Derivs - Regulation

Firm compliance teams are swinging into action to prepare for potential registration as swap dealers—or at least to figure out, along with the business side, whether they will avoid having to enroll.

Gay Huey Evans is the ultimate derivatives bigwig. She has been involved in swaps and derivatives for more than 30 years in roles as a regulator and trade association chief, as well as holding senior positions at major buyside and sellside firms and exchanges. She now resides at the latter two, as a non-executive director at the London Stock Exchange and Aviva.

Derivatives dealers, with buyside input, are on the cusp of releasing a new documentation protocol that should allow end users to easily make representations and provide disclosures to their sellside counterparts. The protocol will allow the industry to quickly update Master Agreements in time for the supposed Oct. 15, 2012 deadline set out by U.S. regulators for new business conduct standards under Dodd-Frank.

A proposal from the Bank of International Settlement’s Risk Management Group to alter the current exposure method—or CEM--for qualifying central counterparties, also known as licensed CCPs, has been opposed by industry associations.

Lawmakers must introduce legislation that is product and asset specific in the Markets in Financial Instruments Directive, according to Kay Swinburne, member of the European Parliament.

Is Australia sticking to type by allowing a market-driven solution to mandatory clearing of over-the-counter derivatives? Or are the findings found in the latest OTC Derivatives Market Reform Considerations report from the Council of Australian Financial Regulators one of the smartest responses from a small-to-mid-sized G20 country yet?

An idea of a time limit on a sovereign credit default swap position that becomes partially uncovered due to fluctuations in the value of the underlying has been shelved by the European Securities and Markets Authority.

Extraterritorial legislation in the U.S. and E.U. may harm financial competition and restrict cross-border activity, according to a letter sent to the U.S. Department of Treasury and the European Commission April 19.

The European Securities and Markets Authority is calling for a ban on credit rating agency employees participating in or influencing ratings if they own derivatives of the rated entity or have had a relationship with a rated entity or related party.

Australia will not directly or immediately mandate clearing of over-the-counter derivatives. It will let the market decide if a domestically-domiciled central clearing counterparty is needed, making it the first G20 nation to propose a market driven approach to mandatory clearing.

The Shanghai Clearing House’s has been quietly consulting a select group of China-based dealers about how to clear over-the-counter China onshore yuan interest rate swaps.

Central counterparties should have margin systems that establish levels that correspond with the risks of derivatives and their portfolios, according to a new document on financial market infrastructures published by the Committee on Payment and Settlement Systems and the International Organization of Securities Commissions.