Derivs - Regulation

Bank Negara Malaysia will not prohibit close-out netting in the event a domestic financial institution collapses.

The Commodity Futures Trading Commission is consulting on potential changes to rules governing firms’ investment of segregated customer funds. It is considering whether to amend Regulation 1.25, which allows derivative clearing organizations and futures commission merchants holding customer segregated funds to invest those funds in certain ways.

Market participants are drawing a link between the timing of the U.S. government’s announcement on regulating over-the-counter derivatives and a block Senators Bernie Sanders (D-Vt) and Maria Cantwell (D-Wa) lifted on Gary Gensler’s nomination to chair the Commodity Futures Trading Commission.

Lawrence Brandman, a bankruptcy lawyer specializing in derivatives, has joined Lehman Brothers Holdings Inc. in New York as head of bankruptcy strategic advisory for derivatives.

The Federal Reserve will likely be the chosen regulator if U.S. financial regulation is consolidated, according to former regulators.

The London Stock Exchange has ruled out clearing credit default swaps due to problems it foresees valuing them, Raffaele Jerusalmi, director of derivatives in Milan, told Derivatives Week.

Peter Nathaniel, chief risk officer at the Royal Bank of Scotland, warned yesterday at the GARP conference in London that clearing bilateral over-the-counter derivatives on exchange will not eliminate counterparty risk.

A court case involving Standard Chartered unit SC First Bank as the defendant and four corporate plaintiffs who lost money on fx derivatives kicked off yesterday in Seoul District Court.

Roger Cole, director of banking supervision and regulation at the U.S. Board of Governors of the Federal Reserve System, told Derivatives Week at today’s Global Association of Risk Professionals conference in London that banks will need to revisit the models they are using to value derivatives.

Northern Trust is expanding its over-the-counter derivatives business with additional services and personnel. By the middle of next year, it plans to have launched new services for valuing and processing trades for its asset management and pension fund clients, addressing their increasing use of equity- and credit-linked instruments.

In the wake of U.S. Treasury Secretary Timothy Geithner’s call last week to introduce sweeping regulations on over-the-counter derivatives, market participants are concerned about the lack of clarity over which agency will lead the charge.

Corporate boards, especially chief financial officers and treasurers, are shying away from accelerated share repurchasing programs using embedded forwards amid looming regulation of over-the-counter derivatives.