January 15, 2021
ISDA dailyLead
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Top Stories
The UK faces a struggle to secure full access to the EU, despite ongoing discussions, City of London leaders have told lawmakers. They cite the UK's indication it will diverge from EU financial rules, while the EU wants assurances it will not.
Full Story: Reuters (1/14) 
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Federal Reserve chairman Jerome Powell indicated that the central bank has no intention of tightening US monetary policy or paring back its bond-buying program any time soon. Powell said that now is "not the time" to think about ending central bank support for the economy given that inflation and employment were tracking below target.
Full Story: Reuters (1/14),  MarketWatch (tiered subscription model) (1/14),  Financial Times (subscription required) (1/14) 
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Industry News and Trends
More than 5,900 entities across about 70 jurisdictions have so far adhered to the Ibor Fallbacks Protocol launched by the International Swaps and Derivatives Association, set to take effect on Jan. 25. ISDA chief executive Scott O'Malia says it is not too late to adhere. "The alternative is not having a clear back-up rate in place in the event an IBOR disappears -- a situation that would create massive uncertainty for firms and their counterparties," said O'Malia.
Full Story: International Swaps and Derivatives Association (1/14),  Futures & Options World (subscription required) (1/14) 
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Some 30 million equity options contracts on average traded on US exchanges each day in 2020, up more than 50% from the year before, and that figure has risen to beyond 40 million per day in recent weeks. With technology making it easier for retail investors to purchase options, the flood of trading shows no signs of abating.
Full Story: The Economist (tiered subscription model) (1/16) 
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US banks face a challenging earnings season as the outlook for 2021 remains uncertain. Although government support for the economy and robust trading revenue have shielded banks from the worst fallout from the coronavirus pandemic, analysts expect fourth-quarter reports to show earnings under pressure and rising impairment costs.
Full Story: The Wall Street Journal (1/14),  Forbes (tiered subscription model) (1/13) 
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Regulatory Roundup
US President-elect Joe Biden said he will ask Congress to act swiftly to provide $1.9 trillion of immediate relief to help the US economy recover from the coronavirus pandemic. The package includes aid to states and cities, additional unemployment benefits, larger direct payments to Americans and a minimum-wage increase.
Full Story: Bloomberg (1/14),  CNBC (1/14),  The New York Times (1/15),  Reuters (1/15) 
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The Office of the Comptroller of the Currency has formalized a rule that prohibits banks from refusing to offer loans or other services to firms in potentially controversial industries. The banking industry largely opposes the rule, finalized shortly before Brian Brooks' departure as acting comptroller of the currency.
Full Story: The Wall Street Journal (1/14),  CNBC (1/14),  American Banker online (subscription required) (1/14) 
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Wall Street is bracing for tough regulation as expectations grow that US President-elect Joe Biden will nominate Gary Gensler to lead the Securities and Exchange Commission. As chair of the Commodity Futures Trading Commission, Gensler led tough rulemaking and enforcement actions for derivatives trading.
Full Story: Bloomberg (1/14),  The New York Times (1/13),  The Wall Street Journal (1/12) 
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Federal Reserve Chairman Jerome Powell told a webinar that the Fed's regulatory work on stablecoins is a "very high priority" because they "could become systemically important overnight." Regarding the establishment of a central bank digital currency, Powell said the Fed is "determined to do this right rather than quickly, and it will take some time -- measured in years rather than months."
Full Story: The Block (1/14),  Finance Magnates (1/15) 
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ISDA News and Events
Join us for a COMPLIMENTARY 2-day event: Collateral Management Transformation Virtual Showcase | January 20-21, 2021
As the rollout of Phase 5 & 6 uncleared margin requirements come into full force in September 2021 & 2022, this 2-day series will cover the steps buy-side & sell-side firms can take to transform and streamline their collateral management operations. Ensure you are completely up to date with industry best practices and cutting-edge technological developments from leading solution providers. Secure your complimentary registration here. *Sponsorship Opportunities Available* Contact Rob Saunders at RSaunders@isda.org for more information
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The transition to a sustainable economy will take a massive amount of long-term funding. The financial services sector will be an essential partner in providing this funding and managing the risks associated with sustainable investments. This paper is intended to help market participants further understand the potential role of derivatives in sustainable finance. Click here to read the ISDA Research Note
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Editor's Note
The dailyLead will not publish Monday
In observance of Martin Luther King Jr. Day in the US, the dailyLead will not publish Monday. Publication will resume Tuesday.
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Wisdom isn't about accumulating more facts; it's about understanding big truths in a deeper way.
Melinda Gates,
philanthropist, advocate for women and girls
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