Derivs - Regulation

Amendments to one of South Korea’s key financial regulations, designed to regulate mandatory central clearing of over-the-counter derivatives, should allow for mutual recognition of overseas clearinghouses.

The International Swaps and Derivatives Association has written to the Bank of England to warn against regulating for full asset segregation. Draft European Markets Infrastructure Regulation proposals to segregate margin deposits of individual clients in futures swaps were originally designed to offer greater client protection in case of counterparty default.

Mainland Chinese corporates are unwilling to provide credit support annex documents when entering cross-border derivative contracts, making it difficult for foreign dealers to sell hedging products, such as fx forwards and options, to their Chinese corporate clients.

The European Commission has set a deadline of the end of the year for the European Securities and Markets Authority to deliver technical advice on supervisory measures and the collection of fines from trade repositories, as set out by the European Market Infrastructure Regulation.

The Reserve Bank of India is looking to improve the availability of long-term over-the-counter fx forwards by developing the country’s money market and interest rate swaps market, making it easier to price forwards with tenors greater than one year.

Algorithms or expert judgment should be used when there is insufficient relevant transactional data to compile a benchmark, according to George Handjinicolaou, deputy ceo and head of Europe, Middle East and Africa at the International Swaps and Derivatives Association.

Some of Europe’s biggest banking associations have warned European Union finance ministers that the financial transaction tax will damage derivative volumes if the current proposals are implemented as planned in January 2014. Under the FTT, financial transactions will face taxes of 0.01% for derivatives and 0.1% for stocks and bonds.

European dealers and counterparties in Japan are looking at contingency plans in case the country’s central clearing counterparty and clearing regulatory regime do not obtain mutual recognition and equivalence status from the European Securities and Markets Authority under the European Market Infrastructure Regulation.

The international reach of Dodd-Frank may result in Brazilian businesses choosing to hedge with a non-U.S. firm to avoid any regulatory burdens involved in complying with U.S. regulation.

An amendment that would have reviewed a rule in the U.S. that requires investments firms to request a quote to buy or sell derivatives from three dealers—an automatic increase from two dealers—has been rejected by the U.S. Commodity Futures Trading Commission.

The Commodity Futures Trading Commission must take the lead on cross-border regulatory harmonization, George Handjinicolaou, deputy ceo of the International Swaps and Derivatives Association told DI.

Derivatives Intelligence & Derivatives Week have launched the Global Derivatives Law Firm Survey, a comprehensive qualitative customer ranking of law firms across multiple asset classes, regulation, tax, and many other areas. The law firm with the best ranking across all categories within the survey will be crowned the Global Derivatives Law Firm Of The Year at the Global Derivatives Awards ceremony in London in September.