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October 30, 2012
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  Credit Markets 
  • IACPM survey uncovers conflicting views on credit default risk
    A survey finds apparently divergent views on credit risk, with widespread and rising expectations of defaults around the world but an improving outlook for credit spreads, as revealed in the latest IACPM Credit Outlook Survey. “We’re dealing with almost two realities here. On the one hand, survey respondents are clearly worried about rising risk but, on the other hand, they don’t seem to think that spreads will rise in tandem with the risks,” commented IACPM Executive Director Som-lok Leung. Read more. ForexLive (10/25), Leveraged Finance News (10/24) LinkedInFacebookTwitterEmail this Story
  • European banks reconsider derivatives trading with U.S. peers
    Regulations mandated by the Dodd-Frank Act are prompting some banks in Europe and elsewhere to curtail or stop derivatives trading with U.S. counterparts. "Numerous counterparties in Europe and Asia have requested they do not face U.S.-based counterparties so they do not build up any swap volumes towards the threshold," an unidentified senior European swaps broker said. Reuters (10/26) LinkedInFacebookTwitterEmail this Story
  • Japan's banks expect to reduce business over U.S. derivatives rules
    Japan's banks apparently will not refuse to register with U.S. regulators in response to rules governing financial derivatives, but a pullback in trading with U.S. counterparts appears to be in store, Kana Inagaki and Kosaku Narioka write. "We'll lean towards avoiding transactions with our U.S. partners, at least in the initial phase," said the unidentified head of derivatives trade at a major Japanese bank. The Wall Street Journal (10/25) LinkedInFacebookTwitterEmail this Story
  • S&P: Slowing Chinese economy to stress-test banks
    Chinese banks' balance sheets are about to show the effects of a rising number of corporate defaults and narrower net-interest margins as the country's economy slows, warns Standard & Poor's. The ratings agency says more challenging operating conditions over the next few years will test many banks, with smaller ones likely to face consolidation pressures. China Daily (Beijing) (10/25), Caijing Magazine online (10/25) LinkedInFacebookTwitterEmail this Story
  • Other News
  Regulatory and Accounting Issues 
  • G-20 is asked to hold U.S. and EU accountable on Basel III
    With the U.S. and the EU home to 23 of 29 banks regarded as systemically important, global regulators called on Group of 20 nations to demand the reason Washington and Brussels have seen fit to dilute key parts of Basel III rules. The Basel Committee on Banking Supervision emphasized a need for consistent implementation worldwide in substance and according to an agreed timetable. The committee also said it will look into different ways banks calculate risk. Bloomberg (10/29), Reuters (10/29), The Wall Street Journal (10/29) LinkedInFacebookTwitterEmail this Story
  • FSB: Banks need to be more open with Basel III information
    Investors should be given more information from banks about how well they meet Basel III requirements, as well as information about banks' internal stress test results, the Financial Stability Board says. Disclosing such information is vital to re-establishing trust in the banking industry, the FSB says. Bloomberg (10/29) LinkedInFacebookTwitterEmail this Story
  • Basel official defends regulatory complexity as necessity
    Complexity is a necessary part of Basel III banking rules, which cannot be reduced to a simple formula and must not be discarded, said Wayne Byres, secretary general of the Basel Committee on Bank Supervision. He also said debt limits shouldn't be regarded as a panacea. "Despite its apparent simplicity, an internationally comparable leverage ratio is anything but simple to design," Byres said. Financial Times (tiered subscription model) (10/24), Reuters (10/24), Bloomberg (10/24) LinkedInFacebookTwitterEmail this Story
  • Analysis: European rule on sovereign CDS will bring surprises
    Europe's rule limiting trading of credit default swaps to owners of the debt being hedged is intended to curb speculation but is unlikely to accomplish much, according to The Economist. "Investors are already looking at new ways to place bearish bets on euro-zone countries," the magazine notes. "One way is to short government bonds themselves, though in practice this is fiddly." The Economist (10/27) LinkedInFacebookTwitterEmail this Story
  • Other News
  IACPM News 
  • Register now for the IACPM 2012 Annual Fall Conference in New York -- Online registration ends on Nov. 2
    Join over 75 others firms to discuss the biggest issues facing the industry.

    Sessions will include:
    • CPM's pivotal role in enterprise risk management
    • CCAR and stress testing
    • Impact of Basel III and Dodd Frank
    • CPM, liquidity and the LCR
    • Latest on the market tools: OTC derivatives, the leveraged loan market and securitization
    • Counterparty risk and CVA
    For more information and to register for the Educational Seminar and the IACPM Fall Conference visit our website at LinkedInFacebookTwitterEmail this Story
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--Hans Hofmann,
German-American abstract expressionist painter

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