Derivs - Credit

Concerns surrounding extraterritoriality in forthcoming European and U.S. regulation in the derivatives market were the focus of conversation between market officials and Asian regulators at the International Swaps and Derivatives Association Asia Pacific Regulators Workshop in Hong Kong today.

The Australian authorities are looking to clear up uncertainty surrounding close-out netting with flailing domestic financial institutions and insurers.

The Monetary Authority of Singapore will mandate the central clearing of standardized derivatives, but has yet to determine how, and to what extent it will do so, Ravi Menon, managing director of the MAS said at the regulator’s annual report conference today.

Not all derivatives on all days are suited to electronic trading, according to interdealer brokers.

Citigroup has begun offering municipal credit-linked notes, which it says are the first CLNs to reference the municipal bond market.

Credit Suisse has reorganized its Asia Pacific global market solutions group, promoting Carl Bautista, Mervyn Chow, and George Pavey to become the three co-heads of the group, according to a memo from the firm.

Credit derivatives trading volumes are down significantly today as the market waits for news from the Thursday meeting of Eurozone leaders on a funding plan for Greece.

The outstanding notional of over-the-counter derivatives in South Korea grew 8.3% over the 12 months to KRW6,970 (USD6.57 trillion) through to the end of first quarter, according to Financial Supervisory Service figures.

The rating agencies had a major impact on the markets last week when Portugal was downgraded to junk by Moody’s Investors Service.

The next wave of derivatives set for clearing will likely include interest rate swap-like non-linear products like swaptions and options, Garry O’Connor, ceo at the International Derivatives Clearing Group in New York, told Derivatives Intelligence in an interview. Cross-currency swaps and swaps with caps and floors will likely follow.

Industry associations and U.K. firms have warned the Independent Banking Commission about the implications that ring fencing could have on a banking group’s derivatives use.

The U.K. Financial Services Authority is consulting on how it reviews the credit risk management of central counterparties.