Derivs - Regulation

Lehman Brothers Special Financing is planning legal action to reclaim billions of dollars it says may have been improperly paid to collateralized debt obligation noteholders, its lawyers said in a U.S. bankruptcy court filing today.

U.S. corporate end-users should be exempt from over-the-counter derivatives regulations because they need customized maturities and collateral arrangements, according to Scott Morrison, president of the National Association of Corporate Treasurers.

The Senate Agriculture Committee is reportedly moving forward apace with derivatives reform with members exchanging language for a draft bill, just as one is expected to be released imminently by Sen. Chris Dodd (D-Conn.), chairman of the Senate Banking Committee.

The group of 15 major over-the-counter dealers collectively cleared 93% of all eligible credit default swaps by Dec. 31, 2009, according to a draft of the March 1 letter to the Federal Reserve Bank of New York. The G15 set itself a collective target of 80% as of October.

Michel Barnier, the new European Commissioner for Internal Market and Services, is set to hold talks with U.K. regulators and government officials March 2 on derivatives reform, financial transaction taxes and the Volcker rule.

The European Council released a report this week proposing that hedge funds in Europe disclose to regulators the leverage they employ through over-the-counter derivatives.

Stuart Kaswell, general counsel of the Managed Funds Association, has sent a letter to Neal Wolin, deputy secretary of the U.S. Department of the Treasury, supporting legislative amendments proposed by ICE Trust and CME Group last year aimed at protecting customer collateral in the event of a counterparty default.

Sharon Bowles, chair of the European Parliament’s Economic and Monetary Affairs Committee, wants to curb speculative trading of sovereign credit default swaps by enforcing position limits and other ownership restrictions, after seeing spreads gap out on Southern European sovereigns like Greece.

The U.K. Financial Services Authority and H.M. Treasury want to extend the Market Abuse Directive to cover credit default swaps.

The U.S. Financial Industry Regulatory Authority fined H&R Block Financial Advisors and one of its brokers today in its first enforcement action on reverse convertibles.

Barclays Capital has told employees it is raising base salaries for trading, sales and structuring teams globally in response to similar moves by competitors over recent weeks.

Commerzbank has filed for a summary judgment in the U.K. High Court in an attempt to avoid a trial after being sued last year by 72 former Dresdner Kleinwort employees claiming to be owed EUR34 million (USD46 million) in bonuses.