Derivs - Interest Rate

Prior to Bob Diamond’s U.K. Treasury Select Committee hearing on the firm’s manipulation of Libor, commentators alluded to the impact Diamond’s comments would have on the integrity and career of Paul Tucker, deputy governor, financial stability at the Bank of England. Yet, Diamond’s comments were never in doubt.

Volumes in floored floater structured products in Switzerland have dropped even further over recent months, with investors instead turning to alternative fixed-income products, such as credit linked notes (CLN), in search of greater yield.

Swap dealers will be able to determine whether a counterparty has the appropriate knowledge and soundness to enter into a swap agreement, according to a draft of business conduct protocols circulated by the International Swaps and Derivatives Association.

David Wright, the recently appointed secretary general of the International Organization of Securities Commissions, plans to develop a research foundation.

Messaging protocols for many over-the-counter products that will be mandated to be cleared are already standardized, according to Philip Whitehurst, director of SwapClear product management at LCH.Clearnet.

Interbank over-the-counter U.S. dollar, Indian rupee forwards, fx swaps and other INR cross currency options will nee to be reported from July 9 to the Clearing Corporation of India’s newly developed trade reporting platform.

Banks acting as counterparties in securitizations are set to begin work swiftly to address the effects of Moody’s Investors Service’s sweeping bank downgrades last week, which will have a far-reaching effect on securitization deal ratings, according to DI sister publication Securitization Intelligence.

The U.K. Financial Services Authority has fined Barclays GBP59.5 million (USD92.7 million), the largest ever fine handed out by the regulator, for misconduct relating to Libor and Euribor. The U.S. Department of Justice has fined the firm USD160 million, while the U.S. Commodity Futures Trading Commission has issued a fine of USD200 million.

The U.S. Commodity Futures Trading Commission has re-proposed a rule that, if enacted, will expand the kinds of firms eligible for block trading by aggregating client funds. The original rule had a narrower base of firms.

Greater clarity is needed on rules for hedging and collateral from the European Securities and Markets Authority.

Application of regulatory requirements across borders is one of the most important issues that still need to be death with, according to David Lawton, acting director of markets at the Financial Services Authority.

Australia’s approach to mandatory clearing of over-the-counter derivatives will make it difficult to establish a domestic clearinghouse, moving clearing of Australian derivatives offshore and limiting the ability of local regulators to manage risk, according to industry officials.