Derivs - Credit

The notion of engineering basis trades on CME Clearing versus ICE Trust was floated this morning at the fourth annual OTC Derivatives Operations and Processing Conference in New York.

The coming over-the-counter derivatives regulations in the U.S. and Europe will result in billions of dollars of new fees for brokers, clearing houses and alternative swap execution facilities, according to JPMorgan analysts.

It's an open question whether older, non-standardized credit default swaps will need to be cleared when U.S. reforms are enacted, according to panelists at the fourth annual OTC Derivatives Operations and Processing conference in New York this morning.

Four major dealers have signed master agreements with Lehman Brothers Special Financing, allowing the bankrupt firm to buy new over-the-counter hedges.

The European Commission has just released an outline of its planned regulation of the over-the-counter derivatives market.

Société Générale has reportedly hired Duan Yang from Standard Chartered, where he was a managing director and head of fixed income sales for China.

Barclays Capital has added to its Tokyo-based credit trading team with the appointment of Tetsuya Ukai and Takahisa Fujiki as a director and v.p., respectively.

One would assume from the blanket media coverage in the U.S. and U.K. that spiraling budget deficits have pushed the respective countries to the brink of default. The U.K., in particular, has seen the issue of public spending create a dividing line between the hitherto inseparable main political parties. But the financial markets have been nonplussed.

The revised over-the-counter derivatives bill passed by the U.S. House Financial Services Committee yesterday could be a boon for interdealer brokers as it requires trades between dealers to go on exchange or so-called swap execution facilities.

Plans being drawn up by regulators in the U.K., France and Germany to apply heft capital charges to bank credit default swap trading will likely hurt end users, who will have to pay more for liquidity, lawyers and structurers note.

The Japanese Credit Determinations Committee of the International Swaps and Derivatives Association is taking a fresh look at whether consumer lender Aiful’s decision to suspend payments on outstanding debt constitutes a credit event.

A Basel Committee on Banking Supervision study released today estimates that pending changes to bank capital requirements will have the effect of requiring trading book reserves to be increased by two or three times. It doesn’t cover the impact of the changes on correlation trading portfolios, which will have an even larger impact on banks.