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Japanese firm plucks banker from UBS
The Americas derivatives community came together in New York to recognise and celebrate outstanding achievements across the industry
The derivatives market gathered in London on Thursday night to celebrate its leading players
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Despite the low volatility fx market environment, demand for options has increased this year creating a competitive market, where dealers have had to make prices that can be challenging to risk manage, Paul Richards, managing director and head of fx distribution for the Americas at UBS in Stamford, Conn. told DW in an exclusive interview. “You’ve got increased demand in the market plus you’ve got the advent of larger funds trying to access the same liquidity and the net result has typically meant more warehousing of liquidity by banks,” said Richards. “We’ve now got the hint that the biggest central bank in the world is going to start tapering, that in itself should elevate volatility, and I think when volatility starts to increase, liquidity can be expected to become more of a premium.” -
Realized volatility in Europe’s two main credit default swap indices has dropped to its lowest point since May 2011, prompting investors to sell implied volatility with August and, to a lesser extent, September expiries.
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Large European banks are likely to strictly control their derivatives trading, especially of riskier instruments, as they strive to meet Basel III leverage ratio capital requirements, according to strategists at Royal Bank of Scotland.
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Spreads on Asia’s emerging market credit default swaps have widened in the last three months, as prices on developed market CDS have tightened, according to data from Markit. And China’s economic situation suggests the trend may be set to strengthen.
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Option traders and hedge fund investors have been playing the steeper skew level on the Hang Seng China Enterprises Index, compared with the Hang Seng Index, since July, via short-dated listed options, put spreads, call spreads or butterfly combinations to capture skew movement.
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Investors are increasingly shorting the Brazilian real as the currency continues to weaken, using structures such as longer-dated risk-reversals to do so.
