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January 7, 2013

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Daily coverage for the global derivatives industry

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Basel Committee offers banks reprieve on LCR
The Basel Committee on Banking Supervision has granted a four-year reprieve and phase-in period for its liquidity-coverage ratio, a step that banks had argued was necessary to sustain lending. Originally, banks were required to have in 2015 sufficient liquid assets to cover expected outflow over 30 days. The date for that has been changed to Jan. 1, 2019, with banks needing to show a 60% ratio in 2015. Financial Times (tiered subscription model) (1/6), Reuters (1/6), The Wall Street Journal/Dow Jones Newswires (1/6)

Commentary: Economic worries drive Basel decision
The Basel Committee on Banking Supervision's decision to loosen an upcoming liquidity rule highlights its concerns about the global economy, Brooke Masters writes. Financial Times (tiered subscription model) (1/6)

Commentary: Revisions to LCR are step in right direction
The Basel Committee on Banking Supervision's revisions to the liquidity coverage ratio should help jump-start the securitization market and sustain corporate-bond demand. Financial Times (tiered subscription model) (1/6)

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Industry News and Trends

Analysis: New rules for derivatives favor platform consolidation
Derivatives are at the core of the merger of NYSE Euronext and IntercontinentalExchange, Helen Bartholomew writes. The regulatory push to get derivatives centrally cleared opens up new business lines for exchanges with a global reach, product breadth and cutting-edge technology, and those elements combined allow exchanges to create and list "contracts that mirror the economics of [over-the-counter] derivatives," Bartholomew writes. International Financing Review (free content) (1/5)

Bank alters trading platform to offset regulatory costs
In a radical change, JPMorgan Chase is adopting new trading technology and moving to a single platform in a bid to rein in costs as regulations come into effect. Financial Times (tiered subscription model) (1/6)

Regulatory Roundup

Foreign banks get no relief on swaps push-out
The Office of the Comptroller of the Currency has repeated a mistake embedded in the Dodd-Frank Act concerning foreign banks, Matt Cameron writes. Non-U.S. financial institutions that conduct swaps in their American branches still will have to shift those activities into a separate legal entity by mid-July. U.S. banks can get a three-year "safe harbor" from the rule, Cameron writes. Risk.net (subscription required) (1/4)

Initial margin for OTC swaps gains support of Fed's Yellen
Federal Reserve Board Vice Chair Janet Yellen says she supports a proposal to require traders to post initial margins on many swaps that would not be standardized and subject to clearing mandates this year. "A more robust and consistent margin regime for non-centrally cleared derivatives will not only reduce systemic risk, but will also diminish the incentive to tinker with contract language as a way to evade clearing requirements," Yellen said at an industry event. However, critics say the proposal could harm global over-the-counter trade. Reuters (1/4)

Cross-border regulation creates challenges
During the past year, regulators have clashed publicly and privately over harmonizing rules from different countries. In 2013, it will be crucial for negotiators to establish a framework to resolve extraterritoriality issues concerning areas including derivatives trading and capital requirements, Michelle Price writes. Financial News Online (U.K.) (subscription required) (1/7)

Coming attraction in 2013: Regulatory changes
This year is overflowing with regulations, including the revised Markets in Financial Instruments Directive and the European Market Infrastructure Regulation. There are significant changes to matters including capital, liquidity, transparency and oversight. Here's a month-by-month guide to help navigate all of the changes. Financial News Online (U.K.) (subscription required) (1/7)

FSA is criticized for slow response to swaps mis-selling
The U.K. Financial Services Authority is accused of responding only fitfully to help small investors who were mis-sold complex interest rate derivatives. "I cannot understand why HSBC has had to pay out billions of pounds to the U.S. regulator [on money-laundering charges] when, closer to home, individuals like me continue to struggle financially due to being mis-sold a base-rate swap," retail investor Rachelle Cohen said. The Telegraph (London) (tiered subscription model) (1/6)

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