Derivs - Regulation

The U.S. Treasury Department is close to proposing legislation that would see Tier One financial holding companies—firms that could pose a threat should they fail—subjected to tougher reserving and risk management requirements. Treasury spokesman Andrew Williams told Derivatives Week Tuesday that the department plans to release proposed legislation on the Tier One portion of the financial reforms “very soon…[in] days or weeks.”

Eurex is close to announcing the single name credit default swap contracts eligible for central counterparty clearing as the July 31 deadline set by the European Commission approaches.

The Committee of European Securities Regulators has called for the adoption “as soon as practicable” of a mandatory trade transparency regime for corporate bond, structured finance and credit derivatives markets, arguing that industry initiatives have not worked.

Bank Indonesia has issued regulations effectively banning the sale of structured products to retail investors.

The U.S. Department of Justice confirmed last night its investigation into potentially anticompetitive behavior among generators of credit derivatives pricing and revealed that clearing providers would also come under scrutiny.

The five main interdealer brokers, ICAP, GFI Group, BGC Partners, Tradition and Tullett Prebon, have formed a group called the Wholesale Market Brokers’ Association Americas, which met for the first time today to discuss its mission statement and a forthcoming Web site.

The U.S. Department of Justice investigation into credit default swap pricing is being seen by some as a logical move, but also many CDS traders told Derivatives Week they believe the investigation will fizzle out.

The Basel Committee on Banking Supervision has enhanced its trading book rules, forcing firms to apply higher capital requirements to offset the risks of complex instruments, such as derivatives.

Emerging market credit default swaps recently went from monthly maturities to quarterly.

Retail and institutional investment flows in structured products in Switzerland are trending up, rising to CHF227 billion in April from CHF225 billion in March, according to the Swiss Structured Products Association’s latest market update our today.

The Commodity Futures Trading Commission’s decision to hold public hearings to consider position limits in electricity, oil and natural gas trading is being tagged by some industry players as political posturing.

The U.S. National Conference of Insurance Legislators was due to vote last Thursday on model legislation that could have banned naked credit default swaps—swaps where the buyer does not own the underlying bonds or loans. But after two hours of testimony and debate, the vote was deferred until NCOIL’s annual meeting in November, Susan Nolan, executive director, told Derivatives Week.