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February 6, 2013

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Daily coverage for the global derivatives industry

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Concerns increase about collateral requirements
Regulatory requirements for collateral backing over-the-counter derivatives transactions might have unintended consequences and an adverse effect on the real economy, industry experts say. Financial Times (tiered subscription model) (2/5)

U.S. banks push for increased clearinghouse transparency
A group of U.S. banks is urging clearinghouses to divulge how they'll invest the margins that banks will have to put up under rules for over-the-counter derivatives and how they'll protect their members from defaults. "The ultimate goal is that clearing member banks will not only have the tools and data necessary to better evaluate specific risks that they face, but that in so doing all market participants will better understand the unique and critically important role played by" clearinghouses, according to a report from the group. Reuters (2/5), Bloomberg (2/5), Financial Times (tiered subscription model) (2/5), The Wall Street Journal/Real Time Economics blog (2/5)

Margin Savings up to 90% for Cleared OTC IRS vs. Futures
90% is no small number—especially when it comes to margin savings. Market participants have been actively utilizing portfolio margining of Cleared OTC IRS and Eurodollar and Treasury futures, and total risk reductions now account for over $1 billion in initial margin savings—figures that remain unparalleled in the industry. Click here to learn more.

Industry News and Trends

Japanese bourse eyes international partnership
Japan Exchange Group is open to an international deal, CEO Atsushi Saito says. "Expansion into clearing is a great trend. JPX will look to capitalize and offer trading through clearing and settlement, and develop our service," Saito said. "We can collaborate or assist with our Asian friends on interest-rate-swaps clearing, although each government will look to establish one [clearinghouse] themselves at first." The company hopes to attract interest from CME Group, Deutsche Boerse, BM&FBovespa or Korea Exchange, he said. Bloomberg (2/5), Financial Times (tiered subscription model) (2/5)

Euroclear questions efficacy of liquidity forum
Euroclear is questioning the effectiveness of the Liquidity Alliance, a forum of central securities depositories that addresses concerns about the availability of high-quality liquid assets. Participating CSDs are working together to resolve challenges stemming from regulatory changes. Risk.net (subscription required) (2/5)

Interactive Data provides services to rate-swaps DCM
TrueEX, a U.S.-designated contract market for interest-rate swaps, will get hosted services from Interactive Data by way of the 7ticks platform. Interactive Data will supply monitoring and support trueEX's network architecture and matching engine. The company also has connections to other futures exchanges, namely IntercontinentalExchange and CME Group, for post-trade solutions. The Trade News (U.K.) (2/5)

Analysis: SGX and LCH.Clearnet are a good match
London and Singapore have similarities, and that makes a deal between the Singapore Exchange and LCH.Clearnet a smart fit, Jeremy Grant writes. Financial Times (tiered subscription model) (2/5)

Eurex and Taifex reach deal on derivatives and clearing
Fox Business/Dow Jones Newswires (2/6)

Regulatory Roundup

Politicians want quantitative-impact study of Basel III
U.S. politicians are taking up a cry for a quantitative-impact study before Basel Committee on Banking Supervision rules are implemented. The study, however, would take a significant amount of time, risking a substantial delay of Basel III. "We don't want to be the ones that give everyone else the excuse to slow down or abandon the project entirely," said Sheila Bair, former chairwoman of the Federal Deposit Insurance Corp. "That's why a U.S. QIS would be disappointing." Risk.net (subscription required) (2/5)

Lawyer: Republican tax plan would sacrifice ETN benefit
A tax-code change proposed by Rep. Dave Camp, R-Mich., would remove one of the major factors that drive investors into the $17 billion market for exchange-traded notes, says lawyer Daniel Crowley, formerly of the Investment Company Institute. Bloomberg (2/6)

BaFin and Bundesbank differ on rate-setting reform
Germany's financial regulator and central bank have taken opposite sides of the debate on how to reform benchmarks such as the London Interbank Offered Rate. BaFin says the system might need to be changed, while the Bundesbank thinks better reporting will fix the problem. Reuters (2/5)

Bank reportedly will face $630M fine in rate-rigging inquiry
The Wall Street Journal/Dow Jones Newswires (2/5)

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