Energy trade associations say Congress is off-base in its desire to tighten energy-market rules. A coalition of these groups argued in a letter to the Commodity Futures Trading Commission that energy end users should not have to play by the same rules that apply to financial companies when it comes to registering as a swaps dealer. The energy industry says that all Congress' efforts will accomplish is increased costs for consumers.
Concern about the Federal Reserve's pulling back on its purchases of Treasurys may be alleviated by new collateral rules for insurers, hedge funds and others, according to this article. The $633 trillion over-the-counter derivatives market will seek trillions of dollars' worth of Treasurys to satisfy collateral rules, observers say. "This is going to be a new, very powerful engine that drives demand for Treasurys," said Ted Leveroni of Omgeo, a trade processor.
The specifications for West Texas intermediate crude oil will change as CME Group seeks to ensure the quality of the oil in its energy contracts, CME says. The development of shale oil has left some analysts concerned that crude's characteristics are changing. "Things have changed, and we now believe having more specifications are important," said Dennis Sutton of Marathon Petroleum.
The Futures Industry Association, the International Swaps and Derivatives Association and the Securities Industry and Financial Markets Association are among six organizations that asked the Commodity Futures Trading Commission to grant a six-month extension on an exemption for cross-border swaps rules that would expire July 12. "The premature replacement of the Exemptive Order with final cross-border guidance, could jeopardise the productive and cooperative efforts underway towards meeting G-20 commitments on an international basis," the groups' letter says.
Regulatory changes require buy-side entities to clear over-the-counter derivatives through a central counterparty, making collateral management critical. Collateral transfers that fund managers must monitor will increase dramatically, according to this article.