Collateral management moves to center stage | ICE aims to clear sovereign-debt CDS of 5 European nations | European ban on naked CDS could hit currency market
November 6, 2012
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Collateral management moves to center stage
The financial crisis and resultant regulation have put collateral management in the spotlight. Markets have ample collateral, but access, availability and quality have become prime concerns. "You need to be sure you use collateral wisely, in the right place and at the right time," said Godfried De Vidts, director of European affairs at ICAP. The Trade News (U.K.) (tiered subscription model) (11/1)
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ICE aims to clear sovereign-debt CDS of 5 European nations
IntercontinentalExchange has sought approval from the Securities and Exchange Commission to back credit default swaps contracts on the debt of Greece, Ireland, Italy, Portugal and Spain. The move is intended to limit systemic risk. ICE has a history of backing sovereign-debt CDS, handling those for Argentina, Brazil, Mexico and Venezuela. Bloomberg Businessweek (11/2)
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European ban on naked CDS could hit currency market
The EU's ban on naked credit default swaps went into effect last week, after politicians argued that such swaps contributed to the eurozone's debt crisis. The ban could affect the currency market, which some use as a way to bet on the future of the region. "Traders and investors who want to bet against [the Economic and Monetary Union] might just transfer their activity to another market that's not subject to any restrictions -- such as the euro," said Steve Barrow, Standard Bank's head of foreign exchange strategy. (U.K.) (10/26)
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Firms seek clarity on U.S. swaps rules
Reforms of the U.S. swaps market have many firms simply trying to understand how to meet requirements, Brian Scheid writes. "We've done a lot of analysis and preparation to try and make sure that we comply with all the requirements, interpret them correctly and manage the best we can for our customers. There's just not enough clarity there, and it makes it challenging for businesses," said Patrice Gorton of Avista, an electric utility. Platts/The Barrel blog (11/2)
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Chinese banks build up reserves against bad loans
China's leading banks have been steadily building up reserves in anticipation of nonperforming loans. The fear is that the banks' many construction loans over the past three years may prove unable to generate revenue for some time to come. The Wall Street Journal (tiered subscription model) (10/30)
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Other News
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Regulatory and Accounting Issues
FSB aims to revamp shadow banking by September
The Financial Stability Board is looking to overhaul rules for shadow banking, including money market mutual funds, by September. The global regulator also plans to propose rules aimed at systemically important nonbank institutions. "Vigilant oversight of shadow banking activities will be required to respond to inevitable market mutations," according to the FSB. "The approach is designed to be proportionate to financial stability risks." Bloomberg (11/5)
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Europe dominates list of systemically important banks
A revised list of banks considered systemically important shows that European institutions remain dominant, even as their businesses shrink. The banks will be required by the Financial Stability Board to hold additional assets, even though many government bonds that anchor these assets have been declining in value. Reuters (11/2)
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BIS official emphasizes importance of global banking rules
Concerns about the economic effect must take a back seat to compelling need for worldwide regulation to reduce risk and leverage, which could again imperil the financial system, said Stephen Cecchetti, chief economist at the Bank for International Settlements. "It is also really important that there be global agreement on the standards and that the standards be implemented uniformly and in a timely fashion; otherwise, you run a risk of a race to the bottom," Cecchetti said. The Wall Street Journal (tiered subscription model) (10/30)
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U.K. has no qualms challenging euro-zone banking rules
The U.K., with the largest financial centre in Europe, says it is prepared to legally challenge any banking rules effectively imposed by euro-zone nations that would be perceived as a threat. "We should be vigorous in making use of the European Court of Justice to defend the positions that we have," Financial Services Minister Greg Clark told a parliamentary panel reviewing banking-union plans. Reuters (10/30)
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IASB proposal to boost authority leaves Europe cold
The International Accounting Standards Board has laid out plans "to establish a multilateral forum where representatives of the standard-setting community can come together with the IASB", Chairman Hans Hoogervorst said. However, the proposal hasn't been universally welcomed by Europe, which thinks its authority would be reduced. Reuters (11/1)
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Accounting rules will challenge U.K. banks
Investors will be taking a hard look as leading U.K. banks are challenged to raise billions of pounds to meet accounting rules taking effect next year. Standards are likely to be different for US banks, which might gain an advantage. The Telegraph (London) (tiered subscription model) (11/3)
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Rules for derivatives-trade reporting pose challenges
Panelists at the Sibos conference in Osaka, Japan, discussed challenges faced by derivatives-market participants as trade-reporting requirements come into effect. Confusion early in the global financial crisis and issues related to Europe's sovereign-debt crisis have reinforced a need for trade repositories. "The main work on trade repositories will need to be done by the largest 20 to 30 derivatives dealers, but reporting will affect all types of market participants, and the differences between the rules across jurisdictions needs to be looked at," said Karel Engelen of ISDA. The Trade News (U.K.) (tiered subscription model) (10/31)
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Hurricane Sandy can?t stop us! IACPM Annual Fall Conference, Nov. 15 to 16
Online registration has been extended to Wednesday. After that date walk-ins will be accepted at the door.
  • Over 75 firms will be represented
  • Welcome Cocktail Reception, Nov. 14
  • Gala Dinner Nov. 15, Sponsored by Moody’s Analytics
  • Plenary and panel discussions -- Both Meeting Days
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  • Networking opportunities
For more information and to register for the IACPM Fall Conference visit our website at
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Credit Default Forecast Rises in Latest IACPM Credit Outlook Survey While Credit Spread Outlook Falls to Virtually Neutral
Respondents in the latest IACPM Credit Outlook Survey see the risk of credit defaults rising and, at the same time, the outlook for credit spreads improve. Learn more.
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Whoever is winning at the moment will always seem to be invincible."
-- George Orwell,
British novelist and journalist
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