Derivs - Regulation

The Securities and Exchange Commission has extended no-action relief allowing several Commodity Futures Trading Commission-registered derivatives clearing organizations to clear swaps for U.S. mutual fund firms.

Plans by the Taiwan Financial Securities Commission to create a trade repository with daily reporting requirements across all assets of over-the-counter derivatives, as well as information including the names of the traders and brokers who worked on the deal, will be prohibitively expensive for the market and unworkable, market players have warned.

The Securities and Exchange Commission is working on updated guidance on how the Investment Company Act applies to derivatives.

The Securities and Exchange Commission has signaled that it plans to keep a close eye on how firms handle retail structured product sales as the market for the securities bounces back.

The offshore U.S. dollar/Brazilian real options market will grow and become a liquid and viable market in coming weeks. Foreign dealers and investors playing onshore will be looking for hedging capabilities that avoid the fx derivatives tax announced on Wednesday, according to traders and strategists in Brazil.

The Brazilian government’s move to tax short U.S. dollar positions prompted a spike in funds closing option trades.

National Futures Association has hired Jamila Piracci, formerly of the Federal Reserve Bank of New York, to plan for the eventual duties the Commodity Futures Trading Commission will hand over.

The U.K. Supreme Court today upheld the flip clause in Lehman Brothers’ synthetic collateralized debt obligations which made Lehman subordinate to noteholders in the waterfall of payments when the firm filed for bankruptcy in 2008. The ruling highlights the differences in U.K. and U.S. law on the matter and could lead to increased scrutiny on the jurisdiction of parties involved in structured credit deals in the future.

Regulators in China are expected to release definitions for credit, interest rate and commodity derivatives by year-end, according to officials familiar with the discussions.

Swaps market participants in the U.S. or those participants dealing with a U.S. counterparty should be able to enter into swaps outside of the U.S. for legitimate business purposes without being concerned that their activity will be considered evasive under Dodd-Frank, according to the International Swaps and Derivatives Association in a comment letter to the Commodity Futures Trading Commission.

Concerns surrounding extraterritoriality in forthcoming European and U.S. regulation in the derivatives market were the focus of conversation between market officials and Asian regulators at the International Swaps and Derivatives Association Asia Pacific Regulators Workshop in Hong Kong today.

The Australian authorities are looking to clear up uncertainty surrounding close-out netting with flailing domestic financial institutions and insurers.