Portfolio Compression

In May, ISDA facilitated discussions among a working group comprising dealers and some end-user firms to explore methods that could be used to reduce the current gross notional credit default swaps (CDS) market size to better reflect the true net risk position. This process has been noted with approval by regulators as offering tangible benefits to CDS market participants through potential capital savings and a reduction in operational risk by decreasing the number of trades.

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‘Code of Conduct’ Update

The European Commission (EC) has stated publicly that it sees no case for extending an equity-style ‘code of conduct for clearing and settlement’ to the over-the-counter (OTC) derivatives. ISDA worked intensively on this issue, comparing its approach with that of trade associations covering other sectors.

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Regulation on Speculative Limits

The House and Senate have become consumed with allegations that speculators are driving up energy and other commodity prices. Several bills and multiple hearings on the topic have resulted. Proposals range from requiring foreign futures markets to comply with comparable US regulations on speculative limits to banning all OTC derivatives trading in energy commodities.

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