Regulatory whirlwind hurls rules to four corners of globe
The securities industry in Asia is to be affected by rules coming out of US and Europe, with new legal procedures and taxes in the works. October 13, 2011 | Peter HoflichThe Volcker Rule may be the biggest piece of regulation in the news today, several other initiatives in the process or formulation and implementation will impact banks’ securities operations even more. And while Asian regulators seem to be sitting on the fence in terms of providing their own guidance in terms OTC derivatives, counterparty rules and transaction taxes, new rules being formulated in the US and in Europe will impact the banks that they regulate nonetheless. The greatest impact on the industry will be from the European Market Infrastructure Regulation, a consistent pan-European law which works hand-in-hand with Dodd-Frank to require OTC clearing through a central counterparty. Since the major derivative-trading banks are all either headquartered in the US or Europe, and they will need to be compliant with these regulations and laws, they will ultimately rope in any outside counterparty that wishes to trade in or out of Europe. It will also affect Asian banks trading with the Asian offices of US or European banks, which will need to be compliant with the regulations of the countries where they are headquartered. Additionally, Dodd-Frank has called for the creation of Swap Execution Facilities (SEFs) that US firms will base their operations around. Counterparties across Asia will need to use the SEFs if they wish to get pricing on a derivative transaction from a US bank. However, an inconsistency with SEFs that still needs to be ironed out is that Dodd-Frank requires it, but EMIR doesn’t, despite the two regulations being spiritually aligned to the truly global market of derivative trading. A further implication is with legal entity identifiers (LEIs), which require legal entity information to be provided in order to be a counterparty to a trade. The system is being implemented in the US and Europe, and it has been adopted in Malaysia, Brazi... Please login to read the complete article. If you already have an account, you can login now or subscribe/register.
Categories: Capital & Strategic Issues, Markets & Exchanges, Regulation, Risk and RegulationCapital & Strategic Issues,Markets Exchanges,riskregulation,Risk and Regulation, Capital & Strategic Issues,Markets & Exchanges,Regulation,Risk and Regulation, Keywords:Volcker Rule, Securities, European Market Infrastructure Regulation, Dodd Frank, SEF, LEI Volcker Rule, Securities, European Market Infrastructure Regulation, Dodd Frank, SEF, LEI
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