Financial Regulatory Forum

BRUSSELS, April 7 (Reuters) – The European Union (EU) is embarking on an overhaul of financial services that politicians hope will send bankers back to their roots of no-frills lending to households and business.

Michel Barnier is the EU commissioner in charge of the shake up on regulations ranging from curbs on banker pay to a clampdown on speculators betting on government debt.

Here is a guide to the overhaul:

* One of Barnier’s priorities is writing a rule book for trading derivatives, a financial instrument whose value is linked to an asset such as a government bond or currency.

Pushed to the top of the agenda after politicians blamed speculators for worsening Greece’s borrowing problems, the European Commission will in June propose broad controls on market betting.

As part of a drive to force more transparency in the $600 trillion off-exchange derivatives market, Barnier will demand that traders either record their positions, or buy and sell through a central counterparty or exchange.

By Huw Jones and Jane Baird

LONDON, Feb 12 (Reuters) – British, Dutch and Swiss market watchdogs have agreed conditions to end a ban on clearing linkages, which could spur competition and cut fees in Europe’s stock market, industry officials said on Friday.

Share trading platforms like Chi-X and BATS want clearing houses to share markets, so that these venues can offer multiple clearers and strengthen their ability to compete with exchanges such as Deutsche Boerse and NYSE Euronext by bringing down transaction fees.

The worst financial crisis since the 1930s prompted regulators to slam the brakes on a string of applications from clearers to hook up with one another.

By Huw Jones

LONDON, Feb 2 (Reuters) – Banks should not be forced to shift privately-negotiated derivatives transactions onto exchanges, Britain’s Financial Services Minister, Paul Myners, said on Tuesday.

“We do not see the need for mandating trading of standardised derivatives on organised trading platforms,” Myners told a committee of parliament’s upper chamber.

The G20 group of countries agreed last year that standardised over-the-counter derivatives should be centrally cleared and, where appropriate, traded on an exchange or other type of electronic platform.

By Jonathan Spicer

NEW YORK, Dec 15 (Reuters) – CME Group Inc began clearing U.S.-based credit derivatives on Tuesday, aiming to capitalize on a government push to safeguard a private market blamed for exacerbating the financial crisis.

The launch of CME’s clearinghouse for credit default swaps (CDS) coincides with the date large dealers promised to offer clearing to their clients. It comes more than a year after the venture was announced, and more than nine months after rival IntercontinentalExchange Inc began clearing CDS.

CME, the world’s largest derivatives exchange operator, has from the beginning promoted its clearinghouse as one friendly to buyside firms, six of which are founding members. Citadel Investment Group was CME’s original partner.