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The Office of Federal Housing Enterprise Oversight's (OFHEO) focus on Fannie Mae's accounting raises the chance Fannie may have to set aside additional capital as a reserve for its hedging activities, according to fixed-income professionals.

--Carl Moerbe, senior agency strategist at Morgan Keegan, on a report from Fannie Mae's regulator criticizing the mortgage giant's accounting.

The U.K. Financial Markets Law Committee has set up a working group to examine the issues raised in a recent Australian court ruling over how to interpret the International Swaps and Derivatives Association master agreement.

The Financial Services Authority is preparing a consultation paper to discuss how International Financial Reporting Standards will affect capital measures, as set out by the Basel II accord.

Dealers in Hong Kong have been abuzz about massive Hong Kong dollar interest rate trades recently put on by banking giant HSBC that have boosted liquidity in the local market.

The Indian regulators have eased trading rules on domestic future positions, which is expected to trigger a major boost in over-the-counter derivatives volumes.

The International Swaps and Derivatives Association is planning to send a second comment letter to the Department of the Treasury and Internal Revenue Service in an attempt to soften the authorities' tax proposals on contingent swaps.

ISDA published last week a confirmation and provision for credit-default swaps referenced to U.S municipal entities.

Manor Park, a U.K. structured products provider, will purchase index options on a quarterly basis for its latest open-ended fund.

U.K. real estate investor Protego will expand its use of property derivatives to offer investors a range of property-linked products by year-end.

Several domestic European regulators are likely to add credit derivatives to the list of instruments eligible for netting, according to Emmanuelle Sebton, head of risk management at ISDA in London.