Part of London’s lucrative over-the-counter swaps market is set to come under direct US regulatory oversight as dealers in the UK capital wrestle with meeting tighter rules for overseas swaps dealers accessing US markets.
Last week we wrote about the recent ISDA margin survey and the rehypothecation of collateral. We noted that 99% of the cash & 85% of government securities received as margin on non-cleared swaps was eligible for rehypothecation and that 87% and 45%, respectively, was actually used. There is more to the story, as explained in an April 19th post from the Harvard Law School Forum on Corporate Governance and Financial Regulation “Segregation of Initial Margin Posted in Connection with Uncleared Swaps”.
The proposal put forward recently by Senators Tim Johnson, Democrat from South Dakota, and Michael Crapo, Republican from Idaho, who lead the Senate banking committee, would bring about a housing finance system driven first and foremost by market incentives rather than by government dictates. There are many pieces to the proposal, including support for affordable housing and an innovative approach by which to reward financial firms that serve a broad range of customers and penalize those that do not.
Corporate bond markets are beginning to adapt to the post-crisis world, which will result in returning liquidity, according to research by the International Organization of Securities Commissions (IOSCO).
Foreign exchange dealers won't face the added cost of having to clear some currency trades if the European Union decides they must come under new EU rules to make derivatives markets safer, a top regulator said.
New rules from the China Banking Regulatory Commission may jumpstart the market for securities backed with financial leasing assets, though hurdles other regulators have put up, as well as high financing rates, are likely to limit its growth.
In retrospect, it is striking that the sovereign bond spreads of peripheral Eurozone countries surged while the economic conditions were gradually deteriorating. This column provides a new explanation for this phenomenon. It suggests that the markets in credit default swap indices have exacerbated shocks to economic fundamentals. The same change in fundamentals had a higher impact on the spread during the crisis period than it had previously.
Results of the March 2014 survey on credit terms and conditions in euro-denominated securities financing and OTC derivatives markets
Over the past several years, a consensus has developed on the goals of GSE Reform: preserve the liquidity of the mortgage market while protecting the taxpayer by putting private capital in a first loss position, retain wide access to long-term fixed rate mortgages, provide access and equity for lenders of all sizes, and support affordable housing. Senators Tim Johnson (D-SD) and Mike Crapo (R-ID) released new draft legislation in March 2014 striving to achieve these goals. While this bipartisan proposal is a major step forward for housing finance reform, we suggest improvements in two critical areas: the structure of the private capital in the first loss position and the affordable housing incentive fee provisions. In both cases, the system as proposed has intellectual appeal, but is apt to have unintended and undesirable consequences.
Individual chapters of this reference book on derivatives will be published on this page as they become available.
The life expectancy gap between the wealthiest and poorest areas of the UK has shrunk, official data on Wednesday show, amid signs that the longevity of men, in particular, is improving.
The way the reinsurance business is capitalised has changed over the last decade, as an increasing amount of capacity funded by capital market investors has entered the sector seeking to benefit from the returns possible on reinsurance business.
This report reviews the catastrophe bond and insurance-linked securities (ILS) market at the end of the first-quarter of 2014, looking at the new risk capital issued and the composition of the transactions completed during Q1 2014.
CME has launched 2, 5 and 10 year DSF contracts on their European trading platform and CCP. The USD DSFs have had mixed reception but looking at the CME statistics are still climbing in volume,
Legal impediments hampering steps towards a cross-border resolution regime for financial institutions could be eliminated in the coming months as the Financial Stability Board prepares to present proposals to global leaders for an international approach to a temporary stay on over-the-counter derivatives contracts for a failed counterparty.
Even as SEF volumes have reached record highs in the wake of the Made-Available-to-Trade determinations, evidence suggests some users are ‘fine-tuning’ contracts in order to continue trading Off-SEF.
Were there no CFPB or Dodd-Frank Wall Street Reform and Consumer Protection Act, banks and non-banks alike would be backing away from the mortgage business. The significant withdrawal of players such as Nationstar and Bank of America from retail lending, and the collapse of the mortgage wholesale and correspondent markets, is just the start of a more generalized retreat of capital from residential mortgage lending that has its origins long before 2010, before Dodd-Frank passed and the CFPB was created. The simple reason for this statement is that the mortgage business, as it stands today, is not particularly profitable, in a nominal sense.
The Commodity Futures Trading Commission Acting Chairman Mark Wetjen and Office of Financial Research Director Richard Berner today announced a Memorandum of Understanding on the terms and conditions for the CFTC and OFR to begin a joint project to enhance the quality, types and formats of data collected from registered swap data repositories.
The main thrust of the consultation document aims at identifying the point at which a spot contract can be considered a forward contract. It recognises that, whilst two business days is the most widely used point of delineation, cut-off points range from between t+0 and t+7, asking what settlement period or periods would be most appropriate, and whether non-deliverable forwards merit different treatment.