Derivs - Regulation

The International Swaps and Derivatives Association has appointed external counsel to produce a memorandum updating its clients on China’s close out netting rules.

The Clearing Corporation of India, which operates the country’s nascent over-the-counter central counterparty, will issue globally compatible legal entity identifier numbers to entities which are party to a financial transaction.

European banks may be required to limit their derivatives products to centrally cleared interest rate, fx and credit derivatives to non-financial clients under new legislation on proprietary trading being considered by the European Commission.

Recent relaxation to documentation requirements by China’s State Administration of Foreign Exchange could boost the mainland's cross currency swap market.

A proposed amendment to South Korea’s Commercial Act Enforcement Decree will allow firms to set off unrealized gains arising from hedging derivatives against the unrealized losses of the underlying transactions.

The Commodity Futures Trading Commission has attempted to dodge blame for failing to limit the cross-border reach of Dodd Frank by issuing a request for comment instead of addressing issues over the extraterritorial application of the regulation.

One date highlighted by market participants next year is Feb. 12, when mandatory reporting to trade repositories begins in Europe. The European Securities and Markets Authority has already approved six trade repositories including IntercontinentalExchange and CME Group (DW, 29/11), but lawyers say that creases in the counterparty-dealer relationship need to be ironed out before the deadline, especially surrounding the issue of delegated reporting.

The move towards greater economic liberalization in China in 2013 and work on strengthening the legal regime, specifically around the bankruptcy law, will likely filter down to the country’s nascent derivatives market in 2014.

The U.S. Commodity Futures Trading Commission has authorized the Singapore Exchange’s SGX Derivatives Clearing as a derivatives clearing organization. The authorization from the CFTC is the first for an Asian clearinghouse.

Market participants that are found guilty of committing fraud or manipulation in the E.U. could face jail under rules agreed by the European Parliament and E.U. member states today.

Financial counterparties and non-financial counterparties will be required to delegate risk-management procedures and arrangements to an asset manager who is providing portfolio management services to the counterparty on an agency basis, according to the European Securities and Markets Authority.

European legislators have failed to reach an agreement over the final text of the Markets in Financial Instruments Directive, reneging on a prior agreement over commodity exemptions to the definition of a financial instrument in Annex I, Section C (6) of the text.