Posts tagged "interest-rate swaps"

Deutsche Lobbies the CFTC on Position Limits, Business Conduct Standards and Definitions

Deutsche Bank’s CFO Stefan Krause has said that the regulation of OTC derivatives is an area of US financial reform that may have a “potential revenue impact” on the bank.   As one of the world’s largest derivative dealers, Deutsche has engaged in a vigorous effort to shape proposed derivatives rules under Dodd-Frank. According to Risk Magazine, Deutsche Bank ranks among the top three foreign headquartered banks in terms of frequency of CFTC external meetings.  Since August 2010, Deutsche has participated in at least eighteen external meetings with the CFTC.  Managing Director Athanassios Diplas has met with CFTC staff more than half a dozen times since August 2010. {read more}

Conflict of Interest In Derivatives Sales

In March 2011, Germany’s highest civil court ruled that Deutsche Bank failed to properly advise its client, Ille Papier Service GmbH, a small paper company based near Frankfurt, of the risks of interest-rate swaps. According to a Wall Street Journal’s story on the court ruling, Germany’s Federal Court of Justice ordered the bank to repay €541,000 ($769,000) to the paper company and ruled that Deutsche Bank had a particular duty to disclose all of the risks to the company, as well as the bank’s potential profit, because of its “gross conflict of interest” in marketing a product whose risk was stacked to the bank’s advantage and “at the expense of the client,” the court ruled.[1] We bring this up because Deutsche and other banks have been lobbying the CFTC against new derivatives regulations that would prevent precisely this type of conflict of interest from harming the banks’ clients.[2] {read more}