Asian banks weary of derivatives regulation
As the arduous Dodd-Frank derivatives rules process heated up, the idea cropped up that some banks would take their trading to financial centers outside of the United States.
Now that the rules finally appear to be ready for implementation, CNBC reports that "Asian banks are reviewing relationships with their U.S. counterparts to avoid being caught by tough new American rules on derivatives trading that are about to come into force."
One Treasury manager was quoted: "If I have the choice, I just don't want to deal with a 'U.S. person'. We're still looking at our compliance situation, but it may mean that in future I need to ask all my U.S. counterparties if there's a way they can change where they book their trades with us."
This is more rhetoric than real at this point. Entities that deal in large volumes will not find it simple to shift all their trading away from U.S. centers. U.S.-owned bank affiliates in Asia may be forced, however, into rethinking some of their processes.
"U.S. groups that want to remain competitive in the non-U.S. market will need to develop a structure that enables them to trade in a way that does not scare their counterparties away," one expert was quoted, adding that, "So the central booking model, where the home office in the U.S. is the counterparty to the trade with the Hong Kong or Singapore hedge fund or bank may be less viable."
In any case, the regulation is rapidly approaching.
- here's the article
The war on Dodd-Frank continues