Derivs - Regulation

The recommendations of the U.K.’s Independent Commission on Banking chaired by Sir John Vickers published Sept. 2011 will have a profound effect on banking in the U.K.

Australian counterparties registered as U.S. swap dealers started submitting over-the-counter interest rate swaps and credit derivative trade data to the Depository Trust & Clearing Corp. this week as part of the first phase of the Australian Securities and Investments Commission’s trade reporting roll out.

Market participants will be required to report disputes in over-the-counter derivatives contracts via a European Market Infrastructure Regulation web portal hosted by the U.K. Financial Conduct Authority next week.

Trade repositories in Singapore could have a competitive advantage in the region after the European Securities and Markets Authority set out technical advice on equivalence for third country trade repositories between the Singapore and European regimes, but did not publish similar equivalence guidelines for trade repositories in Hong Kong, according to lawyers. ESMA stated that while Hong Kong is finalizing its own clearing rules, advice on equivalence with Europe cannot be established.

Distributors of structured products and funds in Australia are hoping upcoming revision of the Future of Financial Advice reforms by the new government will promote greater volume in their industry.

The Korea Exchange will divide membership of its over-the-counter derivatives clearinghouse into two categories, which will see foreign entities allowed to access the CCP indirectly as customers via Korea-based brokers.

The U.S. Commodity Futures Trading Commission’s one-month delay for registered swap execution facilities from any enforcement under the SEF rules with regard to market participants who trade on such SEFs isn’t long enough for the industry.

Buysider margin needs to be segregated for non-centrally cleared derivatives, Aron Landy, chief risk officer for Brevan Howard, told the 34th Burgenstock annual global derivatives markets conference in Geneva last week. Guus Warringa, chief legal counsel and board member at Dutch pension fund APG Asset Management, agreed.

Thomson Reuters has been temporarily approved as a swap execution facility by the Commodity Futures Trading Commission.

The Shanghai Clearing House and the People’s Bank of China are set to meet mid-October with China’s top legislature and judiciary bodies in a bid to iron out netting and bankruptcy rules, according to lawyers.

Interoperability of global clearing models is not only undesirable but could kill product innovation, said Phupinder Gill, ceo of CME Group, at the 34th Bürgenstock annual global derivatives markets conference in Geneva.

The capital cost of clearing for banks could lead end-users to create shadow-banking entities to clear trades, according to panelists.