Companies in Europe have been largely spared being forced to clear all their derivative contracts on centralized exchanges. New regulations announced last week by the European Commission on OTC derivatives, central counterparties and trade repositories largely focused on financial firms. But there was a significant space devoted to corporate users of derivatives.

The new regulations will create three categories of non-financial derivatives user: those who do not need to inform the authorities about their derivatives exposure; those that will have to inform the authorities but can still clear their trades OTC; and those who are such heavy users of derivatives that they will have to behave like banks and trade them on exchanges and have the contracts centrally cleared.

Fearing the fallout should a member-country leave the euro, the International Swaps and Derivatives Association (ISDA) is putting together a committee to study the impact--after a number of requests from members. And according to the FT, a number of banks have begun prepping for such a contingency, as well.

Concerns have grown that a member might be forcibly ejected from the eurozone in light of conflicting eurozone-wide views on implementation of fiscal and monetary reforms necessary to bring member-states out of the growing sovereign debt crisis that is threatening the region.

European companies have come out against proposed EU-wide changes to the OTC derivatives market regulatory framework. The companies, including Daimler, BMW, Volkswagen, Bayer, and Lufthansa, backed a letter sent last week to the European Commission by the European Association of Corporate Treasurers (EACT) outlining their worries and suggesting that the changes could lead to another financial crisis if they are not tempered down.

The biggest concern is that the changes—found within the EC’s European Market Infrastructure Regulations (EMIR) draft—require more OTC contracts to be cleared through exchanges—a requirement that caused heated arguments in the US over the past year as OTC derivatives market legislation was crafted. In the US the current draft legislation—which is expected to be adopted soon—includes a large carve-out of this requirement for non-financial companies.

Gary Gensler said the financial legislation reported by the Conference Committee earlier this week is "strong, comprehensive and historic."

In his first detailed analysis of the legislation he worked tirelessly to support, the chairman of the Commodity Futures Trading Commission (CFTC) applauded the legislation for including strong regulation of over-the-counter derivatives dealers for the first time. "This includes both bank dealers on Wall Street and nonbank dealers, such as the next AIG," he said in testimony Thursday before the Financial Crisis Inquiry Commission.

The latest revelations  concerning the dispute between AIG and Goldman over collateral show how weak the new financial reform package really is.

After all, Goldman's demands for collateral from AIG as it was failing ended up costing taxpayers billions of dollars. Yet according to the testimony today during the crisis panel's latest hearings, the whole question hinged on what constituted fair value.

Anyone counting on regulation alone to prevent the world from falling into another financial black hole will be sorely disappointed, a group of experts warned in an article published yesterday by the International Federation of Accountants.

The experts say that all key parties to the financial disaster--from regulators to managers and investors--share the blame and that tighter regulation alone can therefore go only so far to prevent another crisis from materializing. 

Anyone counting on regulation alone to prevent the world from falling into another financial black hole will be sorely disappointed, a group of experts warned in an article published yesterday by the International Federation of Accountants.

The experts say that all key parties to the financial disaster--from regulators to managers and investors--share the blame and that tighter regulation alone can therefore go only so far to prevent another crisis from materializing. 

While many critics claim the financial regulation bill that emerged from Congressional negotiations on Friday will do next to nothing to reduce the chances of another banking crisis, there are some limits on risk taking that could do just that.

The one that strikes me as the toughest and most critical is the so-called Lincoln amendment, which would require banks to separately capitalize their trading in credit default swaps, which were central to the recent crisis.

The members of Congress in charge of creating a financial reform bill recently decided to remove majority voting for electing board members from the legislation and to include only a diluted version of proxy access for nominating board candidates, as my colleague Stephen Taub just discussed .

That latest cop-out underscores an increasingly obvious truth about this legislation: It's not going to change the financial system significantly nor will it do much to prevent another major crisis.

I'm as a big a fan of Paul Volcker as the next guy but am struggling to understand why he objects to the so-called Lincoln amendment. All it would do at the end of the day is force banks to separately capitalize their derivatives operations, as Simon Johnson explains today.

I can understand why the bank lobby is against the idea. More capital would make their operations less profitable. But that's also the only way to make them less risky as well.