January 2, 2013 / 6:01 AM / 5 years ago

Europe, Asia banks join U.S. in swap dealer line-up

* 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 (Reuters) - 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.

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