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ESMA Issues Consultation Draft on Regulation of OTC Derivatives, CCPs and Trade Repositories

by | Monday, March 19, 2012 | , ,

The European Securities and Markets Authority has issued a discussion draft on proposed regulation of OTC Derivatives, CCPs and trade repositories. The draft introduces provisions to improve transparency and reduce the risks associated with the OTC derivatives market and establishes common rules for central counterparties and for trade repositories.

The discussion paper follows the structure of the European Market Infrastructure Regulation proposal (EMIR) published in 2010, with the first section focusing on OTC derivatives and in particular the clearing obligation, risk mitigation techniques for contracts not cleared by a CCP and exemptions to certain requirements.

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Volker and Legislators Defend the Volker Rules

by | Sunday, February 26, 2012 | , ,

Responding to strident criticism of proposed regulations implementing the Volker Rule, former Fed Chair Paul Volker and the Senate authors of the Dodd-Frank Volker Rule provisions defended the rule as absolutely vital and urged the SEC and banking agencies to eliminate unjustified exclusions and exemptions, such as proposed hedging exemptions related to bank investments in private funds.

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Is the Evidence There to Revamp Reporting under 13(d)?

by | Sunday, February 19, 2012 | , ,

Lucian Bebchuk, Professor of Law, Economics, and Finance at Harvard Law School and Robert J. Jackson, Jr., Associate Professor of Law at Columbia Law School have published a paper urging caution and concluding that the SEC should not proceed with a recently proposed tightening of blockholder reporting. While not opposing some re-examination of the blockholder reporting regulatory regime, Bebchuk and Jackson explain that changes should be examined in the larger context of the beneficial role that outside blockholders play in American corporate governance and the broad set of rules that apply to such blockholders.

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SEC Chair Lays Out the Future of OTC Derivatives Regulation

by | Sunday, February 19, 2012 | ,

In an address in February before the Practicing Law Institute, SEC Chairman Mary Schapiro outlined for the audience the Commission’s plans to build, from the ground up, a new regulatory regime for over-the-counter derivatives. The innovative and heretofore lightly regulated OTC derivatives market has long been seen by Schapiro as a risk to the financial system. In particular, she sees systematic risks posed by: the opacity of the derivatives market; weak or non-existent capital, margin and clearing and settlement requirements; and the concentration of derivative transactions among a relatively small number of institutions.

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Beyond Basel. Can We Do Better than Basel III?

by | Sunday, February 19, 2012 | , ,

Even as countries strive to meet the quickly approaching Basel III deadlines, some fairly influential voices in regulatory policy are wondering aloud if the latest Basel guidelines are up to the task. Thomas M. Hoenig, director of the Federal Deposit Insurance Corporation, in a September 14, 2012 address before the American Banker Regulatory Symposium, raised his concerns that Basel III is based on faulty assumptions and processes, and introduces unworkable complications into an already complex system. Hoenig proposes an alternative, a “back to basics” approach he feels would be more easily monitored and enforced, and represent a better measure of a firm’s ability to withstand financial adversity.

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NYSE Proposes Listing Rules for Derivatives and Structured Products

by | Monday, February 13, 2012 | ,

Nasdaq has proposed new rules for the the qualification, listing, trading, and delisting of a broad list of structured notes and other related products. Although the present NASDAQ Rule 5710 includes initial listing standards for equity index-linked securities and commodity-linked securities, NASDAQ’s proposal would amend Rule 5710 to add continuing listing standards for equity index-linked securities and commodity-linked securities. Nasdaq has also proposed Rule 5711 which would impose listing standards for a host of other equity-linked, commodity-linked, and other notes.

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Strong and Lasting Recovery Depends on Successful Financial Reforms

by | Sunday, February 12, 2012 | , ,

Dismissing calls to weaken or reconsider global financial reforms in the face of short-term setbacks in global recovery, Jaime Caruana, General Manager, Bank for International Settlements, argues that it is more important than ever to continue reforms and see through what has already begun. Caruana lays out in a recent address before the 2012 ADB Financial Sector Forum four principles he feels should guide these ongoing reform efforts.

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