ISDA dailyLead

Reading this on a mobile device? Try our optimized mobile version here: http://r.smartbrief.com/resp/ekcXCfbwocfbkmeRSDvO

February 12, 2013

Daily coverage for the global derivatives industry

Top Stories

Experts prepare to release regulatory proposal for CDS
ISDA is leading a panel of financial professionals who are working on a regulatory proposal for the credit default swaps market. The proposal will address issues such as cash settlement and the effective date of protection. It could affect trillions of dollars in contracts. The Wall Street Journal/MarketBeat blog (2/11)

EMIR might create regulatory burden for clearinghouses
The European Market Infrastructure Regulation will require clearinghouses to obtain reauthorization to ensure they meet regulatory standards, including enough capital, Michelle Price writes. Financial News Online (U.K.) (subscription required) (2/11)

Industry News and Trends

Central clearing hits a snag: Price differentials
Buy-side firms are discovering that price differentials are cropping up when the same products are available at different clearinghouses, Joe Rennison writes. Although central clearing has reduced counterparty risk, funding costs may actually climb, resulting in less efficiency, Rennison writes. Risk.net (subscription required) (2/6)

LCH.Clearnet seeks Australian license to clear swaps despite hurdles
Though Australian authorities will not decide for two years whether to break ASX's monopoly on clearing equities, LCH.Clearnet is still pursuing a license to clear interest-rate swaps. "We still plan to apply for ... an Australian clearing and settlement facility license," an LCH.Clearnet spokeswoman said. The Wall Street Journal/Dow Jones Newswires (2/11)

Carlyle reportedly proposed taking Nasdaq private
Carlyle Group and Nasdaq OMX reportedly had talks about taking Nasdaq private. Sources say the talks, which ended amid disagreement on price, were sparked by Carlyle Chief Financial Officer Adena Friedman, who previously held the same position at Nasdaq. Bloomberg (2/12), Reuters (2/11), Financial Times (tiered subscription model) (2/11)

Alphabet soup of transaction codes might be getting muddled
The proliferation of transaction codes might be causing confusion, experts say. "Does the originator of a transaction get identified with [unique swaps identifiers]? No, the originator gets a [derivatives-clearing organization's] internal counterparty number, a [National Futures Association] ID if they come with that or a [Commodity Futures Trading Commission Interim Compliant Identifier] if they present that," said Allan Grody, president of Financial Intergroup. "The rest of the USI is a transaction identifier, unique to the swap, not the swap business entity that was the transactor." Securities Technology Monitor (2/11)

Bank's Libor settlement reveals central figure
A figure has emerged from Royal Bank of Scotland's settlement related to alleged manipulation of the London Interbank Offered Rate. Trader Tom Hayes traveled from lender to lender, making contacts needed to manipulate the benchmark, regulators say. Meanwhile, RBS executives told the U.K. Parliamentary Commission on Banking Standards that they thought manipulating Libor was not possible. MarketWatch (2/9), Bloomberg (2/11), The New York Times (tiered subscription model)/DealBook blog (2/11)

Regulatory Roundup

Tax proposal would overhaul derivatives treatment
The U.S. House Ways and Means Committee has released a proposal that would force derivatives holders to establish market value and pay tax on that value annually. The requirement would treat derivatives income as regular income, valued as if derivatives had been sold on the last business day of the year. Risk.net (subscription required) (2/11)

Indian regulator investigates inflated derivatives volume
The Securities and Exchange Board of India is examining whether investors are being tricked by high volume created by connected agencies trading with one another. SEBI is seeking increased transparency in releasing data involving open positions of companies that share directors and board members. The Economic Times (India)/Press Trust of India (2/11)

EU considers adopting liquidity-coverage ratio earlier
EU members are evaluating a proposal by the European Parliament for "accelerated" implementation of Basel III's liquidity-coverage ratio. European banks would be complying a year ahead of competitors worldwide. Bloomberg (2/11)

SmartQuote

Do not teach your children never to be angry; teach them how to be angry."

--Lyman Abbott,
American theologian, author and editor

ISDA® is a registered trademark of the International Swaps and Derivatives Association, Inc.

Subscriber Tools

Print friendly format | Web version | Search past news | Archive | Privacy policy

Advertise

Associate Publisher: Abiy Bekele (919) 931-5915