CDS probe gives banks new reason to fret 1 Jul 2013 The EU says the industry colluded to keep exchanges out of the lucrative credit default swaps market. Derivatives body ISDA, data provider Markit and 13 banks may not pay the large potential fines, but the industry will struggle to avoid damaging an already terrible image.
Italy still can’t shake off old derivative sins 26 Jun 2013 Rome’s use of financial engineering in the 1990s is known, but news of a possible 8 bln euro loss on pre-euro swaps is still embarrassing. The debt crisis hasn’t fully clarified Italy’s opaque public finances. Lingering obscurity won’t help if Italy has to ask the ECB for help.
U.S. Congress revs up to squash its own swap rules 25 Mar 2013 A bill that claims to flatten the playing field for U.S. and foreign derivatives traders drew unanimous support in its first test. But it would create a giant loophole in the Dodd-Frank reforms and make regulators’ jobs harder. That’s no way to reduce systemic risk.
Deutsche and Nomura should help tidy Monte mess 11 Feb 2013 Monte dei Paschi faces big losses from structured trades arranged by Deutsche and Nomura. The Italian lender may have known what it was doing when it took on the risks. But Deutsche and Nomura could score regulatory and reputational dividends from helping MPS out of its tangle.
Bank of Italy didn’t push hard enough on MPS 30 Jan 2013 Italy’s central bank knew Monte dei Paschi had bitten off more risk than it could chew. But although it stepped up supervision, it failed initially to delve deep enough into the lender’s dealings. The BoI’s defence doesn’t fully exonerate its then-governor Mario Draghi.
Draghi haunted by ghosts from Italian past 25 Jan 2013 The ECB president, who will soon be the euro zone’s top banking supervisor, has experience. He oversaw Italian banks when he ran the country’s central bank. Monte dei Paschi’s questionable deals happened under his watch. He has some explaining to do.
Four questions Monte dei Paschi must answer 23 Jan 2013 The Italian bank is probing how opaque derivatives trades racked up hundreds of millions of euros in losses. It has promised to come clean about how it got into the mess. Investors and taxpayers need transparency on what it was doing, why it was doing it, and why they weren’t told.
Derivatives fraud ruling crosses a line 20 Dec 2012 UBS and Deutsche are among banks found guilty of fraud over derivatives sold to Milan. The verdict is likely to be tested by an appeal. But for now, it overrides banks’ usual defence that sophisticated clients know what they are getting into. And it could affect many other deals.
US derivatives leader makes timely push on Europe 20 Aug 2012 CME plans a London derivatives exchange. By starting in currencies it avoids tackling rivals NYSE and Deutsche Boerse head-on. The timing is also canny. Private trading is migrating to bourses and moving earlier might have made it easier for NYSE-DB’s merger to win approval.
Worst global Dodd-Frank fears start to take shape 30 Jul 2012 The Swiss are balking at new U.S. derivatives rules, the first overseas authorities to sound off about them. But U.S. watchdogs want foreign arms of domestic dealers to follow the new plan. If global regulators won’t sign up, however, it will create an unlevel playing field.
Too much transparency could muddy trading waters 4 May 2012 Wall Street critics tout more disclosure as a universal good. Often, they’re right. But new rules for the $700 trln derivatives market could prove the exception. These risk handing savvy traders some easy profits while pushing up costs for others. That loophole needs plugging.
Watchdogs adopt smart pragmatism on swaps trading 18 Apr 2012 The SEC and CFTC are whacking up the volume threshold for being dubbed a dealer to $8 bln. That 80-fold increase might seem like they’re caving to industry pressure. But it’s a more realistic level that will let the market function while still ensnaring the market’s big players.
UK, ECB spat highlights derivatives arms race 15 Sep 2011 The UK says the ECB’s policy on central clearing breaks EU law. The ECB’s requirement that euro-denominated products be cleared in the euro zone may be as much control-freakery as realpolitik, but London has reason to fear it could damage the City’s grip on derivatives dealing.