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Regulation

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  • A crop of hedge funds setting up shop in Hong Kong specifically to invest in Chinese stock through the use of over-the-counter derivatives are being squeezed by the quotas placed on foreign investors by the Chinese authorities.
  • Since retail structured products must already be registered with the Securities and Exchange Commission, they will be largely unaffected by pending derivatives legislation, experts say. But if firms are forced to clear their internal hedges for those structures, investors could face higher costs.
  • David Ruder, former Securities and Exchange Commission chairman and a key panelist on the newly formed SEC/Commodity Futures Trading Commission committee on harmonizing emerging regulations, wants to see more transparency, but without forcing the derivatives business offshore.
  • A recent decision by a Hong Kong court to dismiss a challenge on regulatory decision making relating to banks repurchasing Lehman Brothers’ minibonds in 2009 has frustrated lawyers who were keen to see more clarity on the matter.
  • Sens. Tom Harkin (D-IA) and Maria Cantwell (D-Wash.) introduced a little-noticed amendment last Tuesday on the Senate floor that would tighten the screws on Wall Street derivatives dealers by changing the recently amended definition of a swap execution facility back to its original, stricter form.
  • Members of the European Parliament’s Economic and Monetary Affairs Committee voted on Monday to create a European Securities and Markets Association, which will be given powers to approve which over-the-counter derivatives are considered standardized enough for central clearing.