US moves on new regulation for controversial derivatives; Aung San Suu Kyi faces new trial; Neanyahu's surprise trip to Jordan; Pakistan gets its way on drone attacks; and more
Top of the Agenda: New Derivatives Rules
The Obama administration unveiled a broad plan to regulate over-the-counter derivatives trading, a move with potentially sweeping implications for a $680 trillion market that has been blamed for exacerbating the financial crisis. The Financial Times reports the plan would require the vast majority of derivatives to be cleared through central clearinghouses, thereby reducing the risk buyers face through exposure to a single counterparty. This could lead to a market in which most derivatives trade on regulated exchanges or electronic trading platforms. The Wall Street Journal notes that firms with particularly large exposure to derivatives could also face higher regulatory scrutiny, and that regulators would be given the authority to set limits on derivative positions seen to be having too big an impact on markets.
Bloomberg says that when similar transparency requirements were implemented on the corporate bond market several years ago, through a system called Trace, the requirements reduced bank profits in that market by nearly half.
BusinessWeek says the plan shouldn't come as a huge surprise to markets, given that the principles guiding it were spelled out already in Treasury Secretary Timothy Geithner's broader framework for regulatory reform. Here is more on Geithner's framework for reform, which was released in March 2009.
- CFR's Benn Steil, in a recent Council Special Report (PDF), outlines a strategy for improving U.S. financial regulation moving forward.
PACIFIC RIM: Myanmar's Opposition
Myanmar democracy advocate and nobel laureate Aung San Suu Kyi faces new legal troubles with the country's government. The BBC reports Suu Kyi will face trial for breaching the terms of her house arrest after an American man apparently made an uninvited visit to her home.
GM-CHINA: China Daily reports the U.S. automaker General Motors will begin exporting Chinese-made automobiles to the United States.
N.KOREA: Pyongyang set a trial date for two U.S. reporters detained in North Korea for allegedly entering the country illegally. Yonhap says Pyongyang may hope the case will prompt Washington to reach out on other aspects of bilateral relations.