Derivatives
FSB sees flaws in OTC derivatives reforms
Despite greater clarity emerging from the range of regulatory initiatives, there are still considerable differences in implementation between jurisdictions
Powell: Fed will ‘make sure’ swap market can ditch Libor
Central banks want to break the swap market's reliance on Libor, but the planned risk-free alternatives will have to be liquid, and the Fed expects to play a coordinating role
Former SEC chair urges US to accept use of NGAs for overseas swaps
Recent focus on US banks' use of non-guaranteed affiliates risks taking regulators down a slippery slope - issue could be tackled via disclosure instead, argues ex-SEC chair Harvey Pitt
Central Bank of Ireland markets chief wants derivatives on TTIP agenda
The Central Bank of Ireland's markets director believes TTIP is the ideal forum to iron out differences over substituted compliance and establish agreement on monitoring and data collection systems
ECB's Cœuré weighs pros and cons of central clearing
Executive board member touts benefits, including multilateral netting of exposures, but also warns that differences in regulation may lead to regulatory arbitrage and race to the bottom
Frontloading fears remain despite Esma guidance
Uncertainty has been narrowed by Esma Q&A, but dealers say they will still face pricing headaches
OTC derivatives turnover driven by 'non-dealer' contracts, says BIS
Article in latest BIS quarterly review notes share of inter-dealer trades shrunk to 35% in 2013; trading remains concentrated in major financial centres despite 'rapid' growth in EM currencies
CLS raises £160 million capital from shareholders
Hefty capital raise completed last week to enable CLS to meet demanding new capital requirements and support future growth
Initial margin to significantly impact development of Asian derivatives markets: Asifma
Asifma head Austen wants exclusion of initial margin from Asian jurisdictions’ derivatives market regulation
CCPs face $161 billion liquidity shortfall to clear FX options, GFXD finds
Results of an industry study reveal the scale of the liquidity burden that would fall on CCPs clearing physically delivered FX options – but a net settlement mechanism could reduce the number by 73%
Bill Clinton says failure to reform OTC markets earlier was a "real mistake"
Speaking at Sifma AGM, former US president says OTC market should have been forced into collateralised regime before 2008 crisis
Big European companies reject third-party reporting for derivatives
Corporates fear they will still pay the penalty if mistakes are made by delegated reporting services
Lagarde says US has ‘special responsibilty' to unwind QE responsibly
IMF director says failure to raise US debt ceiling could seriously damage the global economy; warns emerging markets will have to adjust to new economic reality for remainder of the decade
Volcker rule in its ‘purest form' necessary to curb derivatives speculation
Under pressure from banks and hedge funds, the definition of ‘hedging' in the final Volcker rule could be so broad as to allow unchecked speculation dressed up as hedging, Vembar Ranganathan argues
FX clearing driven by capital and collateral costs rather than mandate
As mandatory NDF clearing has been delayed, the likely increase in capital and collateral requirements for FX trades is forcing some to consider clearing ahead of the mandate
BIS: Forex OTC markets hold steady, despite regulatory uncertainty
Semi-annual BIS survey reveals a rise in forex OTC derivatives transactions in the second half of last year
Central banks weigh use of OTC clearing houses
Survey finds nearly 40% of central banks are considering clearing their OTC derivatives
Bank of Italy gives green light to €3.9bn MPS bailout
Executive board approves disbursement of bailout funds to Monte dei Paschi di Siena, although the bank insists the situation is ‘completely under control’
Canadian research finds net liquidity boost from central clearing
Bank of Canada working paper finds small liquidity increase from use of centrally cleared derivatives
RBI’s Sharma laments failure of derivatives markets in India
The interest rate swaps, credit default swaps and interest rate futures markets have all failed to take off as hedging markets in India, likely due to onerous regulation, says RBI executive director
BIS’s Cecchetti envisages world without G-Sifis
Stephen Cecchetti says the global financial system needs to reach a stage where no banks are globally systemically important; market discipline critical to stability but not sufficient
MAS expands rate-setting review to cover NDFs
Monetary Authority of Singapore instructs banks to review rate-setting in forex market; banks instructed to discipline any staff found guilty of wrongdoing
Bank of Spain paper develops model of market volatility
Researchers produce measure of volatility able to cope with ‘vast’ panels of data; find model performs better than others that use shorter time horizons
Korea transaction tax could halve number of derivatives transactions
Proposal for a transaction tax on futures and options could have a dramatic impact on Korea's derivatives market