* 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 those listed in the registry of the National Futures
Association (NFA), a U.S. regulator.
But large energy traders such as Royal Dutch Shell,
Valero and Chevron were conspicuously absent
from the registry, a sign of how the market is dominated by
investment banks, which largely serve speculators.
In 2009, the world's largest countries agreed to clamp down
on the unregulated swaps market, which many blamed for
contributing to the devastating financial crisis.
Regulators set 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.
Any 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 new U.S. rules.
The energy traders may join the list once they meet the
threshold, or not at all if they don't trade swaps in sufficient
quantity. A spokeswoman for Shell, for instance, said it would
register if and when it hit the $8 billion mark.
Swaps are currently traded in bilateral deals over the
phone, but this will need to change under new rules, such as the
U.S. Dodd-Frank overhaul of Wall Street.
JPMorgan, Citibank, Bank of America
and Goldman Sachs are the U.S. banks among the more than
60 names dominating the market, which has been blamed for
exacerbating the 2007-08 financial crisis.
The registry 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 (OCC), another regulator.
The list is set to grow in the coming months, as more banks
and other traders will meet the $8 billion threshold, with each
last day of the month marking a deadline.
Swaps 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 one of the first deadlines to be met in the
Dodd-Frank rule-writing, which is done in large part by the
Commodity Futures Trading Commission (CFTC), whose powers have
been vastly expanded to include swaps oversight.
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.
A small group of companies that use swaps for genuine
hedging purposes of physical assets such as commodities, or who
use them to hedge financial liabilities in their daily business
practice, is exempt from the CFTC's rules.