NEW YORK: Italy's UniCredit would not register to trade over-the-counter derivatives with US companies on concerns new rules to trade them will come with high costs and burdensome reporting requirements, the Financial Times said on Sunday.
UniCredit, Italy's largest bank by assets, was the biggest foreign bank yet that has decided to avoid complying with tighter US rules even at the risk of reducing its access to capital, according to the newspaper.
As a part of its plan to tighten oversight of a lightly regulated $640 billion market, the US Commodity Futures Trading Commission required foreign banks to register as swap dealers so they could trade derivatives with their US counterparts.
The US regulator extended the deadline for banks to register as swap dealers until July.
T.J. Lim, the head of UniCredit's capital markets business, told an industry gathering in Singapore last week that the CFTC rules and related concerns meant his bank had decided not to register, the FT said.
The paper, citing banks and lawyers, said the cost for European and Asian banks to trade derivatives could prove too high especially for those that do not do much business in the United States.
Singapore's DBS Bank - Southeast Asia's largest bank and Sweden's Nordea said late last year they would not register as swap dealers with the CFTC, according to the FT.
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