* Banks register with National Futures Association
* Royal Dutch Shell, other big energy traders don't register
* Firms will register as they hit $8 bln threshold
By Douwe Miedema
WASHINGTON, Jan 2 Asian and European banks
registered as U.S. swap dealers this week, joining Wall Street
rivals in complying with new rules that aim to shed light on the
opaque $650 trillion derivatives market.
Deutsche Bank, Commerzbank, Societe
Generale, BNP Paribas and Nomura
were among the swap dealers listed in the registry of the
National Futures Association (NFA), a U.S. regulator.
But large energy traders such as Royal Dutch Shell,
Cargill and Glencore were conspicuously
absent from the list, a sign of how the market is dominated by
investment banks that largely serve speculators.
In 2009, the world's largest countries agreed to clamp down
on the unregulated swaps market, which has been blamed as a
major contributor to the global financial crisis.
Regulators such as the U.S. Commodity Futures Trading
Commission are setting tighter standards for trading and data
reporting, among a host of other measures.
Swaps can be used to protect against the financial effects
of a change in interest rates, currency rates, the risk of
default, or commodity or energy prices, but are now largely used
purely for financial gains, or speculation.
A small group of companies that use swaps for genuine
hedging purposes of physical assets such as commodities, or use
them to hedge financial liabilities in their daily business
practice, is exempt from the CFTC's rules.
But any other trader hitting a volume of more than $8
billion in swaps in the past 12 months needed to register as of
Dec. 31, according to the CFTC's rules.
"The public ... will benefit as swap dealers now will be
subject to common-sense standards ... that will help lower risk
to the rest of the economy," CFTC chairman Gary Gensler said in
a press release.
Energy traders may join the list once they meet the $8
billion threshold, or not at all if they don't trade swaps in
sufficient quantity. A spokeswoman for Shell, for instance, said
the company would register if and when it hit the $8 billion
Energy traders' swaps dealing business is often largely done
on behalf of clients, making them direct competitors to the
largest investment banks.
JPMorgan, Citibank, Bank of America
and Goldman Sachs are the U.S. banks among the more than
60 names mentioned in the NFA's registry.
The list marks the first line-up of swaps dealers active in
the United States, even if the names of the domestic banks were
roughly known through data from the Office of the Comptroller of
the Currency, another regulator.
The number of dealers is set to grow in the coming months,
as more will meet the $8 billion threshold, with each last day
of the month marking a deadline.
Swaps are currently traded in bilateral deals over the
phone, but that will need to change under new global rules, such
as the U.S. Dodd-Frank overhaul of Wall Street.
Trading will need to take place on regulated platforms -
similar to stock exchanges - and clearing houses will stand in
between buyers and sellers to mitigate the risk of counterparty
default and prevent market crashes.
Registration is a first deadline to be met in the Dodd-Frank
rule-writing, which is done in large part by the CFTC - whose
powers have been vastly expanded to include swaps oversight -
and by the Securities and Exchange Commission.
Real-time reporting of swap dealing also started at the
beginning of the new year, the CFTC said, and data would become
publicly available through data warehouses.
The NFA, which has been made responsible for registration by
the CFTC, said it had been working overtime to meet the
deadline, expanding its staff in the past two years and
responding to thousands of queries from registrants.