Derivs - Regulation

A comprehensive derivatives reform bill should reach U.S. President Barack Obama’s desk in late summer, according to Kevin McPartland, senior analyst at independent research firm TABB Group in New York.

JPMorgan, Scotia Capital, Bank of America and Citigroup are among banks pitching to investors total return swap programs that would act as warehouse lines for collateralized loan obligations. The move is the latest sign of the return of the CLO market.

Japanese lender Aiful’s credit default swap settlement auction could impact pricing for other names. “If Aiful’s CDS final price is set at a very low level, it could be a factor for widening,” said Junichi Shimizu, credit research analyst at Deutsche Bank in Tokyo.

Proposals for retail structured product regulation could be put forward by the European Commission as early as April, according to an official at the Commission in Brussels.

Market participants are nearing completion of the new bullet, or non-cancellable, loan-only credit default swap contract after more than a year of debate. A call was held yesterday to discuss the draft, which could be formally introduced by the end of this quarter.

A host of Lehman Brothers’ derivatives counterparties, including Société Générale and Canadian Imperial Bank of Commerce, filed objections this week to the bankrupt firm’s attempts to expedite claims against the estate.

Bank Indonesia is expected to issue long-awaited regulations targeting offshore structured products providers shortly.

Thailand’s Securities and Exchange Commission is planning to introduce by the end of this quarter stricter standards for foreign derivatives dealers wishing to trade in Thailand, according to lawyers.

U.K. representatives on the European Parliament’s Economic and Monetary Affairs Committee are set to cross-examine Michel Barnier, the presumed successor to European Commissioner for Internal Markets and Services Charlie McCreevy, on the impact derivatives regulation will have on the City of London.

A Financial Industry Regulatory Authority arbitrator on Dec. 29 ordered UBS to compensate an investor who bought Lehman Brothers-backed structured products from the bank, the third such decision to go against UBS.

A taskforce within a subcommittee of the American Bar Association will likely stop short of suggesting that the Securities and Exchange Commission impose position limits on mutual funds’ use of over-the-counter derivatives.

U.S. Senate Banking Committee Chairman Chris Dodd (D-Conn.) has scrapped the financial reform package he introduced Nov. 10 (DW, 11/10) and assigned committee members Judd Gregg (R-N.H.) and Jack Reed (D-R.I.) to write new legislative language targeting over-the-counter derivatives.