Derivs - Regulation

U.S. and European regulators must ensure mutual recognition when finalising derivatives regulation in order to reduce jurisdictional conflict, legal risk and compliance complexity, according to a report from a coalition of industry groups called the E.U.-U.S. Coalition.

The opening of China’s corporate bond market to private placements could prove a positive development for credit default swaps there, as players will be able to price more easily credit not linked to state-owned enterprises.

The Hong Kong Monetary Authority introduced Friday a liquidity facility for authorized institutions dealing in China yuan-denominated bonds and fx forwards. It has also replaced its CNH risk management limit with a liquidity ratio for monitoring RMB liquidity positions.

The Commodity Futures Trading Commission is planning to give the industry guidance on Dodd-Frank extraterritoriality provisions. It will also phase-in compliance for foreign institutions on entity-level definitions over the course of an additional year, Gary Gensler, chairman, said in a lunch speech at the Institute of International Bankers.

Alliance Bernstein has cleared interest rate swaps through LCH.Clearnet’s SwapClear, becoming the 75th end user to clear IRS with via the service.

The Foreign Account Tax Compliance Act, which was signed into U.S. law on March 18, 2010, as part of the Hiring Incentives to Restore Employment Act, includes a number of revenue raising provisions affecting cross-border derivatives transactions.

A Chinese over-the-counter central clearing counterparty will not be recognized internationally until China strengthens netting and insolvency laws and refinements are made to the Shanghai Clearing House’s default management protocol.

The Securities and Markets Stakeholder Group, an influential division of the European Securities and Markets Authority, has criticized a proposal from the pan-European regulator for technical standards on margin calculation models for central counterparties.

The Depository Trust & Clearing Corporation plans to open an office in Japan officially in June-or-July, but it may not be ready for the Nov. 1 start for mandatory clearing and reporting of over-the-counter derivatives.

Separate default waterfalls at central counterparties for different markets and committed capital to each waterfall make sense for limiting contagion, Edwin Schooling Latter, head of the Bank of England’s payments and infrastructure division in London, told DI.

The International Swaps and Derivatives Association has stepped up preparations for the potential exit of a member state from the eurozone.

The International Organization of Securities Commissions should drop references to ‘complex’ financial products in its proposed rules around suitability requirements for the distribution of products, according to a letter from six industry associations.