Derivs - Regulation

The Japan Securities Clearing Corp. is looking to clear yen-denominated interest rate swaptions and could start clearing interest rate swaps denominated in other foreign currencies in 2014.

Systemically important persons that trade over-the-counter derivatives could need to register with the Hong Kong Securities and Futures Commission and comply with subsequent regulations should their OTC derivative position reach a certain threshold.

Market participants are expecting a smooth transition to mandatory clearing for non-financial commercial end users, or category 3 entities, in the U.S today.

Foreign investors looking to access the offshore yuan liquidity are better served in the cross currency swap market than entering the nascent CNH HIBOR interest rate swap market, launched earlier in summer.

Merrill Lynch Japan Securities, the securities arm of Bank of America-Merrill Lynch in Tokyo, has joined the Japan Securities Clearing Corporation’s over-the counter credit default swap clearinghouse.

The European Securities and Markets Authority has sent technical advice to the European Commission on the equivalence between third country legal and supervisory frameworks in respect of the European Market Infrastructure Regulation for the U.S. and Japan.

Banks will only be allowed to rehypothecate collateral set aside for initial margin once, unless collateral is collected as variation margin, according to new guidelines for non-centrally cleared derivatives from the Basel Committee on Banking Supervision. Firms must also calculate initial margin on a gross basis, rather than a net basis, according to the BCBS.

The Securities and Markets Stakeholder Group of the European Securities and Markets Authority has called on the regulator to improve the timing of its engagement with the financial services industry when developing level two and level three measures.

South Korean corporations not already licensed by the Financial Services Commission are now allowed to issue certain types of non-principal protected structured products, following the implementation of a recent amendment to the country’s main financial regulation.

Tullett Prebon has filed an application to the U.S. Commodity Futures Trading Commission to become a swap execution facility under Dodd-Frank, three weeks after the final SEF rules became effective.

The Australian Securities Exchange’s over-the-counter derivatives, futures and options clearinghouse expects to meet the higher international capital standards for central clearing counterparties, including those set in the E.U.

Proposals by the Basel Committee on Banking Supervision to incorporate market liquidity risk into the trading book capital framework by classifying risk into buckets of differing liquidity are too simplistic and may add unnecessary complexity into the framework, according to industry participants.