Obama's nominee to head the Securities and Exchange Commission. Although there are concerns about White, editors of The New York Times write that she should be considered. "Ms. White is a worthy nominee, though clearly, the White House and Ms. White will have to address the conflicts of interest in her background frankly and persuasively," according to this editorial. "Equally important, she must be able to demonstrate in her confirmation hearing that she is not captive to the financial industry's view of the world, which has dominated her recent professional life." The New York Times (tiered subscription model) (2/7)

SmartQuote

After you've done a thing the same way for two years, look it over carefully. After five years, look at it with suspicion. And after ten years, throw it away and start all over."

--Alfred E. Perlman,
American businessman

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