Derivs - Regulation

Sovereign spreads hit a new record on Friday, despite the best efforts of European Union governments to stem the panic.

Korea has vowed to support financial markets and ensure sovereign credit default swap spreads and non-deliverable forward rates recover. The two rose sharply after the North Korean attack on Yeonpyeong Island.

European Union lawmakers want to hand to a pan-European securities regulator power to directly fine credit rating agencies for breaches of operating and reporting rules, as well as the ability to carry out random checks on ratings and conduct deeper assessments of their methodologies.

Banks are expected to start piling into trades to cover mismatches in their structured credit books.

Interdealer brokers are concerned over speculation the Commodity Futures Trading Commission will impose rules that allow swap execution facilities to access other SEFs, according to Chris Giancarlo, executive v.p. of corporate development at GFI Capital.

The China Banking Regulatory Commission will reportedly allow banks to use credit derivatives for market-making and hedging purposes when it releases its expected guidelines, a change from earlier drafts.

A new stress test for systemically important financial institutions has been outlined by risk academic Darrell Duffie, professor at Stanford University.

Fewer swaps than Congress and the public expect may end up getting traded on exchanges or through swap execution facilities, according to a Securities and Exchange Commission official.

The U.S. Securities and Exchange Commission has hired two industry professionals as structured finance and new product specialists in the New and Structured Products Unit within the Division of Enforcement.

Centrally clearing over-the-counter derivatives trades will raise costs for established asset managers, at least in the short run, said panelists at the Osney Media Optimising OTC Derivatives Operations in Fund Management conference in London this morning.

The Australian Securities and Investments Commission today issued a 24-page investor guide on contracts for difference suggesting that the predominately over-the-counter derivatives are unsuitable for many retail investors.

The Managed Funds Association has offered a number of corporate governance and ownership recommendations. This is in response to the Commodity Futures Trading Commission’s proposed rule on governance at derivatives clearing organizations, designated contract markets and swap execution facilities.