Derivs - Regulation

The U.S. House of Representatives passed its financial reform bill today, 223-202, including amendments providing a controversial limit on banks’ ownership of clearing houses and a definition of “major swap participant” that’s better for the industry.

The Securities and Exchange Commission’s first insider trading case involving credit-default swaps took a step forward this week when a New York judge ruled against the defendants’ motion to dismiss the case.

A European Parliament committee has proposed that structured retail issuers disclose product terms to regulators where potential buyers are based before marketing the notes.

The U.S. House of Representatives passed a number of amendments to its financial reform bill tonight, including a controversial proposal that limits banks’ collective stake in any clearing house to 20% and a definition of “major swap participant” that’s better for the industry.

Market participants appear resigned to the fact the Hong Kong Securities and Futures Commission is unlikely to budge on a number of contentious plans to overhaul the unlisted structured products market.

A Financial Industry Regulation Authority arbitration panel’s decision to force UBS to compensate an investor to whom the bank sold Lehman Brothers-backed structured products appears on the face of it a troubling development for sellsiders, but some industry officials say they aren’t worried.

Tomorrow the U.S. House of Representatives will debate its comprehensive financial reform package, which includes the reconciled over-the-counter derivatives bill.

Foreign banks are requesting that warranties be written into their over-the-counter derivatives contracts with Chinese counterparties as a means of mitigating regulatory risk.

The U.S. House Financial Services Committee and House Agriculture Committee have drafted a reconciled over-the-counter derivatives bill that they are planning to introduce as an amendment to the omnibus financial reform bill this week.

The International Swaps and Derivatives Association has hired Davis Polk & Wardwell to spearhead drafting of the upcoming 2010 Equity Derivatives Definitions.

Blythe Masters, global head of commodities at JPMorgan, made an innovative proposal at a U.S. congressional hearing on Wednesday that could change the terms of the derivatives reform debate.

City headhunters say they are getting calls from Royal Bank of Scotland derivatives sales and trading staffers, who say they will quit in the New Year if they do not receive competitive performance-related bonuses for 2009.