OTC Derivatives: Pervasive Regulatory Changes and Impact on Market Participants in Asia, Europe, and Beyond

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Source: CFA Institute
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120 min, audio webcast, recorded on 20 November 2012

Scott D. Peterman, CFA, is a partner in the Hong Kong office at Sidley Austin LLP, where he advises on corporate and commercial transactions, with a primary focus on hedge fund formation, private equity transactions, and alternative investments. He is also a member of Sidley’s Emerging Companies and Venture Capital practice. Dr. Peterman’s private equity clients have included Bain Capital, The Carlyle Group, Madison Dearborn Partners, LLC, Olympus Partners, and Warburg Pincus, as well as several large Japanese banks, some of the world’s largest sovereign wealth funds, and many of Asia’s prominent asset managers. He is a leading legal authority on Japanese hedge funds and one of only a few practicing attorneys to hold the CFA designation. Previously, Dr. Peterman served as country manager for China and South Korea at Apple and as director of Asia Pacific at Alcatel Data Network. He also served as vice chairman of the board of the CFA Society of Japan. Dr. Peterman holds a BA from Bloomsburg University, an MA from The Ohio State University, an MA from Vanderbilt University, a PhD from Stanford University, and a JD from Georgetown University Law Center.

The information is accurate as of the date of posting.








Yin Toa Lee, CFA, is partner and financial services leader at Ernst & Young’s Financial Accounting Advisory Services in the Asia-Pacific region. He leads several large-scale finance transformation projects for global financial institutions in Asia Pacific and provides valuation advisory services on derivatives and complex financial instruments. Mr. Lee is a steering committee member at Ernst & Young and convened the Hong Kong Institute of Certified Public Accountants’ Financial Instruments Working Group. He is a director and secretary at the Hong Kong Society of Financial Analysts and chairs the continuing education committee. Previously, Mr. Lee worked at PricewaterhouseCoopers. He is a U.S.-certified public accountant and financial risk manager. Mr. Lee holds a bachelor’s degree in economics from the University of Chicago, a master’s degree in finance from Boston College, and an MBA from Northeastern University.

The information is accurate as of the date of posting.








Kishore Kumar Ramakrishnan is director of the financial services advisory at Ernst & Young. He has lived and worked in three continents, specializing in business architecture, project and program management, and change management for investment banks and other financial institutions. Mr. Ramakrishnan has also worked in various financial institutions, including JP Morgan, UBS, ABN AMRO Group, Credit Suisse, HSBC, Bank of America–Merrill Lynch, and SEI Investments. He has published research in a number of journals and magazines, including TABB Research, the Journal of Trading, Asia Risk, Advanced Trading, and Commodities Now. Mr. Ramakrishnan holds a master’s degree in derivatives and risk management from the Indian Institute of Technology Madras.

The information is accurate as of the date of posting.








Tate Barnes is vice president of OTC derivatives clearing in the institutional client group at Deutsche Bank AG (Singapore). Previously, he was responsible for OTC clearing sales in Europe, covering banks, asset managers, hedge funds, pension funds, and insurance companies. Mr. Barnes was responsible for the business requirements and project management of Deutsche Bank’s implementation of LCH.Clearnet SwapClear, which led to straight-through processing (STP) of the first client-clearing trade. He also worked at MarkitWire. Mr. Barnes holds degrees in economics, international relations, and Chinese from Deakin University.

The information is accurate as of the date of posting.








Play

Summary

Fingerprint criminal background checks by the FBI, the new global Legal Entity Identifier (LEI) system endorsed by the G–20, registration with the U.S. Commodity Futures Trading Commission (CFTC) as commodity pool operators (CPOs) or commodity trading advisers (CTAs) for certain over-the-counter (OTC) derivative market participants (including those outside the United States), extra-territorial cross-border supervision, rules for exemption from registration, onerous aggregation rules, new filing and reporting requirements (e.g., Form 7R, Form 8R), swap dealers versus major swap market participants, CFTC jurisdiction over swaps versus SEC jurisdiction over security-based swaps, moving from bilateral to central counterparty clearing — these are just some of the many complexities that OTC derivative market participants in Asia Pacific, Europe, and beyond are finding that they must come to grips with in dealing with the new laws and regulations. A CFTC regulation start date of 12 October, 2012, has just passed, and local regulatory consultations in Hong Kong, Singapore, Japan, and Australia as well as various European jurisdictions are in process.

Background
Virtually every regulatory authority, from those in Asia Pacific to those in the Americas, Europe, and beyond, is forging ahead to implement pervasive legal and regulatory revisions relating to the sizable and complex OTC derivative markets. It generally started with the passage of the Dodd–Frank Act (DFA) in 2010, right after the Pittsburgh Summit in 2009 for the G–20 nations, with an aim to curtail the systemic risk and enhance transparency in the functioning of the OTC derivative market. Since its passage in 2010, the DFA has given rise to some 400 different rules in over 9,000 pages resulting from over 85 studies by regulators in various jurisdictions. Yet, most regulatory authorities have completed only a fraction of the preparatory work for implementation; the CFTC, for example, is said to have completed merely about one-third of what is necessary to date.

Market participants in Asia Pacific, Europe, and other non-U.S. jurisdictions must also be ready to swiftly adjust their business operations and infrastructure to accommodate the dawn of the “new ecosystem” and navigate through this regulatory tsunami, which could significantly affect hedge funds, broker–dealers, banks, financial institutions, corporate treasuries, insurance companies, pension funds, and other entities that participate in the OTC derivative market.

Agenda
This webinar is aimed at providing an update on the latest legal and regulatory developments relating to OTC derivatives for market professionals, as well as a review of the impact on the various OTC derivative market participants mentioned above. It starts with an overview of the legal and regulatory changes relating to OTC derivatives brought on by the DFA, including the impact of Title VII on hedge funds and other asset managers as well as OTC derivative market participants in general.  CPO and CTA registration and exemption rules, compliance for Asia-Pacific, European, and other non-U.S. market participants, and various local regulatory initiatives across Asia Pacific and Europe will be reviewed. There will be more detailed discussions on the impact of the changes pertaining to the following topics:

  • Capital
  • Trading and Clearing
  • Collateral and Margin
  • Accounting and Reporting
  • Compliance and Tax
  • Cross-Border and Extra-Territorial Implications

Read more on this topic
Enterprising Investor blog
Dodd-Frank Extra-territoriality: OTC Derivatives Reform in Asia, Europe, and Beyond

Market Integrity Insights blog
Is the CFTC’s Cross-Border Swaps Proposal Over-Reaching, Inviting Regulatory Arbitrage, or Just Right?

Moderators
Samuel Lum, CFA and Padma Venkat, CFA

This is an archived recording of a live event that took place on 20 November 2012.

Topics
Derivatives
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Leadership, Management, and Communication Skills
    :
  • Firm Management
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Standards, Ethics, and Regulations (SER)
Credits · About the CE Program
2 CE (including 2 SER) Manage CE Credits

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