Derivs - Regulation

US banks face tighter but potentially confusing restrictions on booking swaps business overseas, say lawyers, after the Commodity Futures Trading Commission (CFTC) adopted a rule that applies multi-faceted criteria to applying cross-border margining requirements on uncleared swaps.

The Hong Kong Exchange (HKEX) has announced the launch of the first RMB global currency index, with a new line of RMB currency futures approved for take off on May 30.

The People’s Bank of China (PBoC) is likely to issue its planned onshore bond denominated in special drawing rights (SDR) as a multi-currency structured note, according to industry participants.

China’s authorities are moving to liberalise the commodities market and introduce renminbi pricing for more and more asset classes as the country puts its focus on furthering global usage of the currency.

The US Department of Labor’s new conflict of interest regulations will change the way structured products are packaged and sold to retail retirement accounts, law firm Morrison & Foerster has warned. And although implementation is nearly a year away, the scope and complexity of likely programme changes require immediate attention from both manufacturers and distributors of structured products.

The International Swaps and Derivatives Association has launched a protocol to help market participants comply with regulations that enforce stays on contractual termination rights between counterparties in different countries.

The People’s Bank of China announced new measures on Wednesday to facilitate cross-border trading in the country’s gold market. The rules follow the launch of a new pricing benchmark in April, which is expected to draw renewed attention to the gold market internationally, according to the World Gold Council (WGC).

The US Senate Agriculture Committee was expected to review legislation reauthorising the Commodity Futures Trading Commission (CFTC) on Thursday amid debate over the benefits of additional funding for financial regulators.

The International Swaps and Derivatives Association (ISDA) used its 31st annual general meeting in Tokyo this week to publish the first in a series of documents to help market participants comply with margin requirements for non-cleared derivatives. It also joined other industry bodies in a clarion call for global regulators to drop dual-sided derivatives trade reporting in favour of an entity-based approach.

Foreign central banks will be allowed to repatriate their RMB holdings without restrictions if they have invested in China’s interbank bond market (CIBM) or traded in the onshore foreign exchange market, said the People’s Bank of China (PBoC) in two announcements released on April 14.

China is set to launch a new gold price benchmark via the Shanghai Gold Exchange (SGE), according to market participants. The initiative will see the involvement of both local and foreign financial institutions, marking a new achievement in China’s quest to make the RMB a reference currency in the commodity markets.

The Basel Committee has made an adjustment to the way it wants leverage ratios to be calculated, in a change that will lessen the capital burden on many banks that deal in derivatives.