Argentina takes what it wants. Whether it’s defaulting on sovereign debt or expropriating an oil company, the Argentine government eats when it’s hungry and doesn’t care what’s in the way, be it the World Bank or Repsol or, for that matter, collective denunciation by, well, everybody. Yesterday, the Argentine Congress passed a bill that will put majority control of YPF (YPFD.B), Argentina’s biggest oil company, back into the coffers of the country’s federal government. The problem with this is that Spain’s flagship energy company, Repsol (REP.MC), owns 51% of YPF, and that Argentina’s action essentially amounts to the legalized theft … Continue Reading →

This week saw the official launch of a new lobbyist body focused on promoting data transparency within regulatory and government quarters. Dubbed the Data Transparency Coalition (DTC — not to be confused with the other DTC), the group is spearheaded by ex-Securities and Exchange Commission legal eagle and government counsel Hudson Hollister. According to the PR, the group is all for “advocating for common sense initiatives that encourage the productivity and transparency necessary for government reform”; hence, the legal entity identifier (LEI) initiative has been added to the group’s list of objectives. The DTC (no, not that one) is a firm … Continue Reading →

One thing I learned during my recent research effort on the road traveled thus far toward establishing a new global legal entity identification (LEI) standard was that there are still real hurdles ahead of the ISO-proposed standard on the table. Much like previous efforts gone by in the area of data standardization, adoption of ISO 17442 beyond its use as a mere cross-reference point for regulatory reporting will be key if it is to make a difference to financial institutions’ risk teams and their day jobs or client account management or, well, anything else. Regulators and the data management community might … Continue Reading →

The Investment Industry Regulatory Organization of Canada (IIROC) recently approved amendments to the Universal Market Integrity Rules (UMIR) pertaining to short sales. The following changes will become effective on September 1, 2012: The new rules repeal the “tick test” — a test that prohibits short sales at a price lower than the last sale price of a security. IIROC decided against implementing a circuit breaker like the SEC’s Rule 201. It should be noted, however, that IIROC has since 2008 had the authority (not yet exercised) to designate “short sale ineligible securities.” In addition, IIROC can trigger single-stock circuit breakers that halt trading for a … Continue Reading →

The European Commission has published a list of deadlines it “expects” will be met before the end of the year, the most interesting of which, from a capital markets technology standpoint, are related to new data retention rules, a pan-European framework for electronic identification, amendments to UCITS, the Securities Law Directive, close-out netting, central securities depositories (CSDs), resolution and recovery arrangements, and data and metadata related to statistics. The EC is proposing a review of (later to be turned into an update of) directive 2006/24/EC, which relates to: “minimum harmonisation that the directive ought to bring (period of retention, types of data … Continue Reading →

There’s no doubt that the European Central Bank’s (ECB’s) Target2-Securities (T2S) planned single platform for settlement across Europe (well, not including settling in currencies like U.K. sterling or Swiss francs) will be a game-changer. The endless delays that have beleaguered it, however (after numerous delays over the last five years, it is now slated to go live in the summer of 2015), and the constant barrage of regulation in other areas of the market have kept most market participants rather distracted. There is still a perception among many that T2S is too far off to care about — other things, like … Continue Reading →

The Wall Street Journal reported yesterday that subprime mortgages, a distressed sector of the securitized debt market, have been smartly rallying in value since late 2011, as measured by the 2006 AAA slice of the ABX index. Currently, the index stands at about 50% — almost twice the value at its all-time low in early 2009. Does this mean that the party is getting started again? Well, it depends on your perspective. Analyzing securitized debt is not for the faint-hearted, even if it is on the most senior tranche, as the index level of the 2006 AAA ABX index can … Continue Reading →

Last week, the Canadian Securities Administrators (CSA) opened for comment the latest in its series of consultation papers on the regulation of over-the-counter (OTC) derivatives. CP 91-404 explores issues, considers alternative solutions, and sets out proposals for the segregation and portability of customer accounts and collateral associated with OTC derivatives transactions cleared through a central counterparty (CCP). The protection of customers’ collateral is an important topic; indeed, Aite Group wrote about account segregation (as well as CCPs) in Top 10 Trends in Institutional Securities & Investments, 2012. We have come to expect the CSA’s Derivatives Committee to explain complex matters clearly and develop regulatory … Continue Reading →

The European Commission is not happy with the Volcker Rule, a provision found in the Dodd-Frank Act  that seeks to limit banks from taking on proprietary trading risks that can imperil client deposits — deposits which in the extreme might require further federal bailouts. The overall intent of the rule is to lower the probability of systemic risk so that banks won’t be able, in effect, to take on risky assets with an implicit federal put. But how can one systematically determine when a transaction is proprietary or market-making for the benefit of customers in nature? King Solomon’s dividing-the-baby dilemma … Continue Reading →

Credit Suisse bankers might not love their employer, but Main Street might. The company has segregated some 800 derivatives risk items to securitize a bond paying 5% to 6.5% to its bankers, in lieu of cash compensation, for at least four years and for as long as nine years. With the U.S. 10-year treasury sitting around 2%, this doesn’t seem like such a bad deal for the bankers. First, the optics: Those Wall Street bankers are finally taking on some responsibility for what they create. Main Street hasn’t had too much to celebrate lately, but can this mean that Wall … Continue Reading →