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In response to controversial sales practices relating to reverse exchangeable securities (reverse convertibles), the U.S. Financial Industry Regulatory Authority recently issued two documents--a regulatory notice and an Investor Alert--on the instruments.
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A recent decision in the U.S. Lehman Brothers bankruptcy case held that investors in a collateralized debt obligation called Dante did not have the right to jump ahead of Lehman to get repaid, contradicting an English court decision and raising questions about how similar deals will be treated.
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The credit crunch has focused a lot of attention on bank capital ratios. With recent large write-downs in asset values, the implementation of Basel II's risk based capital requirements and the possible introduction of further changes following the Basel Committee's December consultation paper, banks face the prospect of holding increasing levels of regulatory capital as the assets they own deteriorate in both credit and rating quality.
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The dispute resolution mechanism established as part of the Big Bang Protocol was recently put to the test for the first time in connection with Cemex.
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On December 11, 2009 the U.S. House of Representatives passed sweeping legislation entitled The Wall Street Reform and Consumer Protection Act of 2009.
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On Oct. 20, the European Commission published a document titled: "Ensuring efficient, safe and sound derivatives markets: future policy actions."
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Section 1260 of the U.S. Internal Revenue Code (the "Code") was enacted in 1999 in response to a specific targeted tax planning strategy that involved writing derivatives on hedge funds.
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"Never waste a good crisis" has been the mantra espoused by political elites over the course of 2009
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In a recent survey prepared by Allen & Overy, 69% of the senior compliance and legal executives at financial services firms across Asia noted that there is a clear need for tighter regulation of sales of structured products to the retail sector, especially in areas surrounding disclosure and suitability.
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New standardized documentation for over-the-counter derivatives in Russia, combined with close-out netting legislation, could open up the market to more OTC volume.