Derivs - Interest Rate

The coming market rush to comply with margin rules on uncleared swaps will be a big challenge in itself, but regulators need to think hard about the unintended repo risks they are creating by requiring collateral building at breakneck speed.

Rising costs for derivatives clearing and difficulties gaining access to dealers present a mounting challenge for small end users in the US and Europe, some of which may have to find other means to hedge risk, a study by the International Swaps and Derivatives Association has found.

BNP Paribas has brought together its global listed derivatives businesses on a single platform hosted by UK software and services company Fidessa.

Icap has bought Abide Financial, a global regulatory reporting specialist.

Rules proposed by the US Commodity Futures Trading Commission this week on cross-border swap trading are a good first step, according to lawyers, but more clarity is needed on how Dodd-Frank requirements will apply.

The acceleration of Europe’s push to impose margin on uncleared derivatives trades has galvanised big banks to ramp up clearing across products as they face a tighter deadline to comply than expected. The European Council’s timeline for approving the rules makes a January rollout likely, writes Dan Alderson.

Already a pioneering issuer in the currency, the International Finance Corporation (IFC) believes greater regulatory clarity will provide a fresh boost to its onshore and offshore renminbi funding plans, Monish Mahurkar, director for treasury market operations, told GlobalRMB.

The expected closing date of a loan to finance a 379 mile transmission line in Chile has been pushed back as negotiations over interest rate swap provisions continue.

trueEX, the interest rate swap trading platform, claims to be the first swap execution facility to execute dealer to client Brazilian real interest rate swaps.

There was both palpable relief and vexation among derivatives market professionals this week as the European Commission approved, albeit with amendments, rules for collecting margin on uncleared derivatives. Although this traversed a key hurdle as Europe seeks to catch up with Canada, Japan and the US, it also brought into question why there had been a delay in the first place.

Volume figures released by major derivative exchanges show that low volatility continues to subdue volumes in equity derivative products, although flows improved in September. Interest rate, metal and energy derivatives show growth, however.

The European Commission has approved, with some amendments, rules for collecting margin on uncleared derivatives, traversing a key hurdle as Europe seeks to catch up with Canada, Japan and the US.