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Tag: Regulation
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FX defs look to calculation agents for close-out rates
Calculation agents will play a bigger role under the International Swaps and Derivatives Association’s new foreign exchange definitions, while the definition of “impossibility” in disruption events will also be updated.
Isda is updating its rule book for trading FX derivatives, after the Russian invasion of Ukraine in 2022 exposed flaws around the management of disruption events and disrupted price sources.
Deepak Sitlani, a partner in the derivatives and structured products group at law firm
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Iosco pre-hedging review: more RFQs than answers
Consultation papers are like tea leaves or runes: observers study them for clues to future actions or events.
Such is the case with Iosco’s latest consultation paper on the controversial practice of pre-hedging. The document, released last November, has raised niggling concerns among market participants that the global standard-setter may be weighing tighter rules on pre-hedging, particularly for trades conducted using request-for-quotes, or RFQs.
Dealers have warned that such restrictions could
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Isda to finalise drafting updated FX definitions this year
A new framework for handling disruption events is at the core of work being carried out by the International Swaps and Derivatives Association to update its foreign exchange and currency option definitions, which is expected to be finalised this year.
Much of the focus on drafting the new definitions, which have not been updated since their inception in 1998, concerns updating the classification of disruption events and fallbacks for deliverable FX transactions, such as spot, FX forwards and
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Iosco mimics industry codes to tackle pre-hedging dilemma
Draft recommendations proposed by international regulators to address controversy over the practice of dealers pre-hedging client orders have largely copied guidance already set out in industry codes.
That’s good news for advocates of pre-hedging who may have feared stricter guidance, but has left its critics wanting more.
“When it comes to the competitive request-for-quote scenario, we don’t feel that they’ve gone far enough with it,” says a regulatory expert at a non-bank market-maker, who
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