Dodd Frank Act and the Brazilian Capital Market - Extraterritorial Effects of Regulation to the Over-the-Counter Derivatives Market PDF Download
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Author: Alexandre Coelho
Publisher:
ISBN:
Category :
Languages : en
Pages : 26
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Book Description
This paper aims to describe the chief alterations proposed by the Dodd Frank Act to the American over-the-counter derivatives market and, at the same time, understand the extraterritorial reach of this law compared to the regulatory framework of the Brazilian derivative market. In order to do so, I will study the extraterritorial effects of the law, particularly in reference to the international nature of Title II of the Dodd Frank, which deals with the over-the-counter derivatives, in order to evaluate its reach to foreign markets, especially the Brazilian market.
Author: Alexandre Coelho
Publisher:
ISBN:
Category :
Languages : en
Pages : 26
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Book Description
This paper aims to describe the chief alterations proposed by the Dodd Frank Act to the American over-the-counter derivatives market and, at the same time, understand the extraterritorial reach of this law compared to the regulatory framework of the Brazilian derivative market. In order to do so, I will study the extraterritorial effects of the law, particularly in reference to the international nature of Title II of the Dodd Frank, which deals with the over-the-counter derivatives, in order to evaluate its reach to foreign markets, especially the Brazilian market.
Author: Michael K. Adjemian
Publisher: DIANE Publishing
ISBN: 1437942571
Category : Business & Economics
Languages : en
Pages : 21
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Book Description
The DF makes significant changes to Fed. regulation of the U.S. OTC derivatives markets. The act calls for swaps to be centrally cleared and traded on an exchange or execution facility and for dealers and major participants that trade these derivatives to be subject to collateral requirements. Although the act exempts certain types of swaps and traders from these clearing, collateral, and trading venue requirements in order to preserve market efficiency, all swaps will be subject to new record-keeping and reporting rules. This report reviews some important features of the new law and discuss their potential impact on agribusiness, much of which will depend on how the rules are written and implemented by regulators. This is a print on demand report.
Author: Rena S. Miller
Publisher: Createspace Independent Pub
ISBN: 9781481063746
Category : Business & Economics
Languages : en
Pages : 28
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Book Description
The financial crisis implicated the over-the-counter (OTC) derivatives market as a major source of systemic risk. A number of firms used derivatives to construct highly leveraged speculative positions, which generated enormous losses that threatened to bankrupt not only the firms themselves but also their creditors and trading partners. Hundreds of billions of dollars in government credit were needed to prevent such losses from cascading throughout the system. AIG was the best-known example, but by no means the only one. Equally troublesome was the fact that the OTC market depended on the financial stability of a dozen or so major dealers. Failure of a dealer would have resulted in the nullification of trillions of dollars' worth of contracts and would have exposed derivatives counterparties to sudden risk and loss, exacerbating the cycle of deleveraging and withholding of credit that characterized the crisis. During the crisis, all the major dealers came under stress, and even though derivatives dealing was not generally the direct source of financial weakness, a collapse of the $600 trillion OTC derivatives market was imminent absent federal intervention. The first group of Troubled Asset Relief Program (TARP) recipients included nearly all the large derivatives dealers. The Dodd-Frank Act (P.L. 111-203) sought to remake the OTC market in the image of the regulated futures exchanges. Crucial reforms include a requirement that swap contracts be cleared through a central counterparty regulated by one or more federal agencies. Clearinghouses require traders to put down cash (called initial margin) at the time they open a contract to cover potential losses, and require subsequent deposits (called maintenance margin) to cover actual losses to the position. The intended effect of margin requirements is to eliminate the possibility that any firm can build up an uncapitalized exposure so large that default would have systemic consequences (again, the AIG situation). The size of a cleared position is limited by the firm's ability to post capital to cover its losses. That capital protects its trading partners and the system as a whole. Swap dealers and major swap participants—firms with substantial derivatives positions—will be subject to margin and capital requirements above and beyond what the clearinghouses mandate. Swaps that are cleared will also be subject to trading on an exchange, or an exchange-like “swap execution facility,” regulated by either the Commodity Futures Trading Commission (CFTC) or the Securities and Exchange Commission (SEC), in the case of security-based swaps. All trades will be reported to data repositories, so that regulators will have complete information about all derivatives positions. Data on swap prices and trading volumes will be made public. The Dodd-Frank Act provides exceptions to the clearing and trading requirements for commercial end-users, or firms that use derivatives to hedge the risks of their nonfinancial business operations. Regulators may also provide exemptions for smaller financial institutions. Even trades that are exempt from the clearing and exchange-trading requirements, however, will have to be reported to data repositories or directly to regulators.
Author: Mark Jickling
Publisher:
ISBN:
Category : Banking law
Languages : en
Pages : 15
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Book Description
The Dodd-Frank Act (P.L. 111-203) sought to remake the OTC market in the image of the regulated futures exchanges. Crucial reforms include a requirement that swap contracts be cleared through a central counterparty regulated by one or more federal agencies. Clearinghouses require traders to put down cash (called initial margin) at the time they open a contract to cover potential losses, and require subsequent deposits (called maintenance margin) to cover actual losses to the position. The intended effect of margin requirements is to eliminate the possibility that any firm can build up an uncapitalized exposure so large that default would have systemic consequences. The size of a cleared position is limited by the firm's ability to post capital to cover its losses. That capital protects its trading partners and the system as a whole. This report describes some of the new requirements placed on the derivatives market by the Dodd-Frank Act.
Author: United States. Congress
Publisher: Createspace Independent Publishing Platform
ISBN: 9781981747368
Category :
Languages : en
Pages : 104
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Book Description
Limiting the extraterritorial impact of Title VII of the Dodd-Frank Act : hearing before the Subcommittee on Capital Markets and Government Sponsored Enterprises of the Committee on Financial Services, U.S. House of Representatives, One Hundred Twelfth Congress, second session, February 8, 2012.
Author: United States. Congress. House. Committee on Financial Services. Subcommittee on Capital Markets and Government Sponsored Enterprises
Publisher:
ISBN:
Category : Business & Economics
Languages : en
Pages : 152
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Book Description
Author: New York University Stern School of Business
Publisher: John Wiley & Sons
ISBN: 0470949864
Category : Business & Economics
Languages : en
Pages : 592
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Book Description
Experts from NYU Stern School of Business analyze new financial regulations and what they mean for the economy The NYU Stern School of Business is one of the top business schools in the world thanks to the leading academics, researchers, and provocative thinkers who call it home. In Regulating Wall Street: The New Architecture of Global Finance, an impressive group of the Stern school’s top authorities on finance combine their expertise in capital markets, risk management, banking, and derivatives to assess the strengths and weaknesses of new regulations in response to the recent global financial crisis. Summarizes key issues that regulatory reform should address Evaluates the key components of regulatory reform Provides analysis of how the reforms will affect financial firms and markets, as well as the real economy The U.S. Congress is on track to complete the most significant changes in financial regulation since the 1930s. Regulating Wall Street: The New Architecture of Global Finance discusses the impact these news laws will have on the U.S. and global financial architecture.
Author: Christian A. Johnson
Publisher:
ISBN:
Category :
Languages : en
Pages : 78
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Book Description
A review of the Dodd-Frank rulemaking projects suggests that the U.S. has entered into a “race to the top” of over-the-counter derivative regulation. Many of the Dodd-Frank statutes and proposed rules go well beyond the relatively modest objectives agreed to by the G20 countries in 2009. These efforts in the U.S. create a legal environment ripe for regulatory arbitrage and the isolation of U.S. OTC derivative markets. Isolation results from participants simply abandoning U.S. markets because of overly aggressive U.S. regulation. Regulatory arbitrage occurs as both U.S. and non-U.S. persons attempt to structure their trading activities to avoid the extraterritorial reach of Dodd-Frank. This paper will discuss the regulatory arbitrage implications triggered by the Dodd-Frank reforms and concerns surrounding the extraterritorial powers given to the CFTC to enforce these mandates.
Author: United States. Congress. House. Committee on Banking and Financial Services. Subcommittee on Capital Markets, Securities, and Government Sponsored Enterprises
Publisher:
ISBN:
Category :
Languages : en
Pages : 180
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Book Description
Author: James K. Jackson
Publisher: Createspace Independent Pub
ISBN: 9781482762143
Category : Political Science
Languages : en
Pages : 58
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Book Description
Derivatives, or financial instruments whose value is based on an underlying asset, played a key role in the financial crisis of 2008-2009. Congress directly addressed the governance of the derivatives markets through the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank; P.L. 111-203; July 21, 2010). This Act, in Title VII, sought to bring the largely unregulated over-the-counter (OTC) derivatives markets under greater regulatory control and scrutiny. Pillars of this approach included mandating that certain OTC derivatives be subject to central clearing, such as through a clearinghouse, which involves posting margin to cover potential losses; greater transparency through trading on exchanges or exchange-like facilities; and reporting trades to a repository, among other reforms. In the debates over Dodd-Frank and in subsequent years, many in Congress have raised the following important questions: If the United States takes stronger regulatory action than other countries, will business in these OTC derivatives markets shift overseas? Since OTC derivatives markets are global in nature, could derivatives trading across borders, or business for U.S. financial firms that engage in these trades, be disrupted if other countries do not adopt similar regulatory frameworks? The first step in addressing these congressional concerns is to examine the degree to which other major countries have adopted similar legislation and regulation as the United States, particularly in light of commitments from the Group of Twenty nations (G-20) to adopt certain derivatives reforms. Following the financial crisis, G-20 leaders (generally political heads of state) established a reform agenda and priorities within that agenda for regulating and overseeing OTC derivatives. The G-20 as an organization has no enforcement capabilities, but relies on the members themselves to implement reforms. According to recent surveys, most members are making progress in meeting the self-imposed goal of implementing major reforms in derivatives markets. Only the United States appears to have met all the reforms endorsed by the G-20 members within the desired timeframe of year-end 2012. The European Union (EU), Japan, Hong Kong, and the United States have each taken significant steps towards implementing legislation requiring central clearing. However, in most of these jurisdictions legislation has not yet been followed up with technical implementing regulations for the requirements to become effective, according to the Financial Stability Board (FSB), which conducts the surveys. Most authorities surveyed estimated that a significant proportion of interest rate derivatives would be centrally cleared by year-end 2012, but they were less confident of progress for other asset classes. The EU appeared to be making progress in its G-20 derivatives regulatory commitments, particularly in central clearing and trade repository-reporting requirements, but at a slower pace than the United States, according to the FSB. This may be due in part to the need for legislation to be passed by individual national legislatures even when agreed broadly by the EU. As of October 2012, however, only the United States had adopted legislation requiring standardized derivatives to be traded on exchanges and electronic platforms. This report examines the G-20 recommendations for reforming OTC derivatives markets and presents the result of self-assessment surveys measuring the performance of G-20 members and some FSB members to date in meeting their commitments. The Appendix to the report presents more detailed information on the status of individual jurisdictions in implementing the G-20- endorsed reforms. The Glossary defines key international bodies and related financial terms and concepts.
