Monday, May 18, 2009

Increased Regulatory Actions

Derivative Plan Lifts CME, ICE Stock. Plans to regulate the over-the-counter derivative market helped lift share prices at CME Group and IntercontinentalExchange, Reuters reports.

CME and ICE, which both operate clearinghouses for derivatives saw stock price rise 6.2% and 5.4%, respectively, after watching it plunge 43% and 37% over the past 12 months. CME stock rose $16.96 to $291.06, while ICE’s climbed $5.33 to $101.92, making them among the best performers on the S&P Financial Index on Thursday. Analysts have raised their rating of CME from neutral to underweight.

S. Korean regulator to ask banks to stress-test derivatives. South Korea's Financial Supervisory Service plans to ask both foreign and domestic banks to conduct stress tests on their over-the-counter derivatives products. "OTC derivatives subject to this testing include currency options, currency forwards and interest-rate swaps," said Soomi Kim, a representative of the FSS.

ECB pushes for increased disclosure to help ABS market. The European Central Bank wants more details on asset-backed securities, including information on the loans that back the securities, disclosed to credit rating agencies. The central bank is advocating the increased disclosure as part of an effort to revive the ABS market. "It is hoped by improving transparency in the surveillance process, market participants can regain confidence in the work performed by ratings agencies in the securitization markets, thereby allowing their reactivation," the ECB said in a bulletin.

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