Derivs - Regulation

The planned pilot project to trade credit default swaps in China will still happen this year, according to a well placed official in Beijing.

European insurers may increase longevity risk hedging via swaps under a set of proposed E.U. solvency rules.

-- Richard Schetman, partner at Cadwalader, Wickersham & Taft LLP

Last week there seemed to be a consensus among the commentariat that BP PLC’s five-year spreads were overshooting significantly. A level of 500bp was outlandish for a AA credit.

The Securities and Exchange Commission’s structured products unit will likely hire three industry professionals next month, Kenneth Lench, head of the unit within the Division of Enforcement, told Derivatives Week.

European lawmakers have proposed a ban on financial services employees being allowed to hedge their bonus payouts. The hedges popped up last season when deferred bonus payouts were being pushed by regulators and staffers.

The City of London should set the benchmark for how the over-the-counter derivatives and securitization markets should operate prior to the release of European legislation reforming both markets, according to Patrick Pearson, head of financial markets infrastructure at the European Commission.

Increased hedging by banks has been an influential factor behind moves in sovereign credit default swap spreads, according to the Bank of England.

The USD700 billion stable value fund market, which covers some 30 million investors, could become effectively off limits to derivative bankers.

The European Securities and Markets Association will be given the final say when determining whether different derivatives should be cleared following an application by a clearinghouse, according to the European Commission.

Recently released data on single-name credit default swaps reported trades that actually transferred risk within the market. Some industry players say it left out pertinent information, while others say it was streamlined specifically to prevent skewed results.

A small segment of buy-side firms plan to increase their spending on technology to improve their collateral management processes for over-the-counter derivatives, according to the results of a survey conducted by IntegriData.