Derivs - Regulation

Rep. Barney Frank (D-Mass.) plans to release his draft over-the-counter derivatives bill in about a week, and his version should be similar to the Obama administration’s proposal.

A New York regulator held back-to-back meetings with dealers last week and listened to warnings about the pitfalls of outlawing naked credit default swaps, but did not fundamentally alter his views.

Goldman Sachs’ tradeable longevity index, QxX, which was launched with much fanfare in 2007, has seen little activity and currently has no swaps or other derivatives outstanding.

A data repository in multiple locations covering different asset classes, which is supervised in Europe and the U.S., could cause duplications of information on over-the-counter derivative trades.

Coordination between Europe and the U.S. is essential in an effort to regulate the over-the-counter derivatives markets, Gary Gensler, chairman of the Commodity Futures Trading Commission, told a European Commission gathering in Brussels this morning.

Sharon Bowles, chair of the European Parliament’s Economic and Monetary Affairs Committee, acknowledged at a conference yesterday that London’s position as the epicenter of Europe’s over-the-counter derivatives market may slip as regulators look to change the rules.

The Australian Financial Markets Association has introduced standardized documentation for carbon derivatives under Australia’s Carbon Pollution Reduction Scheme—a cap-and-trade system that could be introduced next year, if passed by Parliament.

The multi-billion dollar Indian participatory note market is at risk following a regulatory proposal that threatens to nix tax treaties that have allowed noteholders and issuers hedging those instruments to avoid capital gains tax.

There’s speculation that Rep. Collin Peterson (D-Minn.), chairman of the House Agriculture Committee, could be considering his own over-the-counter derivatives bill, independently from Barney Frank (D-Mass.), chairman of the House Financial Services Committee.

European regulators are warning against adopting the same over-the-counter regulatory proposals being put forward in the U.S.

A new over-the-counter derivatives bill put forward by Sen. Jack Reed (D-RI) would give the Securities and Exchange Commission oversight of all security-based derivatives, including those referencing broad-based indices—indices with 10 or more component securities.

More end-users have started lobbying the U.S. Congress to change parts of the proposed over-the-counter derivatives bill, and a high-ranking Congressman last Tuesday said he believes dealers have been pressuring them to act.