Derivs - Regulation

A new task force backed by the American Bar Association will try to answer what to do about implicit leveraging by mutual funds using derivatives, Andrew Donohue, director of the Securities and Exchange Commission’s Division of Investment Management, told delegates at the Mutual Fund Directors Forum this week.

Malaysia’s central bank is expected to allay market concerns that it would prohibit close-out netting on derivatives should a domestic financial institution fail.

Stanford University Finance Professor Darrell Duffie argues in a new book on policy issues facing credit derivatives that the sort of central clearing platforms proposed for CDS would not have prevented outsized losses at American International Group.

The Depository Trust and Clearing Corp. has been fielding requests for barrier options to be added to its derivative confirmation platform, Deriv/SERV.

Eurex Clearing is working with the U.S. Depository Trust & Clearing Corporation’s Trade Information Warehouse on a real-time feed that would show cleared derivative positions and how they impact each member’s portfolio.

Guernsey-based asset manager Birch Assets is avoiding derivatives in the two Shariah-compliant funds it has begun marketing to the retail market, since there is little appetite for the instruments among investors.

Bank of America has given Merrill Lynch clearance to issue its first warrant on the Hong Kong Stock Exchange after four months of stagnation related to their merger.

In the wake of several counterparties, who owe or are owed money by Lehman Brothers International Europe, failing to submit timely valuations on their derivative contracts with the firm, administrator PriceWaterhouseCoopers is trying to move the ball forward.

An announcement from the Depository Trust & Clearing Corp. yesterday that it had terminated its plans to follow through with a proposed merger with LCH.Clearnet is forcing market participants to regroup and reconsider the future of global clearing.

ICE Trust has devised an auction mechanism for determining the settlement prices of cleared credit default swap positions and therefore the daily variation margin to be posted by its members.

Syncora Guarantee has become the first monoline to cease payments under credit default swap contracts and other claims after a New York State Insurance Department section 1310 order forced it to suspend payments as of yesterday.

The percentage of trade record errors attributable to the back office in derivatives transactions has decreased, according to the latest industry survey from the International Swaps and Derivatives Association.