Mandatory Swaps Clearing, Says CFTC

The CFTC announced today that swap dealers, major swap participants, and private funds active in the swaps market, are required to begin clearing certain index credit default swaps (CDS) and interest rate swaps that they entered into on, or after March 11, 2013. In a press release, the CFTC stated that the...

Barnier Issues Letter to EU Lawmakers Concerning Swaps Rules

The European Union’s financial services chief, Michel Barnier, issued a letter asking EU Lawmakers to drop a threat that would block derivatives rules, stating the plan has the potential to harm the EU credibility. According to Barnier’s letter, obtained by Bloomberg News, delaying over-the counter...

ESMA Provides Confirmation, Relief for Fears of Front-Margin for Swaps

The European Securities and Markets Authority (ESMA) has said that a new regulatory regime will not impose swaps margin requirements retroactively. The prospect of changing margin costs for enduring trades came to be know “front-margining,” and a substantial amount of worry had developed in...

SEC’s Walter Sets Loose Agenda for 2013: Cross-Border Swaps are No. 1

New U.S. Securities and Exchange Commission head Elisse Walter set the stage for the commission’s upcoming regulatory year on Friday. Walters placed capital raising, market structure, and issues of extraterritoriality regarding cross-border swaps regulation at the top of the agenda. SEC on Cross-Border...

Regulators in India, U.S. Loosen Grip on Credit Default Swaps (CDS)

Regulators in the U.S. and India now plan to ease up on the credit default swaps (CDS) market. CDS in India The Reserve Bank of India announced this week that it will allow credit default swaps (CDS) for unlisted rated corporate bonds. It already allows CDS for listed bonds. “In addition to listed...

FX Update: Will the European Union Exempt FX Swaps?

It is unclear whether the European Union will exempt FX swaps from clearing rules even though the U.S. Treasury did so last month. In November the U.S. Treasury exempted FX swaps, the second largest derivatives trading market, from certain stipulations of the Dodd-Frank Act. The Treasury cited high-levels of...

To SEF or Not to SEF?: New Derivatives Platform KerbX Must Decide

KerbX, a new equity derivatives platform authorized by Dodd-Frank, must decide whether it will register as a swap execution facility (SEF). Dodd-Frank will push the bulk of the $640 OTC-derivatives market through clearinghouses and SEFs in order to cut back on privately negotiated trades. TheWSJ reports that...

Swaps Report: ISDA Predicts Only 20% of Swaps Will Remain Uncleared

A report by the International Swaps and Derivatives Association (ISDA) predicts that swaps remaining outside of clearing will require traders to post $1.7 to $10.2 trillion in initial margin, after new rules go into effect next year. Margin is the collateral that traders use to back their positions; initial...

Derivatives Update: Cut-Price Clearing Approved for OTC

OTC derivatives dealers who offer both trading and clearing gained a significant advantage this week, as the CFTC approved cut-price clearing wherein derivatives clearing and execution may be bundled together. The rule is seen to favor large trading and clearing firms who are already waiving fees. The result...

Buy-Side Nervous Ahead of OTC Clearing Regulation

New swaps regulation that forces a large amount of OTC derivatives through central counterparties (CCPs) has some domestic and international buy-side advocates nervous, according to panelists at the 2012 Sibos conference. The question remains whether the buy-side is prepared for the looming regulation that...