Derivs - Regulation

The People’s Bank of China is reviewing whether the National Association of Financial Market Institutional Investors should produce an internationalized master agreement for Chinese derivatives.

The Monetary Authority of Singapore is preparing to unveil legislation in the next few weeks that will contain rules for mandatory clearing and reporting of standardized over-the-counter derivatives, according to lawyers in Hong Kong and Singapore.

The Australian government is planning to introduce rules to forbid the use of client money as collateral backing over-the-counter derivatives, bringing the nation in line with U.K. and U.S. standards.

Direct access to central clearinghouses and linkages between CCPs will be good for the market, says the Bank for International Settlements, but CCPs will also need to make extensive changes to their structures to mitigate risks.

Legislation aimed at facilitating the establishment of South Korea’s central clearing counterparty has failed to be passed in the country’s parliament.

Commodity Futures Trading Commission Commissioner Scott O’Malia (R) yesterday submitted a letter to the Commission’s Technology Advisory Committee calling for advisement on a specific set of data points which he believes should define high-frequency traders.

A proposed European Union financial transaction tax from the European Commission could increase hedging costs and ultimately mean risks being left unhedged if the rule is imposed in the region, according to the International Swaps and Derivatives Association.

Bid/ask spreads will increase by 0.2%, implementation costs will exceed USD750 million, and ongoing operational costs will exceed USD250 million in implementing the proposed regulatory mandate for electronic execution into the over-the-counter interest rate swaps and options market, according to a International Swaps and Derivatives Association cost-benefit analysis published today.

National Association of Financial Market Institutional Investors credit default swaps definitions will contain a simplification of the cash settlement mechanism, doing away with weighted averages and replacing them with multiple valuation dates.

U.S. industry regulators are confident they can harmonize international regulations.

Full segregation of client collateral within cleared swap accounts at major U.S. derivatives dealers was stressed by Gary Gensler, chairman of the Commodity Futures Trading Commission, at the Securities Industry and Financial Markets Association’s 2011 Annual Meeting in New York on Monday.

Carefully worded public statements that skate around the heart of controversial issues have been the norm for some U.S. industry associations and lobbying groups.