Derivs - Regulation

Eurex Credit Clear has cleared the first single name credit default swap contract globally, with Nomura and UniCredit—the platform’s only two members so far—behind the contract.

The Central Bank of the United Arab Emirates is cracking down on retail structured products but has done so in a fashion that is confusing to bankers and lawyers.

A coalition of trade groups is floating the idea of restricting the re-use of collateral posted in derivatives transactions. The idea comes in response to concern from buysiders reeling after Lehman Brothers collapsed and they had difficulty recovering their money. The group plans to release its proposals by November.

The U.S. Bankruptcy Court for the Southern District of New York today agreed in principle to the concept of non-binding mediation between Lehman Brothers and counterparties on its in-the-money derivatives. A formal order was adjourned to Sept. 15, the next omnibus hearing date.

Goldman Sachs is offering to replace users’ non-standardized credit default swaps featuring ‘modified restructuring’ with the new ones bearing ‘no restructuring’ trading conventions. It believes contracts on the old format hold secondary market value, but on the other side buysiders need to get out of Mod R contracts, since they are no longer liquid.

South African regulators are looking at over-the-counter derivatives, focusing on contracts-for-difference as well as credit default swaps.

Korea’s Financial Supervisory Service is looking into additional regulation of equity-linked notes after receiving allegations of manipulation.

Regulations issued by the Bank of Thailand earlier this month have cleared up questions over what hedging and speculative transactions are allowed by Thai banks and investors, particularly when the trades reference foreign assets or are done with a foreign counterparty.

Gary Gensler, chairman of the Commodity Futures Trading Commission, has pushed back on certain points of the Obama administration’s draft Over-the-Counter Derivatives Markets Act of 2009, a consolidation of previously voiced positions on the market.

A taskforce within a subcommittee of the American Bar Association is looking into mutual funds’ usage of derivatives and leverage, focusing on potential improvements in three areas: the legislative framework, disclosure requirements and board oversight.

The U.K. Financial Services Authority has struck an agreement with the U.K. Financial Ombudsman Service, an independent body that settles claims between consumers and financial firms, to defer decisions on cases relating to Lehman Brothers-backed structured products for the second time in six months.

CME Group will not be establishing a credit default swap default fund separate from the one covering futures and options, Kim Taylor, president of CME Clearing, told Derivatives Week. The move is in contrast to IntercontinentalExchange Clear Europe and Eurex, which have separate funds.