Cooperation Announced Between Global CDS CCP Regulators

Representatives from regulatory agencies with direct authority over one or more of the existing or proposed credit-default swap central counterparties (CDS CCP) discussed today possible information sharing arrangements and other methods of cooperation within the regulatory community.

Today’s discussion follows an initial meeting held at the Federal Reserve Bank of New York on January 12, 2009. The discussions included representatives from the Federal Reserve, Commodity Futures Trading Commission, U.K. Financial Services Authority, the German Federal Financial Services Authority (BaFin), Deutsche Bundesbank, the New York State Banking Department, the Securities and Exchange Commission, and the European Central Bank and the Hungarian Financial Services Authority in their roles as co-chairs of the joint ESCB-CESR Working Group on Central Counterparties.

The primary objectives of the effort discussed today include:

• Mutually supporting each regulator in carrying out its respective authorities and responsibilities with respect to CDS CCPs; and

• Applying consistent standards and promoting consistent public policy objectives and oversight approaches for all CDS CCPs.

To facilitate communication among the regulatory community with respect to all CDS CCPs, CDS CCP regulators plan to host a workshop in the near future with representatives of other interested regulators and governmental authorities that are currently considering CDS market matters, to discuss the CDS CCP regulatory interests and information needs of other authorities and the market more broadly.

Source URL: http://www.anotherfp.com/newsite/story.php?id=889

CDS dealers bow to pressure and commit to EU clearing counterparty

Nine of the leading dealer firms in the credit default swaps markets have committed to the use of central counterparty clearing for CDS in the European Union by end-July 2009.

In a letter to EU Commissioner Charlie McCreevy, the nine dealers - Barclays Capital, Citigroup Global Markets, Credit Suisse, Deutsche Bank, Goldman Sachs, HSBC, JPMorgan, Morgan Stanley and UBS - have agreed to work closely with infrastructure providers, regulators and the European Commission in resolving outstanding technical, regulatory, legal and practical issues. Each firm will make an individual choice on which central clearing house or houses might best meet its risk management objectives, subject to regulatory approval of any such clearing house in Europe.

The move follows the threat of legislative action by the European Commission after the industry failed to meet an end-December deadline to deliver a detailed plan for CDS clearing in the eurozone.

Last week, London-based LCH.Clearnet announced plans to launch a clearing service for credit default swaps in the Eurozone by December 2009.

The initiative has sparked a flurry of activity in France, where the central bank has called on eurozone countries to come up with an alternative solution to counter the challenge posed by the creation of systemically-significant clearing bodies in London and the US.

In a document seen by the FT, the Banque de France called for the creation of a "consortium of eurozone banks and shareholders of major infrastructures with the objective of developing a common strategy for the integration of several of the eurozone's prinicple clearing houses".

Separately, IntercontinentalExchange, which is looking to set up a global clearing house from the US, has announced plans to set up a European equivalent, dubbed ICE Trust Europe and set a H1 2009 launch date.

 

Source URL: http://www.finextra.com/fullstory.asp?id=19659