Derivs - Regulation

If the U.S. financial reform legislation successfully pushes many over-the-counter derivatives onto exchanges, banks and dealers could see a tax break on those deals of up to 12%, lawyers say.

Sharon Bowles, chair of the European Parliament’s influential Economic and Monetary Affairs Committee, told Derivatives Week that E.U. politicians will propose a 25% cap on bank ownership stakes in clearing houses, rather than a complete ban.

Foreign banks in China are scoping setting up licensed subsidiaries, as opposed to branch offices, because they think regulators are going to let those subsidiaries get more active in onshore trading.

The International Swaps and Derivatives Association is in the process of updating documents related to its governance structure. The additions are expected to be released next month.

Over-the-counter equity derivatives are the least suitable for standardization and exchange trading, and OTC fx swaps are the least likely to be cleared, according to a survey of market participants done by BNY Mellon and analyzed by the TABB Group. This discrepancy highlights the fact that standardization does not necessarily imply clearing and vice versa.

Marilyn Ramplin, an ex-executive director in prime brokerage and equity derivatives strategy to hedge funds, funds of funds and asset managers at JPMorgan in London, has set up a UCITS (Undertakings for Collective Investment in Transferable Securities) advisory shop.

The Swiss Financial Market Supervisory Authority has begun looking at whether the over-the-counter derivatives market should be regulated.

Qualified foreign institutional investors who are licensed to trade the new China Financial Futures Exchange CSI 300 index may only be able to do so for legitimate hedging purposes, according to new guidelines issued by the China Securities Regulatory Commission.

With the U.S. Senate bill finalized, players throughout the industry say their final hopes for less draconian rules depend on the conference to merge the bill with the House version, and on federal regulators charged with implementation.

Hedge funds and corporates have been buying up one-week and one-month put options on the euro against the U.S. dollar since Wedneday after being rattled by Germany’s decision to ban naked sovereign credit default swaps referencing eurozone debt.

Kennett Square, Pa., advisor Chatham Financial plans to launch a currency hedging platform within its microfinance arm, Cygma, later this year in Luxembourg. The aim is to capitalize on USD1-1.5 billion that investors would like to invest in microfinance, but can’t because of excessive currency risk.

The U.K.’s newly formed coalition government appears to have ruled out plans to introduce a tax on financial transactions. The move, which will be cheered by the U.K. banking sector, will come as a blow to other E.U. countries, such as Germany, where politicians are making the case for transaction taxes to be implemented as a way of offsetting the cost of the E.U. bailout fund.