Derivs - Regulation

In the newly released report of Lehman Brothers’ final hours, court-appointed examiner Anton Valukas says that Lehman may have legal ground under the safe harbor provisions of the U.S. Bankruptcy Code to undo a guaranty promising JPMorgan USD8.6 billion in collateral.

U.S. Senator Maria Cantwell (D-Wash.) is adamant that Senate legislation tackling over-the-counter derivatives should not leave any loopholes for market abuse. She spoke to Derivatives Week about her specific grievances with the language that’s surfaced in the bills so far.

Senate Banking Committee chairman Senator Chris Dodd (D-Conn.) offers a description of an alternative swap execution facility in his latest bill that some market officials say is too narrow.

Dealers are lobbying for an exemption to a proposed law in Korea that would force all new over-the-counter instruments to be approved by a regulatory panel of the Korean Financial Investment Association (KOFIA) before being sold.

The New York insurance committee is circulating within the state assembly a draft bill that would ban naked credit default swaps and require any seller of CDS to obtain a credit default insurance company license.

A U.K. High Court judge ruled today that BGC Brokers, along with two of its senior executives in London, poached 10 employees from rival broker Tullett Prebon.

China’s National Association of Financial Market Institutional Investors (NAFMII) has informed a number of major Chinese banks they will be able to trade renminbi-denominated corporate credit default swaps referencing onshore names as part of a pilot scheme later slated for later this year.

A judge for the U.S. Bankruptcy Court for the Southern District of New York today approved a motion to transfer billions of dollars in impounded Lehman Brothers Holdings Inc. collateral to JPMorgan, but left the door open for Lehman to try and recover the monies at a later date.

Senator Chris Dodd (D-Conn.) has broadened the definition of major swap participant in his most recent financial reform bill. That has some end-users worried, but many observers think an expected amendment from Senators Jack Reed (D-R.I.) and Judd Gregg (R-N.H.) could change the definition again and create exemptions to the central clearing requirement.

Members of the European Parliament have admitted that a push by officials to ban naked sovereign credit default swap trading in the region may have been premature, given there is little U.S. support for such a ban.

Europe should set position limits for the over-the-counter derivatives market, according to Gary Gensler, chairman of the U.S. Commodity Futures Trading Commission.

A group of sellside and buyside institutions has formed the Swaps and Derivatives Markets Association to push for equal access to swaps clearing among dealers of all sizes.