Derivs - Interest Rate

Local securities firms in South Korea increased their participation in the over-the-counter derivatives market to account for 10% of total volumes in 2013. This is compered to 5.2% in 2011.

Major US banks seeking to revoke parent entity guarantees for London-based affiliates have met resistance from counterparties reluctant to give them up. Some of these counterparties are looking at taking a technical reading of Dodd Frank to try and maintain their guarantees while avoiding a US requirement to trade on swap execution facilities.

Concerns about liquidity levels backed more paying in short CNY swaps on Monday, while anticipation of weak PMI data on Tuesday supported the long-end. The 1s/10s swap curve slope flattened as a result, writes Deirdre Yeung of Total Derivatives.

Asia-based investors are not holding enough diversified collateral against over-the-counter derivative positions, concentrating their holdings in cash and risking a potential collateral squeeze once mandatory clearing is more broadly rolled out in the region.

The lack of regulatory clarity surrounding the process for frontloading of cleared trades is irking market participants after NASDAQ OMX became the first clearinghouse approved under the European Markets Infrastructure Regulation. According to lawyers, market participants are unsure which classes of derivatives traded since March 18 will need to be frontloaded.

The Monetary Authority of Singapore could waive certain requirements for interbank trade reporting of interest rate swaps and credit derivatives, or extend a confidentiality clause past Oct. 2014, ahead of the introduction of mandatory reporting next week.

Foreign receivers have emerged in short CNY swaps after a liquidity-related rise in fixings pushed rates higher on Tuesday morning. The 1s/10s swap curve slope has flattened in the wake of more data suggesting Chinese economic growth is slowing, writes Deidre Yeung of Total Derivatives, a sister publication of GlobalRMB.

The US Commodity Futures Trading Commission has extended its temporary no-action relief for swaps trading on multilateral trading facilities in European Union member states, following calls from MTFs for more time.

The Australian Securities Exchange is calling on the government to mandate onshore clearing for all over-the-counter Australian dollar interest rate swaps executed by large financial institutions, or free the exchange from rules limiting its operations to Australia.

The move by the US Commodity Futures Trading Commission in February for no-action relief for multilateral trading facilities in the EU from the swap execution facility registration requirement doesn't include an exemption for trading platforms which exist outside of the EU, raising fears for some market participants.

Hong Kong’s Legislative Council will resume the second reading of the Securities and Futures (Amendment) Bill 2013 on March 26, 2014. The bill forms the legislative framework for the implementation of Hong Kong’s G20 over-the-counter derivatives market reform commitments.

ISDA and Markit have added to the portfolio of tools available on ISDA Amend to help market participants prepare for a change in segregation rules that come into force on May 5.