Derivs - Regulation

Regulators in the U.S. and Europe have reached out to officials on structured credit desks to better understand the effect the structured bid have on corporate financing.

European commercial banks are approaching asset managers and broker dealers to enter total return swaps to free up capital.

Dealers and the International Swaps and Derivatives Association are working on ways to settle credit-default swaps triggered by a restructuring credit event and are considering grouping together contracts with similar maturities and running a separate auction for each of these groups of contracts.

Dealers and the International Swaps and Derivatives Association are working on how to deal with a restructuring credit event as part of a broader project to hard-wire cash settlement into ISDA documents.

The Bank of Thailand is understood to have submitted a new credit derivative regulation to the Thai Ministry of Finance that could pave the way for local commercial banks to enter into total-return swaps, currently not permitted by law without BoT consent.

The Securities and Financial Markets Association has formed a global, investor-led task force to examine the credit rating agencies system and the group is expected to meet sometime before mid-May to map out its plan and priorities.

Regulators have told DW that creating a central clearing house for credit-default swaps is not a move they are pushing for.

Lawyers say the recent slew of collateral disputes caused by valuation discrepancies is leading to either entirely new agreements or significant changes, rather than lawsuits.

Investment banks are slowing complex trading and spending millions to clean up messy back offices in the wake of the Jérôme Kerviel affair, City consultants say.

A group of dealers is pushing forward with a plan to establish a clearing house for credit derivatives in co-operation with The Clearing Corparation.

A breakdown in LIBOR-linked funding is leading market participants to peg derivatives transactions on alternative rates such as overnight index swaps.

The Taiwanese retail market for structured investments has been particularly hard hit by recent market turbulence, with bankers reporting that market activity has backed off by close to 90% since last year.