October 20, 2011: MIFID II Rollout, In A Nutshell [NEWSLETTER]

Conversation Starter World Bank Report Shows Morocco Most Improved In Business Regulation In a report issued this week, "Doing Business 2012" World Bank researchers indicate that Morocco improved its business regulation the most compared to other global economies, climbing 21 places to 94, by simplifying the construction permit process, easing the administrative burden of tax compliance, and providing greater protections to minority shareholders. Since 2005, Morocco has implemented 15 business regulatory reforms. Besides Morocco, 11 other economies are recognized as having the most improved ease of doing business across several areas of regulation as measured by the report: Moldova, the former Yugoslav Republic of Macedonia, São Tomé and Príncipe, Latvia, Cape Verde, Sierra Leone, Burundi, the Solomon Islands, the Republic of Korea, Armenia, and Colombia. The Republic of Korea was a new entrant to the top 10. The World Bank's report assessed regulations impacting domestic firms in 183 economies and ranked the economies in 10 areas of business regulation, such as starting a business, resolving insolvency and trading across borders. This year’s report data cover regulations measured from June 2010 through May 2011. ---------------------------------------------------------------- ISDA Comments on EC’S MiFID Proposals NEW YORK, Thursday, October 20, 2011 – The International Swaps and Derivatives Association, Inc. (ISDA) welcomes the publication by the European Commission of legislative proposals relating to its review of the Markets in Financial Instruments Directive (MiFID). The overarching objective of the original MiFID framework was to further the integration, competitiveness and efficiency of European financial markets, and ISDA supports changes that build on that goal, including the introduction of a well calibrated post-trade transparency regime for OTC derivatives. ISDA is concerned, however, that the European Commission’s stance on organised trading of OTC derivatives goes well beyond the spirit of the September 2009 G20 commitment that OTC derivative contracts should be traded on exchanges or electronic trading platforms, where appropriate. In particular, the European Commission proposes certain restrictions on Organised Trading Facilities that will hurt end user choice and market liquidity. These restrictions would, in essence, limit the types of trades that can be transacted on single dealer platforms and would adversely affect the ability of firms to effectively manage their risks. Conrad Voldstad, ISDA Chief Executive Officer, said: “OTC derivatives trade infrequently. For example, only 3,600 interest rate swaps are traded each day globally and only half of these are sufficiently standardized to be cleared. In all, we think less than 1,000 interest rate swaps will be traded in Europe on Organized Trading Facilities. Half of these may be interdealer trades and the balance will be divided across hundreds of infrequently traded contracts with different maturities. These trades depend on the ability of dealer firms to make markets, particularly given the large trade size of most interest rate swaps. If you want to protect end users’ ability to access these markets, then you need a suitable range of venues on which to trade; limiting what you class as an eligible trading platform for OTC derivatives is not a good move.” By way of comparison, around 1 million orders are executed every day on the London Stock Exchange. ISDA will continue to engage with the European Commission, as well as other as policymakers within the European Parliament and Council of Ministers over the coming months on the topic of MiFID, in support of a legislative framework that advances ISDA’s commitment to safe, efficient markets. -- Christine Nielsen Lead Stories MIFID II Rollout, In A Nutshell Chris Kentouris, Securities Technology Monitor The European Commission on Thursday finally rolled out its long-awaited new version of the Markets in Financial Instruments Directive which will have broadreaching implications on the front, middle and back offices of buy and sell side firms not only for equities, but bonds and commodities as well. http://jlne.ws/nsavt8 **CN: See Contributing Editor Doug Ashburn's MarketsReformWiki page about the rollout, which includes posts of related documents. MiFID2 - European Commission Publishes Proposed New Rules For Securities Markets Press Release The European Commission will today publish proposed new rules for securities markets by amending the 2004 Markets in Financial Instruments Directive ( http://jlne.ws/qYmS3v NYSE Euronext Statement on MiFID Review Press Release Amsterdam, Brussels, Lisbon, London and Paris, October 20th 2011 - NYSE Euronext (NYSE: NYX) today issued the following statement regarding the publication of the legislative proposal by the European Commission: With the publication of the proposals, European policymakers now have an opportunity to strengthen Europe’s financial market regulation for the benefit of investors, listed companies and the economy as a whole. We consider today’s legislative proposal as a significant step in delivering on the G20 commitment made in September 2009 to establish safer, sounder and more transparent financial markets globally and in Europe. http://jlne.ws/nwyPn6 The end of an MTF era By Jeremy Grant, Financial Times With exquisite timing, the European Commission produced its massive “Mifid II” proposals on Thursday morning. A central thrust of the whole thing is tackling the monster that was created by Mifid I, namely the excessive (depending on your view) fragmentation of share trading that has resulted since the directive was enacted in 2007. http://jlne.ws/nQcgMX Ben Bernanke Speech: The Effects of the Great Recession on Central Bank Doctrine and Practice The financial crisis of 2008 and 2009, together with the associated deep recession, was a historic event--historic in the sense that its severity and economic consequences were enormous, but also in the sense that, as the papers at this conference document, the crisis seems certain to have profound and long-lasting effects on our economy, our society, and our politics. More subtle, but of possibly great importance in the long run, will be the effects of the crisis on intellectual frameworks, including the ways in which economists analyze macroeconomic and financial phenomena. http://jlne.ws/pSE7iv Rate on 30-Year Fixed Mortgage Falls to 4.11 pct. By Eamon Murphy, Daily Finance The average rate on the 30-year fixed mortgage was nearly unchanged this week after rising sharply last week. Freddie Mac said Thursday that the rate on the 30-year loan edged down to 4.11 percent from 4.12 percent last week. The week before, it fell to 3.94 percent. That's the lowest rate ever, according to the National Bureau of Economic Research. http://jlne.ws/pIZ5nx Improvement in US mortgage delinquencies ends By Tom Braithwaite and Shahien Nasiripour, FT.com The improvement in US mortgage delinquencies has flattened or reversed, according to quarterly earnings from three of the four biggest US lenders, sparking fresh fears over the resilience of the American consumer. http://jlne.ws/pOuLlU New Mortgage Plan Floated BY RUTH SIMON, NICK TIMIRAOS AND DAN FITZPATRICK, WSJ.com State and federal officials are pushing a plan that could help some "underwater" borrowers get refinancing assistance in the latest government bid to break a legal impasse with big banks over alleged foreclosure abuses and ease problems in the housing market. http://jlne.ws/q10UY4 Fighting financial crisis: Don’t look down The Economist ASKED on October 11th how he might have handled the financial crisis of 2008 differently, Mitt Romney, the frontrunner for the Republican presidential nomination, refused to answer “a hypothetical”. He had good reason to prevaricate. The possibility of another crisis, given the euro zone’s woes, remains; the ability of the federal government to respond has changed drastically. http://jlne.ws/nUvFAU EZ bailout talks focus on collateral guarantee Reuters European officials are focusing on having a bailout fund provide collateral to back up bond issues by troubled euro zone countries rather than using it to provide direct guarantees, the Wall Street Journal reported on Wednesday. http://jlne.ws/qoA243 EU bank recap could be only E80bn By Alex Barker in Brussels and Patrick Jenkins in London, Financial Times Europe’s grand plan to strengthen its banking system is set to fall well short of market expectations, identifying a capital shortfall of less than E100bn that must be made up over the next six to nine months, according to the latest official estimates. http://jlne.ws/pngmsP Europe Banks Vow $1 Trillion Shrinkage as Recapitalization Looms BusinessWeek European banks, assuring investors they can weather the sovereign debt crisis by selling assets and reducing lending, may not be able to raise money fast enough to prevent government-forced recapitalizations. http://jlne.ws/no8uS5 Moody’s Analytics Economist Urges Bigger EFSF to End Crisis By Stelios Orphanides, Bloomberg Businessweek European policy makers can help end the debt crisis through an orderly Greek default, interest-rate cuts, further bond purchases and a bigger rescue fund, said Steven Cochrane, head of economic research at Moody’s Analytics. http://jlne.ws/qFQWMO Fitch affirms Belgium AA+ rating, negative outlook By William L. Watts, MarketWatch Fitch Ratings on Thursday affirmed Belgium's credit rating at AA-plus, while maintaining a negative outlook on the rating. "Risks to Belgium's rating continue to be skewed to the downside, particularly with the escalation of the euro area crisis and additional contingent liabilities assumed by Belgium in the context of Dexia's restructuring," said Maria Malas-Mroueh http://jlne.ws/n26GIe Fitch: Portuguese banks highly vulnerable to sovereign developments Reuters Fitch Ratings says that the major Portuguese banks remain vulnerable to sovereign developments. Portugal's two-year economic recession, lack of access to the wholesale funding markets and uncertainties as to how the euro zone crisis will be resolved will have a direct effect on Portuguese banks' short-term financial strength and long-term prospects http://jlne.ws/o50dVw Moody’s Downgrades Spain’s Biggest Banks By MARK SCOTT, NY Times Pressure continues to mount on European banks as the credit rating agency Moody’s downgraded several of Spain’s largest financial institutions. http://jlne.ws/rinyFD IMF's Chief Lagarde: European Banks Must Strengthen Capital WSJ.com Christine Lagarde, the managing director of the International Monetary Fund, Monday said European banks must strengthen their capital. http://jlne.ws/qTjJxX Hedge funds suffer worst performance since 2008 CNN Money Feeling blue about the hit your portfolio took last quarter? You're not alone. Hedge funds also had a lousy third quarter, delivering one of the worst performances on record. http://jlne.ws/qaLOEO Volcker Rule Enforcement May Come After the Fact, Bingham Says By Matthew Leising Regulators may have to enforce restrictions on financial firms engaging in proprietary trading after transactions are completed, creating confusion for banks, according to a summary of the proposed Volcker rule by Bingham McCutchen LLP. http://jlne.ws/qwd3ie Lawsky Walks Tightrope as the New Financial 'Cop on the Block' in New York Bloomberg Ben Lawsky, the first person to head New York's newly established Financial Services Department, said he'll be walking a tightrope between enforcer and promoter as he oversees the state's banks and insurance companies. http://jlne.ws/prOvlg Fed OKs 'living wills' rule for big banks Market Watch The Federal Reserve on Monday approved rules requiring the largest global financial institutions to explain by July 2012 how they would divide up their assets if they fail. The so called "living wills" rule parallels a regulation approved by the Federal Deposit Insurance Corp. on Sept. 13. http://jlne.ws/odFTyG Do Large Banks' Troubles Show They're Too Big to Manage? The Online NewsHour Finally tonight, one more economic story, this tied to a subject of heated discussion and protests these days: the health of big U.S. banks. http://jlne.ws/qFG22i US economy faces slow growth, Fed says By Robin Harding, FT.com The US economy is growing slowly but there is little sign of a slide into recession, according to the latest reports from the Federal Reserve’s business contacts around the country. http://jlne.ws/qjIvNA The Shout With Operation Twist: Federal Reserve Bank of Cleveland John B. Carlson and John Lindner, Federal reserve Bank of Cleveland Much attention has been given to the Federal Open Market Committee’s September decision to extend the average maturity of its portfolio by selling short-term Treasury securities and purchasing longer-term Treasury securities. This policy action is commonly called operation twist since its intended effect is to lower long-term interest rates relative to short-term rates—that is, to twist the yield curve. http://jlne.ws/oCJUoB Federal Reserve Board Approves Final Rule Implementing The Resolution Plan Requirement Of The Dodd-Frank Act Press Release The Federal Reserve Board on Monday announced the approval of a final rule to implement the resolution plan requirement in the Dodd-Frank Wall Street Reform and Consumer Protection Act. http://jlne.ws/o7N0Ch Dismantling the Myths Around Wall Street Reform Neal S. Wolin, U.S. Department of the Treasury. In the fall of 2008, a financial crisis of a scale and severity not seen in generations left millions of Americans unemployed and resulted in trillions in lost wealth. Our broken financial regulatory system was a principal cause of that crisis. It was fragmented, antiquated, and allowed large parts of the financial system to operate with little or no oversight. http://jlne.ws/owdy5o Geithner Says US Will Help Europe Through IMF Jamila Trindle, Dow Jones Newswires The U.S. will help European countries deal with the debt crisis through the International Monetary Fund rather than with direct U.S. funds, Treasury Secretary Timothy Geithner said Friday. http://jlne.ws/rgwZrz Millionaires Control 39% of Global Wealth By Robert Frank, WSJ.com Here’s another stat that the Occupy Wall Streeters can hoist on their placards: The world’s millionaires and billionaires now control 38.5% of the world’s wealth. http://jlne.ws/oKhX5M Social Security to hand out first raises since 2009 By Stephen Ohlemacher, Associated Press Social Security recipients will get a raise in January — their first increase in benefits since 2009. It's expected to be about 3.5%. http://jlne.ws/pJRm1i Diane Saucier, Vice President, Global Market Development For Trading Technologies: Q and A Re Occupy Wall Street Kristin Samuelson, Chicago Tribune Demonstrations inspired by the Occupy Wall Street protest now dot cities nationwide, including Chicago, with a rallying cry that 99 percent of U.S. workers are suffering from the aftermath of the financial crisis while 1 percent is swimming in wealth. But who, exactly, is among that "99 percent"? Turns out, many "rank-and-file" employees in the financial industry are suffering from the same job losses and economic hardships that others have felt. So how are the protests being received in the financial sector? http://jlne.ws/p2MNmL CN: *See Saucier's bio on MarketsWiki. Student loans outstanding will exceed $1 trillion this year By Dennis Cauchon, USA TODAY Students and workers seeking retraining are borrowing extraordinary amounts of money through federal loan programs, potentially putting a huge burden on the backs of young people looking for jobs and trying to start careers. http://jlne.ws/qjb0R2 Consumers Will Switch Banks Over Fees By Elizabeth Ody, Bloomberg About 30 percent of U.S. consumers said they’d leave their banks over fees for using their debit cards, according to a survey by the Research Intelligence Group. http://jlne.ws/r3xFaC FDIC Appoints Craig Jarvill Director of FDIC's Division of Finance Press Release The Federal Deposit Insurance Corporation (FDIC) today announced the appointment of Craig Jarvill as the Director of the Division of Finance (DOF). As the Director of DOF, Jarvill will oversee the day-to-day financial operations of the FDIC. FDIC Acting Chairman Martin Gruenberg said, "I am very pleased to announce the selection of Craig for this position. His many years of FDIC experience, in both the corporate and receivership accounting areas, and his in-depth knowledge of the FDIC's finance and accounting operations make him the ideal choice to lead the division." http://jlne.ws/na45Ec                                                                                       Economic News U.S. Budget Deficit Rose to $1.3 Trillion in Fiscal 2011 By Vincent Del Giudice and Ian Katz, Bloomberg Businessweek The U.S. government posted its third consecutive annual budget deficit in excess of $1 trillion in the fiscal year ended Sept. 30. http://jlne.ws/njhrZ9 Consumer Confidence Most Negative Since Recession By Shobhana Chandra, Bloomberg Consumer confidence in the U.S. economic outlook slumped in October to the lowest level since the recession, highlighting the challenges facing the biggest part of the economy. http://jlne.ws/pm8Eb5 Consumer inflation subdued, home building rises By Lucia Mutikani, Reuters High food and gasoline prices kept pressure on U.S. household budgets in September, but core prices rose at their slowest pace in six months, showing inflation was still largely contained. http://jlne.ws/rsrKX2 CPI increased at a 3.7 percent annual rate in September, a deceleration from the two prior months Federal Reserve Bank of Atlanta The headline consumer price index (CPI) increased at a 3.7 percent annual rate in September, a deceleration from the two prior months. The headline gain was supported by 5.6 percent and 26.9 percent increases in the indexes for food and energy, respectively. Excluding food and energy, the CPI rose 0.7 percent (annual rate), a sharp drop from a 3 percent increase in August and the smallest increase since October 2010. http://jlne.ws/qO2Z5v FRB: Beige Book--Summary--October 19, 2011 Reports from the twelve Federal Reserve Districts indicate that overall economic activity continued to expand in September, although many Districts described the pace of growth as "modest" or "slight" and contacts generally noted weaker or less certain outlooks for business conditions. http://jlne.ws/p6bIbO Industrial production increased in September Federal Reserve http://jlne.ws/pHRxm0 October homebuilder sentiment highest since May 2010 Reuters Homebuilder sentiment perked up in October to its highest level in a year and a half, though ongoing challenges still kept confidence historically low, the National Association of Home Builders said on Tuesday. http://jlne.ws/qZ0XRJ Exchanges, Clearing Houses & MTFs CME Group Begins Clearing Euro-Denominated Interest Rates Swaps, Announces New IRS Clearing Record Press Release CHICAGO, Oct. 19, 2011 /PRNewswire/ -- CME Group, the world's leading and most diverse derivatives marketplace, today announced that it has begun clearing Euro-denominated interest rate swaps (IRS). The company also announced that it set a new daily record for IRS clearing on October 18, 2011, with $8 billion in U. S. customer volume cleared. http://jlne.ws/pMWzMd CME Group Statement Regarding Commodity Futures Trading Commission Rule Making On Position Limits Press Release CME Group, the world's leading and most diverse derivatives exchange, today released the following statement regarding the Commodity Futures Trading Commission (CFTC)'s rule making on position limits: http://jlne.ws/oCmFRZ ICE Clear Credit to Launch Sovereign CDS Clearing for Latin American Countries Press Release CHICAGO, Oct. 20, 2011 /PRNewswire/ -- IntercontinentalExchange, Inc. (NYSE: ICE), a leading operator of regulated global futures exchanges, clearing houses and over-the-counter (OTC) markets, announced today that ICE Clear Credit will launch clearing of Latin American sovereign credit default swaps (CDS) this month. ICE Clear Credit is the first central counterparty to clear sovereign CDS. http://jlne.ws/mYtamZ DTCC Submits Model Message Schemas To The Money Management Institute For Industry Adoption Press Release The Depository Trust and Clearing Corporation (DTCC) announced today that it will submit its message standards (schemas) for the processing of unified managed accounts/model portfolio programs to The Money Management Institute (MMI), the national organization for the managed investment solution and wealth management industry. http://jlne.ws/oyPcdw Firms and Banks PIMCO's Mea Culpa to Investors By Bill Gross, PIMCO What’s happened over the last few months to the world’s greatest bond fund? (Well at least arguably the world’s largest bond fund). Giants Hall of Famer, Willie Mays, was once asked to name his most outstanding catch. “I don’t rate ‘em,” he said, “I just catch ‘em.” Likewise at PIMCO. We leave the ratings to you the client, or to Morningstar for which we are always grateful. We just try to catch “alpha” wherever and whenever we can with as little risk as possible and let the performance make our headlines. But this year the headlines have spoken to some dropped fly balls. What’s happened to the “Say Hey Kid” and PIMCO’s Total Return Fund? http://jlne.ws/rbDC5m Pimco, the World's Biggest Bond Fund, Apologizes To Investors for “A Bad Year" Economy Watch Bill Gross, manager of the world’s biggest mutual fund, has apologized to Pimco investors for his poor performance. http://jlne.ws/rlm8SN Big US banks hurt by consumer woes By Tom Braithwaite, Shahien Nasiripour and Ajay Makan, Financial Times Fears about the health of US consumer balance sheets grew on Monday as Citigroup and Wells Fargo joined JPMorgan Chase in reporting new signs that homeowners and credit-card borrowers are falling behind on their payments. http://jlne.ws/oT7FOF Morgan Stanley Chairman John Mack:Q and A TheStreet.com Morgan Stanley Chairman John Mack, has long been one of Wall Street's most charismatic CEOs, despite his perhaps inevitable nickname, "Mack the Knife." Mack, 66, started at the investment bank as a bond salesman in 1972, working his way up the ranks before leaving after he lost a very public battle with CEO Phil Purcell in 2001. http://jlne.ws/oXbDt2 Morgan Stanley trading business strong By Lauren Tara LaCapra, Reuters Morgan Stanley (MS.N) posted a surprisingly strong profit during a rough-and-tumble third quarter for Wall Street, helped by a large accounting gain and an increase in stock-trading revenue. http://jlne.ws/oUFszw UBS managers aware of rogue trader's actions: press AFP via Yahoo! News Managers of the UBS trader whose rogue trade led to a $2.3 billion loss for the Swiss bank were aware of his actions, a Swiss economics magazine said. http://jlne.ws/pikYlN U.S. judge takes $8.5 billion Bank of America deal from state court Reuters A judge Wednesday decided to keep a proposed $8.5 billion settlement over Bank of America Corp's mortgage-backed securities in federal court, potentially lengthening the deal's consummation. http://jlne.ws/o7EitG Investment Banking’s Uncertain Future at UBS By JULIA WERDIGIER, NY Times In a golfing resort in the rolling farmland of Hamburg, N.J., about 100 senior UBS investment bankers gathered last month to discuss their unit’s uncertain future. http://jlne.ws/qaqUXd Citigroup to Pay $285 Million to Settle SEC Charges for Misleading Investors About CDO Tied to Housing Market Press Release Washington, D.C., Oct. 19, 2011 – The Securities and Exchange Commission today charged Citigroup’s principal U.S. broker-dealer subsidiary with misleading investors about a $1 billion collateralized debt obligation (CDO) tied to the U.S. housing market in which Citigroup bet against investors as the housing market showed signs of distress. The CDO defaulted within months, leaving investors with losses while Citigroup made $160 million in fees and trading profits. http://jlne.ws/oqBAFN Citigroup Appoints Michael O'Neill Chairman of Citibank NA BusinessWeek Citigroup Inc., the third-biggest U.S. lender by assets, appointed company director Michael O'Neill as chairman of the board overseeing Citibank NA, its primary banking subsidiary. http://jlne.ws/qLk6t5 Citigroup Closing Proprietary Unit After Equity Trading Rout BusinessWeek Citigroup Inc., the third-biggest U.S. lender, said it's closing a proprietary-trading unit that incurred losses in the third quarter, as regulators prepare to restrict banks from making bets with shareholder cash. http://jlne.ws/nMtVar Goldman Sachs's 'Confusing' Credit-Default Swaps Aren't Wrong, Viniar Says Bloomberg Goldman Sachs Group Inc. (GS) Chief Financial Officer David A. Viniar said the rise in the cost to insure against a default by his company isn't wrong. It's just "confusing." http://jlne.ws/pkK426 Goldman Sachs's Compensation Pool Falls 24%, Leaving $292,836 Per Employee Bloomberg Goldman Sachs Group Inc. (GS) set aside $10 billion to pay employees in this year's first nine months, down 24 percent from the same period last year as revenue slid and the firm cut jobs. http://jlne.ws/nwA0U9 Goldman Sachs Lost $428 Million Last Quarter Alexander Abad-Santos, Atlantic Wire Goldman Sachs, the U.S.'s largest investment bank, lost $428 million during its third quarter reports Reuters. http://jlne.ws/o5Q8EM Wells Fargo, RBS Said to Prepare $1 Billion Offering of CMBS BusinessWeek Wells Fargo and Co. and Royal Bank of Scotland Group Plc are planning to sell about $1 billion of bonds backed by commercial mortgages in what will be one of the final issues of the debt this year. http://jlne.ws/rdPLJq RBS investment bank unit targets tech and market data in cutback plans In an internal memo to staff, obtained by the BBC, Chris Kyle, chief financial officer, global banking and markets, RBS, outlines a range of cutbacks for the rest of the year at the struggling bank, which is 83% owned by the taxpayer. http://jlne.ws/q8Cwqd Penson Adds Canadian Fixed Income Products to US Broker Bond Platform Press Release DALLAS, TX, October 18, 2011 – Penson Worldwide, Inc. (NASDAQ: PNSN), a leading provider of execution, clearing, settlement, custody and technology products and services to the global financial services industry, today announced that correspondents of its U.S. subsidiary, Penson Financial Services, Inc. (PFSI), now have access to Canadian fixed income products through the Penson Bond Connection platform. http://jlne.ws/qp9Er1 Regulators Merkel Cancels EU Summit Statement, Cites 'Lack of Details' for EFSF - DJN Street Insider German Chancellor Angela Merkel has cancelled her statement at the EU summit originally scheduled for Friday, citing lack of details for EFSF. The report was made by a spokesperson for Merkel, and appeared on Dow Jones headlines. The German Coalition said the EU summit will take place on Sunday. http://jlne.ws/otinea Merkel Risks Own Downfall to Save Greece By Leon Mangasarian, Bloomberg German Chancellor Angela Merkel may be risking her 2013 bid for a third term with a bet on expanding the effort to save the euro. Merkel may endorse policies unpopular with her Christian Democratic voters at an Oct. 23 European summit, bowing to world leaders including President Barack Obama to do more to stem the debt crisis that began in Greece and is now rattling core economies such as Italy and France. http://jlne.ws/qqL0S7 Bank of England slashes growth forecast FT.com http://jlne.ws/pHorvj Ex-Fed Kohn: Sees Less Room For Fed To Act In Next Fin Crisis The Bond Buyer The Federal Reserve will be able to serve as a lender of last resort in the next financial crisis, but "it will be worse before they can do it," former Fed Vice Chairman Donald Kohn warned Wednesday. http://jlne.ws/pp4yMI Federal Reserve Bank of New York: Back to the Future: Revisiting the European Crisis Paolo Pesenti, Federal Reserve Bank of New York Recent financial developments are calling into question the future of regional economic integration. Market confidence deteriorates across countries in a contagious way. http://jlne.ws/nBfCg6 ECB Staff Grade Trichet By Brian Blackstone, WSJ.com As Jean-Claude Trichet enters the last two weeks of his European Central Bank presidency, economists across Europe have been giving their thoughts on his performance over the past eight years on everything from controlling inflation to stabilizing financial markets. http://jlne.ws/pUtMp6 EU Raids Banks in Probe of Possible Collusion in Interest-Rate Derivatives Bloomberg European Union regulators raided banks that offer financial derivatives linked to the Euro Interbank Offered Rate, saying they were investigating possible collusion. http://jlne.ws/nQUz8z Swaps ISDA Unveils New Mission Statement Business Wire via Yahoo! Finance The International Swaps and Derivatives Association, Inc. announced today that its board of directors has updated its mission statement to reflect the Association's evolving mandate in the rapidly changing global derivatives markets. http://jlne.ws/opVFhP CFTC Approves Rule Expanding Access to Swaps Clearinghouses By Silla Brush and Matthew Leising Swaps clearinghouses will be required to open access to companies with at least $50 million in capital under Dodd-Frank Act rules completed by the U.S. Commodity Futures Trading Commission. http://jlne.ws/qdY1bH CFTC Backs $50Mln Minimum For Clearinghouse Membership By Katy Burne and Jacob Bunge, Nasdaq U.S. derivatives regulators on Tuesday backed a lower entry fee for financial institutions to gain entry into the business of processing privately negotiated derivatives, or swaps--a sector dominated by the biggest Wall Street banks. http://jlne.ws/q3Cvs5 CFTC Approves Rule Expanding Access to Swaps Clearinghouses By Silla Brush and Matthew Leising, Bloomberg Businessweek Swaps clearinghouses will be required to open access to companies with at least $50 million in capital under Dodd-Frank Act rules completed by the U.S. Commodity Futures Trading Commission. http://jlne.ws/nGZ9TR TABB Says 90% of Top-Tier Swap Dealers See Their Profits Down or Flat after Dodd-Frank Implementation Despite the risks to liquidity posed by CFTC-proposed regulation, over the long term nearly 75% of existing swap dealers tell TABB Group they believe liquidity will ultimately improve in the post-Dodd-Frank Act era due to increased market participation, further product standardization and electronic trading access. http://jlne.ws/pRb3Dq OTC derivatives comments from ISDA officers: Troubling aspects of the Dodd-Frank Act ISDA, derivatiViews There was a premiere in Washington on October 14, though you might not have read about it in the arts and entertainment pages. Connie made his first appearance on the Congressional hearing stage, representing ISDA and its members before the Capital Markets and Government Sponsored Enterprises Subcommittee of the House Committee on Financial Services. http://jlne.ws/pZFQ0O EU ban on ‘naked’ CDS to become permanent By Alex Barker in Brussels, Financial Times A permanent ban on so-called naked credit default swaps is set to be agreed by European Union lawmakers, in effect restricting the sovereign credit insurance to investors seeking to hedge long positions. http://jlne.ws/pSqiSw Bloomberg First to Connect to All Repo Agencies; Meet Fed Reforms Press Release Investors in the U.S. tri-party securities repurchase (repo) market can now use Bloomberg technology to match and confirm repo trades with both clearing banks, Bank of New York Mellon (BNY) and JP Morgan. Bloomberg's fixed income group announces the first agency-neutral platform that allows investors to process and confirm repo trades with either clearing bank as mandated by the Federal Reserve Bank of New York (The Fed). http://jlne.ws/o2FScq European Parliament: Crack Down On Short Selling And Sovereign Debt Speculation Press Release Lead MEPs and the Polish Presidency on Tuesday clinched a deal on the regulation beefing up standards and requirements for the practices of short selling and trading in credit default swaps (CDS), a financial product insuring against default. The rules will impose much more transparency, increase the powers of the EU's financial watchdog and virtually ban certain CDS trades, thereby making speculation on a country's default more difficult. http://jlne.ws/qY2z9U Global News HSBC Said to Join Suitors for Dexia's Denizbank in Turkey BusinessWeek HSBC Holdings Plc, Europe's biggest bank, is interested in buying Turkey's Denizbank from Dexia SA, the first lender to founder with the European debt crisis, two people with knowledge of the process said. http://jlne.ws/ropbUt Longest Bonds Since 1984 for Sale Just as Yields Climb: Australia Credit By Candice Zachariahs, Bloomberg Australia’s sale of its longest- maturity government bond since 1984 will lock in yields at about a 2 1/2-year low just as yields start to rise. http://jlne.ws/r3inDH World Bank: India Needs to Pursue Reforms to Boost Investment Flows WSJ.com India needs to pursue reforms to boost investment flows and help keep its exports competitive, a senior World Bank Group executive said. http://jlne.ws/ptSl5q S and P downgrades French bank BNP Paribas amid funding, liquidity concerns The Associated Press Standard and Poor’s has downgraded its long-term rating for leading French bank BNP Paribas, citing concerns about funding and liquidity across France’s banking sector. http://jlne.ws/neXJlz Europe’s Last Stand Needs Overwhelming Firepower: View Bloomberg Europe is heading for what could be the last stand in its two-year-old sovereign debt crisis. By the time the Group of 20 nations holds its summit in Cannes, France, on Nov. 3-4, the European Union aims to have a rescue plan sound enough to ensure the financial troubles of struggling governments don’t bring down the banking system. http://jlne.ws/qnGmHc