Derivs - Regulation

The European Commission is soliciting alternatives to proposed capital charges for customized trades and has reached out to various industry bodies and dealers for their thoughts.

The New York bankruptcy court judge handling the workout of the Lehman Brothers Holdings estate ruled yesterday that Metavante Corp., a counterparty that owes Lehman roughly USD7 million plus interest on a swap, has to pay up. That’s despite language in the International Swaps and Derivatives Association contract that suggested otherwise.

A training module for participants selling what the Monetary Authority of Singapore considers to be complex structured products will be implemented by the first quarter.

Mary Johannes, director of U.S. regulatory policy at the International Swaps and Derivatives Association, this morning cited a 50% chance of over-the-counter derivatives legislation substantially like the Treasury Department’s proposals passing Congress before the 2010 Congressional elections.

A white paper addressing margin-related risks will be released today by the International Swaps and Derivatives Association, the Managed Funds Association and the Securities Industry Financial Regulatory Authority.

The Hong Kong Securities and Futures Commission is considering allowing dividend swaps to be sold to retail investors.

Matthew Kerfoot, formerly a senior v.p. on HSBC Bank USA’s global structured fund products’ desk, has joined Dechert as counsel in the firm’s New York office. He will focus on advising clients on structuring and documenting equity, credit and commodity derivative transactions.

On the anniversary of Lehman Brothers’ bankruptcy filing, it seems fitting to consider the magnitude of losses—both on derivatives referencing Lehman and on trades where Lehman served as counterparty—that might have been sustained had another dealer failed soon after.

The International Swaps and Derivatives Association is working on a standardized contract for longevity swaps, a sign the nascent market is taking off.

Bank Indonesia’s intentions to restrict what offshore providers can sell into the country are expected to feature two points that have bankers worried. The first is that BI will only permit sales of credit-linked notes and collateralized debt obligations on the strict proviso the offshore issuer has at least one onshore branch.

A number of wrinkles in Thomson’s debt, including a potential indemnity related to its revolver, lie behind the delay in determining the list of debt obligations deliverable into the credit default swaps settlement auction.

The Singapore’s plan to introduce a cooling-off period for investors in structured products has market participants querying who would assume the risk of that product falling in value over that time period.