Financial Regulatory Forum

CFTC rules on swaps trading put demands on compliance oversight

By Nick Paraskeva, for Compliance Complete

NEW YORK, May 29 (Thomson Reuters Accelus) - New U.S. rules requiring many over-the-counter derivatives to be traded on swap execution facilities and exchanges will have a major impact on the compliance and risk processes of market participants. Price quotation, execution and trade reporting requirements adopted last week by the Commodity Futures Trading Commission aim to bring transparency to the previously unregulated swaps markets.

The rules contain some concessions in response to industry lobbying against earlier proposals, but they did not squelch the opposition. (more…)

OPINION-The heavy lift of harmonization-CFTC’s Chilton

–The author is Bart Chilton, a commissioner at the U.S. Commodity Futures Trading Commission. The opinions represent the view of the author and not that of Reuters.

By Bart Chilton

Now that the U.S. has approved the largest financial regulatory reform ever undertaken, it’s time for other nations to join in to ensure more efficient, effective market systems. Here is what we know: free markets without sufficient sideboards led to the global economic collapse.

Banks moved away from traditional lending and into exotic mortgages and foolhardy bets — like naked credit default swaps — and ultimately the American taxpayer was left with the bill for bailing out large institutions previously thought of as too big to fail.

FACTBOX – Comparing EU and U.S. financial reform

LONDON, May 21 (Reuters) – The U.S. Senate approved a reform of Wall Street on Thursday and President Barack Obama may be signing into law the most sweeping changes to financial rules since the 1930s as soon as next month.

It implements pledges the United States, the European Union and other leading countries in the Group of Twenty made in 2009.

With the United States set to adopt its reform soon — and thus easily meet G20 deadlines — the EU has to play catch-up in some cases. Banks are watching carefully as transatlantic differences are emerging that will affect business models.

COLUMN – $2 trillion OTC derivatives may be undercollateralised

– John Kemp is a Reuters market analyst. The views expressed are his own –

By John Kemp

LONDON, April 14 (Reuters) – As much as $2 trillion of over-the-counter derivatives held at the largest banks in the United States, Europe and the rest of the world could be under-collateralised, according to a working paper published by the International Monetary Fund this month.

Banks might have to find $200 billion in initial margin and guarantee funds if standardised contracts are moved into clearing houses, and hold an extra $70 billion to $140 billion in regulatory capital to cover the non-standard contracts they retain on their balance sheets.

Bipartisan US financial reform deal uncertain – Sen. Dodd

By Kevin Drawbaugh

WASHINGTON, March 5 (Reuters) – Senator Christopher Dodd, chief negotiator for the Democrats in U.S. Senate talks on financial regulation reform, said on Friday he was uncertain whether bipartisan support for a compromise bill could be achieved.

With one of the Obama administration’s top domestic policy priorities in the balance, Dodd sounded wary but hopeful following weeks of discussions that have snagged on a proposal to create a new financial consumer watchdog.

“While we do not have a bipartisan agreement yet at all, we’re getting there, we’re trying. I don’t know if it will happen or not,” Dodd said in remarks on the Senate floor.

UK opposes mandatory exchange trading of derivatives

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.

UK authorities propose measures on OTC derivatives

LONDON, Dec 16 (Reuters) — Britain’s Treasury and Financial Services Authority proposed regulatory measures for over-the-counter derivative products on Wednesday, including higher capital charges for non-centrally-cleared trades.

The authorities published a paper to identify steps to address problems in management of counterparty risk and a lack of transparency in derivatives markets highlighted by the financial crisis.

“Given the importance of OTC markets to the UK economy (43 percent of the global OTC market is located in the UK), the UK has been leading the analysis of how these issues might be addressed,” the report said.

U.S. House approves sweeping financial regulation overhaul

By Kevin Drawbaugh

WASHINGTON, Dec 11 (Reuters) – The U.S. House of Representatives approved the biggest changes in financial regulation since the Great Depression on Friday, marking a win for the Obama administration and top Democrats in Congress.

The sweeping bill, which will have to be reconciled with any measure the slower-moving Senate might eventually approve, aims to safeguard the financial system and ward off future crises of the type that punished the nation in the past year with its deepest recession since the 1930s.

The House voted 223-202 to pass the 1,279-page bill, which was hammered out in the months since last year’s crisis convinced Democrats of an urgent need for reform. All of the chamber’s Republicans and 27 Democrats voted against bill.

U.S. House poised to back financial rules overhaul

By Kevin Drawbaugh

WASHINGTON, Dec 11 (Reuters) – The U.S. House of Representatives was expected to approve the biggest changes in financial regulation since the Great Depression on Friday, marking a win for the Obama administration.

With the Senate due to debate reforms well into next year, the House could complete its legislative work by passing a 1,279-page bill that has been hammered out in the months since 2008′s financial crisis.

The bill still faces potential amendments on the House floor, including one that would gut a key provision — the proposed creation of a Consumer Financial Protection Agency (CFPA) — and another to change mortgage bankruptcy law.

U.S. Senate agriculture panel head plans own US swaps reform bill

Senator Blanche Lincoln (D-AR) (C) speaks about the 2007 budget in a news conference at the Capitol in Washington, February 9, 2006. Also pictured are Senate Majority Leader Harry Reid (D-NV) (L) and Senator Kent Conrad (D-ND).   REUTERS/Jonathan Ernst WASHINGTON, Nov 18 (Reuters) – The U.S. Senate Agriculture Committee chairman said on Wednesday she intends to draft legislation “that will bring much-needed transparency and accountability to the over-the-counter derivatives market.”

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