Top Interest Rate Headlines 10-25-10: Treasury Draws Negative Yield for First Time

Treasury Draws Negative Yield for First Time
By Cordell Eddings and Daniel Kruger, Bloomberg
The Treasury sold $10 billion of five-year Treasury Inflation Protected Securities at a negative yield for the first time at a U.S. debt auction as investors bet the Federal Reserve will be successful in sparking inflation.
http://jlne.ws/bEivFI

South Korea's Economic Growth Likely Slowed as Won Surge Endangers Exports
By William Sim and Sarina Yoo, Bloomberg
South Korea’s economic expansion probably slowed last quarter as the nation’s currency surged the most in Asia and global growth cooled, imperiling exports and increasing scope to extend a pause in interest-rate increases.
http://jlne.ws/9bnmYe

CFTC aims for middle ground in segregating funds
By Roberta Rampton and Christopher Doering, Reuters
The U.S. futures regulator is aiming to find middle ground between money managers who want their swaps' collateral protected in times of financial crisis, and the clearinghouses and their members who worry new rules will ratchet up costs.
http://jlne.ws/9BbmIX

Curbing Swaps Correlation Risk Vital, Regulators Told
By Matthew Leising and Shannon D. Harrington, Bloomberg
Regulators need to consider the collective risk of the credit-default swap market when deciding margin requirements for cleared trades, University of Houston finance professor Craig Pirrong said today in Washington.
http://jlne.ws/anJqga

Fed boss: Regulators looking into foreclosure mess
By JEANNINE AVERSA, AP
Federal banking regulators are examining whether mortgage companies cut corners on their own procedures when they moved to foreclose on people's homes, Federal Reserve Chairman Ben Bernanke said Monday.
http://jlne.ws/cYhES1

OTC derivatives trade grows in 2010 despite crackdown - ISDA
By Daisy Ku, Reuters
The outstanding amount of over-the-counter derivatives rose during the first half of 2010 despite calls by regulators to move much of the market on to exchanges, the International Swaps and Derivatives Association said on Monday.
http://jlne.ws/aVPeD3

CFTC Shouldn't Allow Margin Rules to Aid CME Group, ELX Says
By Matthew Leising, Bloomberg
The U.S. commodity regulator shouldn't allow proposed rules on margin offsets for futures and swaps trades to be used to cement CME Group Inc.'s monopoly in U.S. markets, according to competitor ELX Futures LP.
http://jlne.ws/9ZDdg4

ELX Press Statement to CFTC on Portfolio Managing Procedures (Dodd-Frank Act)
To summarize: ELX believes that any action by the CFTC to permit and foster portfolio margining between swaps and futures must promote competition among execution and clearing alternatives, and choice by market participants. ELX is against any discretionary action, such as the granting of a 4d order, that would allow the CME Group to assure its ongoing monopoly power in futures, and develop monopoly power over the clearing of swaps. CME controls over 96% of regulated futures trading and clearing. Given such dominance, the CFTC should ensure that portfolio margining systems not be used to prevent competition. In addition, any action by the Commission on this issue should be by rulemaking of general applicability and not by individual order or exemption. In order to protect against the CME from gaining further monopoly power as a result of a new statutory scheme - something not intended by the "open access" provisions of the Dodd Frank Act - ELX strongly recommends that the CFTC not adopt a portfolio margining regime unless it adequately protects the ability of other exchanges and DCOs to adopt different market mechanisms for position transfers. including EFF transactions.
http://jlne.ws/cLnh6e

Wall Street Sold `Tragically Deficient' Product, Angelides Says
By Phil Mattingly, Bloomberg
Wall Street firms such as Goldman Sachs Group Inc. and Citigroup Inc. created products that were "tragically deficient," in the view of the chairman of the panel charged by Congress with identifying the causes of the financial crisis.
http://jlne.ws/d9uzfk

CME to Begin Trading 'On-the-Run' Treasury Futures Contracts
By Liz Capo McCormick, Bloomberg
CME Group Inc., the world's largest futures market, will begin trading on-the-run Treasury futures contracts next week that will provide investors exposure to benchmark 2-, 5- and 10-year notes.
http://jlne.ws/bJ2l7O

G20 reaches agreement on global banking
The Age
G20 finance ministers have reached agreement on tougher rules for banks and big finance firms blamed for triggering the global economic crisis.
http://jlne.ws/devcz9

Plosser Says Fed in 'Difficult Spot' on Mortgage-Debt Buybacks
BusinessWeek
The Federal Reserve's effort to recover taxpayer money used in bailouts while also ensuring the stability of the financial system puts it in a "difficult spot," said Charles Plosser, president of the Philadelphia Fed.
http://jlne.ws/c0DQJt

Brussels looks to cut settlement times
By Jeremy Grant in London and Nikki Tait in Brussels, FT.com
European regulators are considering ways to cut the time it takes for securities to be processed after trades are done in a bid to reduce risks to the system in the event of defaults and other large financial failures.
http://jlne.ws/c5Q5zj

U.S. Treasury Shielding of Citigroup With Deletions Make FOIA Meaningless
Bloomberg
The late Bloomberg News reporter Mark Pittman asked the U.S. Treasury in January 2009 to identify $301 billion of securities owned by Citigroup Inc. that the government had agreed to guarantee . He made the request on the grounds that taxpayers ought to know how their money was being used.
http://jlne.ws/cMOgKB