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February 14, 2013

Daily coverage for the global derivatives industry

Top Stories

Derivatives-margin rules are delayed, leaving markets wondering
Forging an agreement on collateral has delayed final rules for derivatives trading, leaving market participants wondering about their next step. "We need to do more economic thinking on the balance of the overall package," said David Wright, secretary general of the International Organization of Securities Commissions. Reuters (2/13)

ISDA panel rules SNS Reaal nationalization triggered CDS
ISDA's Determinations Committee is poised to decide whether to hold an auction to settle credit default swaps contracts covering the debt of SNS Reaal. The panel has ruled that nationalization of the Dutch bank constituted a restructuring credit event, triggering CDS payouts. Bloomberg (2/13)

Industry News and Trends

Banks reportedly scrap plans to withdraw from Libor panel
The U.K. Financial Services Authority recently warned major banks, including Rabobank Group and BNP Paribas, against withdrawing from the panel that sets the London Interbank Offered Rate. The warning has prompted several banks to forgo plans to pull out, sources say. The Wall Street Journal (2/13)

Nissan Century Securities is Eurex's first Japanese member
Nissan Century Securities has become a member of Eurex Exchange, the derivatives market owned by Deutsche Boerse. "We are honored to be the first Japan-based brokerage firm to attain Eurex membership," Nissan Century Securities CEO Hideaki Futaya said. "I believe we can better satisfy client needs by offering this new access in addition to our current memberships, which include the Japan Exchange and [the Tokyo Commodity Exchange]." The Trade News (U.K.) (2/13)

Regulatory Roundup

CFTC is stuck on minimum number of swaps bids, sources say
The Commodity Futures Trading Commission's five members have been unable to agree on how to force swaps deals onto exchangelike platforms, especially regarding the minimum number of quotes needed for a deal to proceed, sources say. "The lower we go on that, the more the swaps market is going to function the way it was before Dodd-Frank," one of the sources said. Reuters (2/13)

Council of the EU heads toward compromise on OTFs
The Council of the EU has outlined its position regarding the revised Markets in Financial Instruments Directive. A MiFID II draft indicates that the council will recommend that organized trading facilities cover all asset classes. The council also is leaning toward prohibiting use of proprietary capital in OTFs. The Trade News (U.K.) (2/13)

U.S. regulators aim to finalize Basel III soon
Federal Reserve Governor Daniel Tarullo is poised to tell lawmakers that implementation of Basel III rules by U.S. regulators likely will be finished this spring. Regulators are focused on reaching a final rule on capital standards, Tarullo says. The Wall Street Journal (2/13)

Gensler: Banks may be helping hedge funds sidestep rules
Hedge funds may be skirting central-clearinghouse rules set to take effect next month with the help of overseas affiliates of U.S. banks, Commodity Futures Trading Commission Chairman Gary Gensler is expected to tell the Senate banking committee today. The banks may be transacting trades offshore for hedge funds even though the principal place of business for those firms is the U.S. Bloomberg Businessweek (2/13)

U.S. groups express concerns about European transaction tax
The U.S. Treasury Department, financial institutions, other businesses and associations argue that a proposed tax on financial transactions in Europe ignores international treaties, overreaches and would hurt the global economy. The European Commission has outlined the plan, which could raise as much as €35 billion annually. Financial Times (tiered subscription model) (2/14), Reuters (2/14), Bloomberg (2/14), The Wall Street Journal (2/13)

Congressional members pledge to scrutinize CFTC
U.S. legislators have vowed to keep a close watch on the Commodity Futures Trading Commission. The collapse of MF Global Holdings and Peregrine Financial Group has given the regulator a black eye and has prompted doubt about its ambitious plans for Wall Street. Reuters (2/13)

SmartQuote

Continuity gives us roots; change gives us branches, letting us stretch and grow and reach new heights."

--Pauline Kezer,
American politician

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