Corporates to Get More Time for Swaps Docs January 23, 2017 “To the extent that the non-financial end user is party to a CSA that [it] has negotiated apart from regulatory requirements, that CSA will not need to be modified,” said Kate Helmberger, director, derivative and regulatory contract advisory at Kennett Square, PA-headquartered Chatham Financial. Ms. Helmberger added that the letter can be completed using the ISDA regulatory margin self-disclosure letter, which can be accessed on the analytics site IHS Markit website or in paper form; in addition some banks have created their own representation documents. Read Complete Article

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Delay US non-cleared margin rules, industry tells Congress By Peter Madigan June 14, 2016 “If I was a European entity and I had the choice of facing a European bank or a US bank, one who was subject to US margin rules that started earlier and another that is subject to European rules that had not come into effect, if those start dates did not match I would have an incentive to trade with the European bank,” said Luke Zubrod, director of risk and regulatory advisory services at Chatham Financial, which advises derivatives end-users. “That is a real-world implication of that misalignment on those dates. We should endeavour to move forward in lockstep with Europe.” Read More *Registration may be required for Risk.net

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Executive Summary On October 22, 2015, U.S. prudential regulators published final and interim final margin rules governing swaps that are not centrally cleared (the “PR margin rule”) and on December 16, 2015, the Commodity Futures Trading Commission published its corresponding final margin rules (the “CFTC margin rule” and together with the PR margin rule, the “Margin Rule”). The Margin Rule requires financial end users to back their uncleared OTC derivatives transactions with cash or liquid securities. Who is Affected? Financial end users that may face these requirements include private equity, real estate, infrastructure, and microfinance fund vehicles, as well as banks and insurance companies, among others. These Financial end users could face substantial new requirements mainly as a result of the variation margin (“VM”) obligations. In contrast, banks are not required to impose margin requirements on nonfinancial end users which…

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VIDEO: Recordkeeping Requirements Under Dodd-Frank Pam Brown of Chatham Financial discusses how the recordkeeping requirements implemented by the U.S. Commodity Futures Trading Commission (CFTC) as a result of the Dodd-Frank Act affect end-users in the OTC derivatives market. In addition, she explains how clients use ChathamDirect to maintain compliance with this regulatory requirement. window._wq = window._wq || []; _wq.push({ id: '14ftj61lp2', onReady: function(video) { video.bind('play', function() { Munchkin.munchkinFunction('visitWebPage', { url: '/video/14ftj61lp2', params: 'video=started' }) }); video.bind('end', function() { Munchkin.munchkinFunction('visitWebPage', { url: '/video/14ftj61lp2', params: 'video=finished' }) }); }}); Recordkeeping What is it? A requirement to report and keep records of relevant data for all swap transactions. All swap counterparties – including end users – must keep records of their derivatives transactions. As for reporting, the CFTC requires that one of the two counterparties to a swap must report the data to…

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Last week regulators from the US, Britain, and Switzerland announced fines of $4.25 billion against several major financial institutions for conspiring to manipulate the foreign exchange markets. Simultaneous with the settlement announcements, the CFTC published select transcripts detailing chat room evidence of the manipulations. The transcripts are rough reading, especially if you aren’t a text-happy teenager well versed in financial slang and impervious to foul language. But because they afford critical background for our story, we’ve decided to translate a short excerpt from one chat into clearer, safe-for-work English. The excerpt comes from three traders discussing how they could manipulate the 4 pm WM fixing for GBP-USD (often referred to as “cable” by FX traders), selling large amounts just before the fixing to drive the rate down. Trader 1 (70 minutes until fix): it’s early but I am selling cable…

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This is part two in a three-part series on the hedging outlook for 2014. Last week, we reviewed current Fed Policy and discussed the impact on hedging programs in 2014. This week, we look at the path of derivatives regulation and the expanding role of global regulation on domestic hedging programs. Part II: Derivatives Regulation. Hedging programs in the U.S. changed monumentally over the past year. A veritable alphabet soup of regulatory requirements was heaped upon market participants, including the following: – ECP: Now all market participants must be Eligible Contract Participants (ECPs), or be qualified so by virtue of certain qualifying owners or guarantors. – LEI: Each hedging party must obtain and maintain a Legal Entity Identifier (LEI). – End-User Exception: All parties to a new transaction who are eligible to do so must now preserve the right to…

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In some ways, the turning of the calendar to a new year does what no other deadline nor holiday can do – generally speaking, it stops you in your tracks. Your time and team ran out as if you just played the biggest bowl game of your life, and having secured the victory in the 4th quarter, commenced celebrating the season in grand fashion. Congratulations all around to your winning team! What followed was a well-deserved break, and time to reconnect with friends and family. Wrapping up and reflecting on the prior year, you can be proud of what you accomplished, but still resolve to come back stronger and better prepared next year. Welcome to next year. 2014, that is. Unlike in football, there is no offseason in your business. There is, however, a rhythm and routine that you will…

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It’s amazing how time flies. Can this really be our first newsletter in June 2013? Why, that means our favorite holiday is one short week away! Of course, we’re talking about World Derivatives Day! To answer your first question: no, this is not a joke! If you’ve been reading our newsletters for a while, you may recall that in 1997, we at Chatham decided to dedicate one day a year to celebrating the mighty derivative and its use in financial risk management: more predictable than a LIBOR-Fed Funds dislocation; more foreseeable than a black swan event; and able to fix the largest of variable interest rate exposures with a single “done”! But this year, World Derivatives Day coincides with an important milestone in the now four-year-old realm of financial regulatory reform, and it is an inauspicious day for some. Beginning…

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Is the IRS out to get you? Are there unresolved questions about your eligibility or status that are preventing you from moving forward? Have you been contacted recently, only to be asked for more documentation or information? Have you had to retain legal counsel to sort through all the new requirements? If you have experienced similar problems, you are not alone. Millions of Americans are coming to terms with their own frustrating IRS experiences. Some law makers even want to advance a new IRS tax, to help pay for regulating the IRS! But let’s not get ahead of ourselves. There’s already enough going on with Interest Rate Swaps. Interest Rate Swaps have never been so simple and yet so fraught with questions and compliance issues. Many market participants are experiencing this right now as they go back into the market…

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Overview of Reporting and Recordkeeping Title VII of the Dodd-Frank Act, along with the rules promulgated by the Commodity Futures Trading Commission (“CFTC” or “the Commission”), institute new swap data recordkeeping and reporting requirements for OTC derivatives that are regulated as “swaps.” End users will be subject to these requirements as of April 10, 2013. Regulators will require swap counterparties to maintain records and require certain data to be reported to a swap data repository (“SDR”) within specific timeframes. SDRs will warehouse the swap data and permit regulators access to monitor market stability, identify abuses, and enforce new rules. Additionally, real-time reporting requirements will increase price transparency to all market participants by providing a subset of data to the public on an anonymous basis. Part 45 Recordkeeping & Reporting – The swap data recordkeeping requirements under Part 45 will affect…

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