Derivs - Regulation

The National Conference of Insurance Legislators has begun to think about how it would regulate credit default swaps. Joseph Morelle, chairman of the New York Assembly Committee on Insurance and of NCOIL’s taskforce on CDS, told DWO a timeline for creating model legislation was outlined Friday.

CME Group, which has partnered with Citadel to clear credit default swaps, has regulatory approval for its offering but is waiting for critical mass to launch, said Kim Taylor, managing director and president of the clearing house division at yesterday’s Futures Industry Association OpTech 09 conference in New York.

Global regulators are unlikely to stop at mandating central counterparty clearing platforms for credit derivatives in the quest to reduce risk, according to some industry experts.

The British Bankers’ Association has given its support to the existing mixed-measurement model for financial reporting, and is urging international accounting boards to deal with the valuation and impairment of available-for-sale financial assets, the inability to reclassify instruments subject to fair value, and embedded derivatives.

A recent proposal by the U.S. Financial Accounting Standards Board to allow financial institutions to apply fair value measurements to illiquid instruments, such as synthetic collateralized debt obligations, could render the government’s Troubled Asset Relief Program ineffective, auditors at Ernst & Young said.

The volume of market participants that have signed up to the credit default swap big bang hardwiring protocols, launched March 12 by the International Swaps and Derivatives Association, numbered 1,712 by press time. The window for adhering parties closed at 5p.m. today.

The new panel of judges presiding over the controversial knock-in knock-out currency trade case at Seoul Central District Court have asked the banks in question to disclose how they calculated premiums on the contracts

Banks in Asia who use international accounting standards may have to wait at least nine months from now before any change in valuing illiquid products becomes law

The North American credit default swap market will start trading the new standardized CDS contracts Wednesday, but some are worried the industry is not adequately prepared.

Taiwan’s Financial Supervisory Commission has released a 17-page paper on draft regulations governing the sale of retail structured products by offshore institutions, and some of the proposals caught the market off-guard.

The court for the Southern District of New York is set to hear a dispute between Barclays Bank and Morgan Stanley Capital Services concerning payment rights from one of the first synthetic collateralized debt obligations issued.

An update released today by the Bank for International Settlements’ Financial Stability Forum has called on international financial authorities to enforce minimum initial margins for over-the-counter derivatives.