ISDA PRESS REPORT - NOVEMBER 27, 2001

ISDA Names Mengle To New Position As Head Of Research
Dow Jones Newswires
By Joe Niedzielski

The International Swaps and Derivatives Association said Monday that it had
appointed David Mengle as head of research.

Mengle will be responsible for providing research and analytical support for
various ISDA committees and initiatives in this newly created position, ISDA
said in a press release.

In particular, Mengle will work on aspects of ISDA's risk management
activities, providing technical assistance on issues surrounding the Basel
capital accord. He will also oversee ISDA's market survey and will work to
produce surveys in other areas.

Over the past several years, Mengle assisted ISDA by conducting derivatives
operations and documentation seminars and he will continue his involvement
in this area, ISDA said.

"David brings an enormous amount of industry and academic experience to
ISDA," said Robert Pickel, ISDA's executive director and CEO.

"His expertise in risk management, derivatives products and regulation will
strengthen ISDA's mission to encourage the prudent and efficient development
of the privately negotiated derivatives business," Pickel said in the
statement

Mengle was most recently with the consulting firm Rutter Associates.
Previously, he was a vice president at J.P. Morgan and worked on a number of
policy and capital related issues. Prior to that, he was a research
economist at the Federal Reserve Bank of Richmond.

David Mengle Appointed ISDA Head of Research
ISDA Press Release - November 26, 2001
www.isda.org/press/press112601.html
<http://www.isda.org/press/press112601.html>

ISDA Appoints Head of Research 
Risk News - November 27, 2001
www.risknews.com <http://www.risknews.com>

CREDIT DERIVATIVES
	*	End-users Build Up Experience - IFR

REGULATORY
	*	Treasury's Bair: Congress Should Pass Netting Laws This Year
- Dow Jones
	*	Momentum Builds For US Derivatives Insolvency Bill - Dow
Jones
	*	German regulator may follow US - Financial Times

RISK MANAGEMENT
	*	UK's FSA Consults On Implications Of Basel Accord Delay -
Dow Jones
	*	ISDA Names Mengle To New Position As Head Of Research - ISDA
Press Release
	*	ISDA Appoints Head of Research - Risk News

End-users Build Up Experience
IFR - November 24, 2001

End-users of credit derivatives in the US and Canada are trading an average
of 65 deals a year and make use of with six to seven traders on average,
according to a report released last week by consultant Greenwich Associates.
"The larger the user, the more dealers they are using," said Peter D'Amario,
principal at Greenwich and one of the authors.

The multiple points of contact, though they complicate documentation for
end-users, indicate that end-users are learning and triangulating what they
are hearing, D'Amario said. As credit derivatives are still a relatively new
market, this strategy may assist users in benefiting from price
differentials. "They are still concerned enough to go around and talk with
people," he added.

The largest and most sophisticated users of credit derivatives report an
average of 150 trades a year, according to the report. Banks were the
biggest users of credit derivatives in terms of volume. Reinsurers and
insurers, fund mangers and hedge funds, in that order, filled in the ranking
of users, said D'Amario, noting that corporates ranked last on the list of
users.

About one-third of the corporates interviewed for the survey said they did
not use credit derivatives. However, no other grouping is looking so
aggressively at becoming involved in the market in the future. Roughly half
of the corporates not currently using credit derivatives stated an intention
to use them within the next year. The inter-dealer market was excluded from
the survey.

"Although [end-users] are using six or seven dealers, they are giving 80% of
their business to three of their top dealers. The other three or four are
fighting for 20% of the business," said D'Amario.

"That's unsustainable. I wouldn't be surprised if there is a contraction in
the average number of dealing relationships." Firms that do not offer a
broad product array may be knocked out first. Greenwich said the dealers
that fare best in its rankings are those that offer a depth and breadth of
relationships, product knowledge, structuring ability and an understanding
of client needs, D'Amario said.

About 40% of end-users cited a relationship as a reason for picking a
dealer, though 53% listed competitive quotes as their top reason for
selecting a dealer. "When we asked people that, right off the bat they say
competitive quotes. Then, we derive from data what [it is that] correlates
with being one of a user's top three dealers. It is never competitive
quotes. The real reason for selecting a dealer is relationships," D'Amario
said.

Treasury's Bair: Congress Should Pass Netting Laws This Year
Dow Jones - November 26, 2001
By Rebecca Christie

A senior Treasury official said Friday that Congress should find a way to
pass so-called netting legislation, even if more broad-based bankruptcy
legislation stalls.

Sheila Bair, assistant secretary for financial institutions, told an
American Bar Association committee that there was an immediate need for the
proposal, which would make it easier for banks and businesses to settle
financial contracts if one of the parties becomes insolvent.

"The relevant provisions are a non-controversial portion of broader
legislation to revise the bankruptcy laws. We are concerned, however, that
the controversial issues of the broader legislation may not be resolved soon
enough to allow its passage this year," Bair said.

The proposed changes would limit market disruptions in the event of
insolvency and also reduce the risks to federally regulated participants and
to the overall financial system, Bair said.

"Whether as part of comprehensive bankruptcy reform legislation or as a
stand-alone bill, we believe that Congress should enact netting legislation
this year. Further delays would unnecessarily place the financial system at
greater risk," Bair said.

Momentum Builds For US Derivatives Insolvency Bill
Dow Jones - November 26, 2001
By Dawn Kopecki

The nation's leading securities trading groups urged congressional leaders
Tuesday to pass legislation that allows financial institutions and
corporations to close out their derivatives contracts during an insolvency.

"The current economic climate, worsened by the tragedy of Sept. 11, has made
passage of these provisions...critical to the systemic risk reduction given
the combination of market disruption and economic uncertainty," reads a
letter sent Tuesday to House and Senate leaders from The Bond Market
Association, The Financial Services Roundtable, International Swaps and
Derivatives Association, the Futures Industry Association and a half dozen
other financial organizations.

Pressure to pass the legislation has mounted since the Sept. 11 terrorist
attacks shut down U.S. financial markets and destroyed the Manhattan offices
of many Wall Street brokerage houses.

Even though no company went under as a result of the market disruption, the
fear of institutional failures has grown, and support is mounting for
passing the provision apart from the controversial bankruptcy bill to which
it is attached.

The measure allows institutions to quickly close outstanding derivatives
with bankrupt trading partners by netting all the losses and gains of
individual contracts into one deal.

"Congress should not fail to enact netting legislation this year," Federal
Reserve Chairman Alan Greenspan and Treasury Secretary Paul O'Neill wrote
House lawmakers last month. "Further delays would unnecessarily place the
financial system at greater risk."

But congressional support for tightening U.S. bankruptcy laws has dwindled
in the face of a probable recession. As a result, Rep. Pat Toomey, R-Pa.,
introduced the netting measure as its own bill in the House last week.

"Although we support passage of these provisions as part of the larger
bankruptcy-reform legislation....we share concerns of the key financial
regulators that broader (bankruptcy) legislation may not be resolved soon
enough to allow passage this year," the trade groups wrote. "We urge you and
your leadership team to pass (netting legislation) as quickly as possible so
that we do not miss an opportunity for enactment this year."

German regulator may follow US 
Financial Times - November 27, 2001
By Bertrand Benoit

The integration of European capital markets means Germany's securities
regulator will need to model itself increasingly on the US Securities and
Exchange Commission, according to Georg Wittich, the German authority's
chairman.

"One should examine whether the SEC might not be the appropriate structure
for securities regulation in the future," Mr Wittich said in an interview.

"We will have to go towards more centralisation at the German level as the
need arises for increased co-operation between reg-ulators at the European
level."

Created in 1994, the Frankfurt-based Federal Supervisory Office for
Securities Trading, or BAWe, is one of the few financial markets regulators
in Europe not to act as supervisor for the stock exchange. For historical
reasons, this responsibility lies with the government of the state of Hesse.

Although BAWe is responsible for overseeing companies' official
announcements to financial market participants, it has no power to
investigate suspected cases of market manipulation and no authority to
approve share offer prospectuses if they are linked to a public listing.

While it is mandated to investigate insider trading, the authority has no
right to sue or sanction offenders. Instead, it must transfer all suspected
cases to a public prosecutor for criminal investigation. In practice, few
insider-trading cases ever reach court.

A planned bill, recently adopted by the German government and set for
approval by parliament next year, would make BAWe responsible for fighting
market manipulation, including the key prerogative to file civil claims
against suspected offenders.

From January, the authority will also be responsible for enforcing Germany's
first compulsory takeover code. Meanwhile, despite opposition from the
insurance industry and regional central banks, a draft bill by the finance
ministry should result in the merger next year of BAWe with the federal bank
and insurance regulators into a centralised financial supervisor.

Yet there is no plan to give the watchdog authority over the Frankfurt stock
exchange.

"The separation of roles (with each state being responsible for policing
stock exchanges on its territory) is above all historical," says Mr Wittich.
"We have a high quality of supervision, but a rapprochement in this respect
- which should be a matter the federal and state governments - is something
to think about for the future." Germany's courts chase after companies,

UK's FSA Consults On Implications Of Basel Accord Delay
Dow Jones - November 27, 2001
By Sarah Turner

The U.K.'s financial watchdog, the Financial Services Authority, said
Tuesday that it has set out for consultation the implications of a one-year
delay to the revised Basel Capital Accord on integrated prudential
supervision for U.K. financial firms.

The new Basel Accord framework is intended to improve the safety and
soundness of the financial system by placing more emphasis on banking
internal controls and management, the supervisory review process and market
discipline.  These international initiatives have been delayed until at
least the start of 2005.

The FSA's director of prudential standards, Clive Briault, said the FSA was
previously planning to implement its integrated prudential sourcebook at the
start of 2004, in line with the implementation of the new Basel Accord and
related new European Union legislation.

Briault said "we believe that we should not defer all the benefits of
integrated regulation simply on account of the delays in international
discussions."  He added that "our preferred option is to implement as much
as possible of the sourcebook early in 2004, while deferring those parts
which will or may have to be changed significantly as a result of the
international discussions."

Key candidates for implementation in 2004 are sourcebook provisions relating
to insurance companies, Lloyds insurance and friendly societies.  Briault
said other areas suitable for early implementation are systems and controls,
investment firms not covered by the Investment Services Directive,
operational risk and, in part, market risk.

**End of ISDA Press Report for November 27, 2001**

THE ISDA PRESS REPORT IS PREPARED FOR THE LIMITED USE OF ISDA STAFF, ISDA'S
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Scott Marra 
Administrator for Policy and Media Relations
International Swaps and Derivatives Association 
600 Fifth Avenue 
Rockefeller Center - 27th floor 
New York, NY 10020 
Phone: (212) 332-2578 
Fax: (212) 332-1212 
Email: smarra@isda.org