Derivs - Credit

The China Banking Regulatory Commission has approved more lenient rules for the use of credit derivatives.

The Taiwan Financial Supervisory Commission plans to evaluate creating an over-the-counter derivative central counterparty.

Credit rating agencies could be banned from rating the sovereign debt of E.U. countries, under pre-legislative amendments put forward by some members of the European Parliament’s Economic and Monetary Affairs Committee.

Convergence between the U.S. and Europe on regulations affecting the cash and synthetic securitization markets remains mixed, according to a panelist at the Practising Law Institute’s 10th annual Securities Regulation in Europe conference in London.

Ian Pearce, formerly co-head of asset-backed securities and sterling credit trading for derivatives and cash at UBS in London, will join RBC Capital Markets in London as head of European credit trading in February.

Buyside firms are largely unprepared for the post-Dodd Frank over-the-counter derivatives environment and need to work toward a more balanced relationship with the major dealers through technology buildouts and adherence to a new set of industry best practice standards, according to a report.

Some dealers are concerned a Commodity Futures Trading Commission proposal on regarding membership criteria for dealers in central counterparty clearinghouses could open the door for entities who lack market-making experience in credit default swaps. They may, in turn, misuse capital that should be reserved in the case of default.

The International Swaps and Derivatives Association is aiming to shore up a provision allowing a non-defaulting swap counterparty to net out its position and terminate a transaction with a counterparty in default. The industry group has set up a working party to review the master agreement provision after aspects of it have been queried by recent litigation.

The European Securities and Markets Authority, the newly formed pan-European securities regulator, is seeking industry feedback on the implementation and application of the endorsement regime, a core part of the wider credit rating agency regulatory overhaul taking place in Europe.

Japanese financial institutions reported of losses JPY44 billion (USD534.8 million) on credit default swaps with monoline insurers as of Sept. 30, 2010, according to a report released yesterday by the Japan Financial Services Agency.

Giving European regulators the power to impose stringent margin calls and demand more collateral could help prevent future crises or at least coordinate regulators’ actions in a crisis, according to a report from the European Securities and Markets Authority, the new pan-European regulator, to its members and European lawmakers.

Structured products market participants have asked the Committee of European Securities Regulators, now the European Securities Market Authority, to extend its proposed maturity limits of structured Undertakings for Collective Investments in Transferable Securities (UCITS) funds.