Global banks are in a precarious position as they try to navigate compliance with both China's new security law imposed on Hong Kong, and sanctions against China under deliberation in the US. Banks face a serious dilemma if the US calls on them to cooperate in sanctioning Chinese entities, which the new security law expressly prohibits.
US midsize banks preparing to phase out Libor are showing a preference for the American Interbank Offered Rate, an unsecured overnight rate, rather than the Secured Overnight Financing Rate, which the Alternative Reference Rates Committee favors. The banks say Ameribor relates more closely to their cost of funds.
Experts told a FIA virtual conference that there has been little progress in migrating cleared swaps from UK central counterparties to EU CCPs. Material risk transferred from London's LCH to Germany's Eurex "hasn't really played out yet, particularly for the longer-dated portfolios," said JP Morgan's Farida El-Gammal.
Saudi Arabia is looking to launch a derivatives market in the third quarter of this year, said Mohammed El-Kuwaiz, chairman of the kingdom's Capital Market Authority. El-Kuwaiz told an online discussion panel, "We are in the phase of developing the derivatives market with intensive work on the options contracts and the futures contracts."
Hong Kong Exchanges and Clearing has become the first to clear an interest rate swap based on the Hong Kong Dollar Overnight Index Average (Honia) as part of a trade between Bank of China (Hong Kong) and the Hong Kong and Shanghai Banking Corp. Honia has emerged as an alternative to the Libor-based Hong Kong Interbank Offered rate (Hibor).
Bets on dividend futures beaten down by the coronavirus crisis sent QVR Advisors' volatility fund up 15.7% during the second quarter. QVR told investors in a letter that the "shift in volatility of volatility (higher) and trading liquidity (lower) makes this a good environment for our strategies."
James McDonald, the director of the Commodity Futures Trading Commission's Division of Enforcement, said in a recent interview with FIA General Counsel Allison Lurton that recently issued civil monetary penalty guidance should be seen as a living document and will work in concert with previous policy statements. He also discussed coordination with the Department of Justice and how a company's internal investigations and cooperation may affect penalties.
Wells Fargo executives are drawing up plans to cut thousands of jobs, sources say, as analysts predict the lender could post its first quarterly loss in more than 10 years.
Fintech SoFi is renewing its plans to become a national bank and has applied for a de novo charter with the Office of the Comptroller of the Currency. The firm had withdrawn its 2017 application with the Federal Deposit Insurance Corp. and Utah bank regulators.
The San Francisco Federal Reserve Bank will host biweekly research seminars on the impact of climate change. Fed attention has in recent months centered on its response to the fallout from the coronavirus pandemic.