Derivs - Regulation

ANZ has become the first Australia-based member of LCH.Clearnet’s SwapClear interest rate swap central clearinghouse and has cleared its first trade.

Only a few financial firms that have signed up to the Hong Kong Trade Repository are submitting trade data, with the rest of the counterparties waiting until December when mandatory interim reporting is enforced.

Pricing bilaterally traded over-the-counter derivative contracts that are entered into following the enforcement of the frontloading obligation under the European Market Infrastructure Regulation could result in market dislocation, according to the International Swaps and Derivatives Association and the British Bankers’ Association.

The Korea Exchange is conducting research to determine which non-deliverable forward currency pairs, in addition to Korean won and U.S. dollar, the bourse’s central clearing counterparty will clear when the service starts in 2014.

Should derivatives regulation differ between provinces in Canada, then it could result in market participants having to comply with rules in more than one province and disincentivize dealers from transacting with counterparties based in Canada, according to market participants. Regulators in Canada, however, are aiming for the provincial rules to be identical.

The European Securities and Markets Authority has secured a delay to the deadline for the registration of the first trade repositories until Nov. 7 from Sept. 24. This means that counterparties will not be expected to report to trade repositories until Feb. 2014.

Obtaining high-quality assets to use as collateral may be destructive to the markets in which they are being used and they’ll be costly to get hold of, according to Michael Clarke, managing director at Goldman Sachs.

Market participants are likely to continue using streaming prices and request-for-quote when credit derivatives are mandated to be traded on swap execution facilities, as opposed to trading on a central limit order book, according to panelists at the International Swaps and Derivatives Association’s Annual North America Conference in New York on Thursday.

The market needs to ensure greater margin efficiency for buyside firms to produce returns for their clients, while the introduction of swap execution facilities is leaving buysiders with greater risk, according to Richard Prager, board member at the International Swaps and Derivatives Association and head of global trading at BlackRock.

A European Court of Justice judge has opined that the European Securities and Markets Authority should not have the power to intervene in national law to prohibit short selling financial instruments in emergencies. The move has some raising the possibility that the E.U. short selling regulation, which includes the ban on naked sovereign credit default swaps, may be reworked.

The Australian Securities Exchange’s over the counter derivatives clearinghouse cleared the first Australian dollar interest rate swap on Thursday between the Commonwealth Bank of Australia and Deutsche Bank.

Firms operating in Europe are testing client clearing for interest rate swaps prior to the introduction of clearing deadlines in the European Market Infrastructure Regulation.