Derivs - Regulation

Japan should sign memorandums of understanding with U.S. and European financial regulators in a bid to facilitate the sharing of information regarding important financial institutions, such as central counterparties, swap dealers and trade repositories.

E.U. regulators are set to issue guidelines for payoffs in investment products, including structured products, after an amendment to Packaged Retail Investment Products legislation was passed by the European Parliament’s Economic and Monetary Affairs Committee on Monday evening.

Bloomberg has completed the first cleared bunched derivative trade via its swap execution facility. The firm has developed new SEF functionality for its clients ahead of a Nov. 1 deadline set by the Commodity Futures Trading Commission for registered SEFs to complete onboarding documentation, including customer agreements.

A potential mismatch could arise if Japan’s Financial Services Agency looks at using trust accounts for the segregation of client collateral when it implements the Basel Committee on Banking Supervision and the International Organization of Securities Commissions’ margin requirements for non-centrally cleared derivatives, according to market officials.

Global consistency in over-the-counter derivatives legislation may not be possible, according to Steven Maijoor, chair of the European Securities and Markets Authority.

The Monetary Authority of Singapore has proposed product highlight sheets for convertible bonds where a prospectus is required to be issued. The regulator is aiming to improve the accessibility and readability of prospectuses, and encourage better understanding of a product’s key information.

The central banks of the U.S. and Japan will not be required to comply with EMIR reporting and clearing requirements after the Council of the European Union approved a European Commission act calling for their exemption.

The International Swaps and Derivatives Association has published a protocol that enables parties to amend the terms of covered transactions to address future rate discontinuations.

Recent press reports of Congressional and U.S. Commodity Futures Trading Commission investigations of possible price manipulations involving financial and energy assets have once again raised the question of what types of behavior constitute unlawful manipulation under the Commodity Exchange Act (CEA), which governs exchange and over-the-counter trading in a wide range of financial and commodities assets and values and can reach activities beyond U.S. borders.

The Hong Kong Securities and Futures Commission is leading the international charge to tackle cross-border extraterritoriality of global regulatory reforms stemming from the Pittsburgh G20 commitments, setting up a cross-border task force designed to bring industry and regulators together.

The International Swaps and Derivatives Association has published an FAQ to answer concerns expressed by market participants around a potential CDS credit event on U.S. sovereign debt at a time when discussions over the country’s debt ceiling continue.

Limiting the ability of so-called ring-fenced banks to trade interest rates, fx and commodity derivatives will be overly restrictive and could prevent banks from offering adequate protection to clients. That’s the view of Fiona Taylor, director of the European regulatory team at the International Swaps and Derivatives Association in London, in a letter to HM Treasury about the banking reform bill.