Derivs - Regulation

The high number of loans eligible for delivery into the credit default swap settlement auction for Aiful is bad news for protection sellers, who may get lumbered with debt they may struggle to get off their books, according to Deutsche Bank credit analysts.

The first step to preventing another financial crisis is increasing the transparency of the over-the-counter derivatives markets, according to a report from research and advisory firm Aite Group.

U.S. Senate Banking Committee members Jack Reed (D-R.I.) and Judd Gregg (R-N.H.), who are steering the derivatives working group under Committee Chairman Chris Dodd (D-Conn.), reportedly believe that some end-users should be exempt from mandatory central clearing.

LCH.Clearnet is set to launch a platform for clearing over-the-counter fx options.

A special hearing will be required to harmonize conflicting U.K. and U.S. judgments on the Dante collateralized debt obligation lawsuit after this week’s U.S. court ruling.

U.S. House Financial Services Committee Chairman Barney Frank (D-Mass.) this morning trashed industry arguments that over-regulation of the financial markets, including derivatives, could lead to the next financial crisis.

Hong Kong regulators may need to amend the country’s Securities and Futures Ordinance from 2002 to ensure comprehensive reform of over-the-counter derivatives. But the Securities and Futures Commission is in no hurry.

Dealers have formed a new working group to help boost flows in the contingent credit default swaps market. The group, comprising 23 dealer-only members of the International Swaps and Derivatives Association, met Jan. 19.

A coalition of major players in the over-the-counter derivatives market have agreed to a request from U.S and international regulators to define what constitutes a standardized OTC contract for each asset class.

The German government and its banking regulator Bundesanstalt für Finanzdienstleistungsaufsicht, or BaFin, look set to cap compensation for traders and other staffers responsible for taking risks on behalf of financial firms.

A number of banks have been signing agreements to kick-start the distribution of offshore structured retail products back into Taiwan.

The Obama administration’s proposal to rein in proprietary trading has predictably drawn fire from industry watchers. At issue is how to distinguish market making for clients from excessive risk-taking using proprietary capital.