Derivs - Regulation

The Monetary Authority of Singapore will mandate the central clearing of standardized derivatives, but has yet to determine how, and to what extent it will do so, Ravi Menon, managing director of the MAS said at the regulator’s annual report conference today.

Not all derivatives on all days are suited to electronic trading, according to interdealer brokers.

The Commodity Futures Trading Commission’s plan setting capital requirements for swap dealers and major swap participants promises to favor the bank holding companies (BHCs) and foreign bank subsidiaries that already dominate the markets, while squeezing out newer entrants, according to Jefferies & Co.

The Securities and Exchange Commission should carve out a safe harbor in its plan to impose new anti-fraud and anti-manipulation requirements on security-based swap transactions, according to the Securities Industry and Financial Markets Association.

Industry associations and U.K. firms have warned the Independent Banking Commission about the implications that ring fencing could have on a banking group’s derivatives use.

Counterparties should not have to post margin for non-cleared swaps on the same day of execution, nor should covered swap entities be barred from netting initial and variation margin requirements across asset classes and financial products, say the International Swaps and Derivatives Association and the Securities Industry and Financial Markets Association in a joint comment letter to bank regulators last week.

The Singapore Exchange has created standardized product disclosure templates for structured products and funds to enhance transparency and understanding.

Australian regulators are eyeing onshore mandatory clearing for Australian dollar-denominated interest rate swaps.

The Central Bank of Ireland said it identified compliance issues in its examination of firms that that deal in contracts for difference and financial spread speculation.

The latest version of the European Market Infrastructure Regulation exempts some intragroup transactions from the obligation to clear, allowing some financial institutions to breathe a sigh of relief.

Imposing central clearing and exchange trading requirements on the foreign exchange swaps and forwards market might actually increase, rather than decrease, systemic risk, according to the Investment Company Institute.

Since early 2010 and when the term “PIIG” entered the daily financial language, there has been significant interest in the debt exposure of the major banks to the ongoing European periphery concerns.