"The Bank of England (BoE) has warned banks to book trades to their various legal entities in a simple, coherent way, citing lessons learned during the collapse of Lehman Brothers. Messy booking practices could make it harder for authorities to quickly resolve stricken banks, the BoE fears."
"Offshore hedge funds can breathe a sigh of relief after the Commodity Futures Trading Commission (CFTC) narrowed the scope of its controversial US persons definition. The CFTC's cross-border guidance had previously defined any offshore hedge fund with a majority of US investors as a US person, meaning the fund would have to comply with transaction-level requirements set out in the US Dodd-Frank Act, such as mandatory reporting and clearing of certain swaps. However, in its proposed rules for cross-border uncleared margin, released on June 29, the regulator scrapped the so-called majority ownership test, to the delight of industry participants."
"Alternative reinsurance capacity struggles to find a home outside of existing, well-defined product lines, according to Guy Carpenter’s Chairman Britt Newhouse, but this provides clear opportunities for growth for ILS specialists."
"Another private catastrophe bond, or cat bond lite, transaction has been launched by Swiss headquartered ILS and reinsurance investment manager Twelve Capital, with the completion of Dodeka VII, an $18.899m deal."
"Today’s derivative practitioners are facing a new slew of complicated computational and other challenges as they work hard to achieve their end goal—profitability. With ever-increasing regulations being implemented and rolled-out, what should we be looking at when it comes down to best practices in dealing with the growing list of XVA pricing adjustments?"
"This article outlines a framework for considering whether clients in mid-career are on track for a sustainable retirement. It investigates what combinations of savings rates and years of continued work would have allowed someone to have always accumulated enough by retirement to afford one’s desired retirement expenditures in all of the rolling periods from the historical data. A strategy is “safe” if it worked in the worst case offered thus far by history."
"Alternative reinsurance capital, so third-party investor funding allocated to catastrophe bonds, collateralized reinsurance, sidecars and other insurance-linked securities (ILS), grew by more than 3% in the first-quarter to $66 billion, outpacing total reinsurance capital growth."
"The prospect of new financial regulation hurting liquidity in the European Union energy market was high on the agenda at Energy Risk Summit Europe, with several speakers giving dire warnings about the consequences of the second Markets in Financial Instruments Directive (Mifid II), in particular."
"We are in the early stages of data-based analysis of possible recent changes in the resilience of market liquidity. An upcoming study of the October 15 event will shine some light on the functioning of the U.S. Treasury market, but there is still much we need to learn. More broadly, at the Board, we will closely monitor and investigate the extent of changes in the resilience of liquidity in important markets, while deepening our understanding of different contributors and how market participants are adapting."
"It is imperative that lawmakers and regulators work to relieve smaller firms from the excessive capital requirements burden. Otherwise the future for liquidity in our European markets looks anything but rosy."
"SINGAPORE: The Monetary Authority of Singapore (MAS) announced on Wednesday (Jul 1) that it is seeking feedback on proposed regulations for central clearing of over-the-counter (OTC) derivative contracts."
"Despite Japan regulators introducing Basel III in 2013, a year ahead of Europe and with it the requirement to calculate a regulatory credit valuation adjustment charge to mitigate counterparty credit exposure, domestic banks in the north Asian country are not yet pricing CVA into derivatives trades."
"Cash may have been king a few years ago, but it has fallen on hard times. Facing a raft of new regulatory costs, banks are turning customers away – seven out of 11 depositors that spoke to Risk for this article said their bank has become reluctant to do the business. The alternatives are not always attractive."
"The restoration of private-sector securitization – non-government guaranteed securities – is a necessary component of the broader reinvigoration of the housing system in the United States. Why has the market for Private-Label Mortgage-Backed Securities (PLS) remained largely stagnant while others have gained momentum since the financial crisis?"
"In a move that will have significant ramifications for the global reinsurance market re/insurer ACE Group has announced that it is to acquire competitor Chubb Group to create the world’s largest property and casualty firm."
"Barney Frank and others apparently had the easy job: crafting the legislation that would become the Dodd-Frank Act and the law of the land. Regulators now have the unenviable task of making it work. Sometimes that means pushing aside personal views for the common good."
"Standard & Poor's, the credit rater, has just published new research on the changing structure of the corporate bond market and its effect on on a wide variety of financial entities."
Not only have the regulators fragmented the swap market with their uncoordinated demands on its participants but, with respect to the general lack of cross-border harmonisation, they have managed to do so with a bare minimum of sunlight shining into their closed door consultations. A pattern has emerged: there comes a carefully worded, impeccably anodyne statement assuring the credulous reader of progress; followed by months of waiting for some verification or substantiation of progress; followed by another anodyne statement of progress; followed by yet more months marked by little if any actual, verifiable progress.