A European bank has included in a written contract that a borrower cannot go to a US bank to hedge the loan. The underlying, but unstated, reason is fear that the lender would fall under the Dodd-Frank Act's swaps-dealer jurisdiction. "It's the first time we've seen this," said an adviser in the deal.
The revised Markets in Financial Instruments Directive is getting closer to reality, and monitors of operational risk in the industry need to get a handle on changes, write Meredith Gibson, head of legal risk at Santander UK, and Helen Pykhova, director of Op Risk. They note that some of the regulation's edicts are not on the industry's radar.
US adoption of International Financial Reporting Standards is seen as highly likely, but it won't be easy. Sceptics worry that IFRS -- touted as a simpler, principles-based approach -- has not been through the test of time, like the US Generally Accepted Accounting Principles.