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The finalization of the bylaws needed to create industry representative FIA Global was announced on August 22 by the Futures and Options Association, the Futures Industry
Association and FIA Asia.

The steps needed to create this organization, which has been designed to give market participants involved in derivatives trading the ability to consolidate their views and influence on a global level, were started in July.

During that month, both FIA and FOA announced their intention to work together and create a larger organization. When declaring their desire to do this, the two industry representatives noted that the benefits would include greater transparency between different regions and greater sway with lawmakers and regulators in terms of cross-border concerns.

"The formation of FIA Global creates a powerful platform to represent the derivatives industry and the interests of its many stakeholders as it faces a period of rapid change across the globe," Jason Scott, chairman of FIA Asia, said in a statement. "FIA Asia now has a voice at the highest level to represent its membership and carry out its mandate."

FOA and FIA have collaborated previously, working together to create industry-friendly, cross-border derivatives regulations. Also, they both have a desire to represent the market for derivatives trading.

Market participants trading OTC derivatives in the European Union EU are not likely to be required to clear these transactions before mid2014 Vere 3497 800921883 0 0 7034815 300 Europe unlikely to adopt derivatives regulation affecting clearing before 2014, says regulator

Market participants trading OTC derivatives in the European Union (EU) are not likely to be required to clear these transactions before mid-2014, Verena Ross, executive director of the European Securities and Markets Authority (ESMA), stated at a conference on December 5.

At the event, which was held for institutional investors, Ross stated that determining standards would be required before regional market participants were provided with derivatives regulation obligating them to clear OTC contract transactions, according to The Financial Times.

If Ross is accurate in her prediction, the postponement will mean that global regulators are compromising further on pledges they made to change laws affecting the financial system after the recent crisis, the media outlet reports.

Regulators worldwide have been moving to push the trading of OTC derivatives onto exchanges and require that transactions such as these be cleared, but the government agencies have encountered strong resistance from industry representatives seeking to lessen the requirements that global market participants will need to fulfill, according to the news source. 

An example of the impact that derivatives regulations requiring a greater number of OTC contracts to be centrally cleared is the recent move made by exchange operator CME Group Inc. to increase its available credit substantially in preparation for processing more financial transactions. 

while+wall+street+watchdog+commodity+futures+trading+commission+cftc+has+asserted+that+the+majority+of+derivatives+should+be+cleared+using+swap+execut 3497 800651984 0 0 7051102 300 Debate intensifies regarding how derivatives should be tradedWhile Wall Street watchdog Commodity Futures Trading Commission (CFTC) has asserted that the majority of derivatives should be cleared using swap execution facilities (SEF), this view has met stiff resistance from industry insiders.

Banks are arguing that while highly liquid financial products are suitable for electronic trading, other financial instruments should be traded via voice, according to Financial News. These market participants believe that forcing the bulk of derivatives to be traded via SEF will raise costs for both banks and the users of the risk management tools. Rising costs of hedging risk could put pressure on users to utilize other financial instruments.

The media outlet reports that the CFTC takes a different approach, arguing that utilizing SEFs will lower costs for users of derivatives. The agency stated earlier in 2011 that failing to push these derivatives trades to electronic exchanges will increase the opaqueness of pricing the financial instruments.

Electronic trading of swaps has risen significantly in anticipation of adopting the new regulations. Tradeweb Markets LLC announced in a statement released October 3 that trading activity on its global interest rate derivatives platform spiked 90 percent between Q3 2011 and the same period in 2010. 

The Chicago Board of Trade's Volatility Index (VIX) gained as much as 35 percent on August 18 amid debt issues in Europe and a spate of negative economic news in the United States. European debt woes continued as German Chancellor Angela Merkel and French President Nicolas Sarkozy rejected a proposal to create a joint bond for the region.

The VIX rose to 42.7 during trading while several U.S. stock indexes plunged, according to CNN Money. This increase is the largest since the index spiked 50 percent to reach 48 on August 8, The Wall Street Journal reports.

Volatility gauges in countries worldwide posted increases. Europe's VStoxx Index (V2X) rose 35 percent to 47.17, which was its highest value since May of 2010, according to Bloomberg. Indexes in India, Hong Kong, and Japan also experienced spikes.

"You can see people getting out of the market, and there’s a lot of hedging going on," Dan Deming, a VIX options trader at Stutland Equities LLC, told the media outlet in a telephone interview. "There’s continued concern about European banks and that we might be in for a credit squeeze."

CNN Money reports that any VIX reading above 30 signals investor concern, so recent VIX spikes are noteworthy.  

the+reserve+bank+of+india+in+mumbai+issued+new+derivatives+rules 3497 800570383 0 0 7047695 300 Companies should report their mark to market losses in derivatives deals, RBI suggestsOn Monday, the Reserve Bank of India (RBI) issued a report detailing a new process for banks which offer derivatives products. Financial institutions that offer derivatives deals to companies will have to be supported by the corporate board to complete transactions, reports The Economic Times.

Moreover, companies that ink these deals will have to detail their mark-to-market loss (MTM) on a regular schedule. They'll also have to submit detailed board resolutions to the banks selling the derivatives deals, according to the news outlet.

The goal of the proposal is to reduce disputes between companies and banks, and limit risk for banks. Moreover, the move will hopefully keep these complex products from being mis-sold to local companies, reports The Wall Street Journal. The rules are also meant to disallow foreign banks that can't price products locally from becoming market makers.

According to the Times, PricewaterhouseCooper partner Kumar Dasgupta said, "This is a good thing. It brings about proper risk management and will stop a lot of speculative positions being taken without people thinking it through. Companies need to think about the benefits and risks involved in a complex derivative."

The resolutions that are submitted to the corporate boards must specify which products will be transacted, detail limits, and detail which person has the authority to sign agreements.  

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