Derivs - Regulation

Akihiro Wani, a partner at Linklaters in Tokyo, questioned the need for mandatory clearing of iTraxx Japan under the derivatives law reform in Japan from the viewpoint of efficiency at the International Swaps and Derivatives Association Annual Regional Meeting in Tokyo.

The Securities and Exchange Commission and Commodity Futures Trading Commission have released an interim rule requiring dealers to report swaps made prior to but not expiring before the enactment of the Dodd-Frank Act.

The International Swaps and Derivatives Association has come out with best practices for settlements and interest compensation claims for over-the-counter derivatives.

A deep market for renminbi-denominated offshore structured products and forwards is still a ways off as the offshore renminbi deposits in Hong Kong are not large enough to sustain the market and the threat of China cracking down is still in players’ minds, investors and bankers said.

Moves by China to make credit derivatives trading by firms client-only are being criticized by dealers because it will bar them from hedging their own credit-related risks.

Javelin Capital Markets, an electronic trading venue planning to register post-reform as a swap execution facility, has provided regulators with specific threshold levels for block trading in interest rate swaps and credit default swaps.

The Committee of European Securities Regulators is against client categorization rule changes for over-the-counter derivatives proposed under the Markets in Financial Instruments Directive.

Buyside firms may begin turning to local dealers as counterparties in individual Asian markets over international dealers, as coming regulation pushes more Asian derivatives activity onshore.

Panelists of a joint Securities and Exchange Commission/Commodity Futures Trading Commission hosted roundtable this morning tackled questions of access to risk management strategies for clearing parties and possible conflicts of interest within the clearing process.

ISDA members have come to a provisional consensus to alter the definitions regarding the right of termination with respect to a disruption event in the case of a change in law.

European dealers are warning the definition of covered positions in credit default swaps must be kept flexible lest some trades be seen as falling outside the regime introduced by the European Commission.

The implementation of the Volcker Rule will drive down the cost of structured products relative to the rest of the market if the structures meet the regulatory definition of permissible risk mitigation.