Derivs - Credit

The US has raced ahead of Europe and the rest of the world in implementing derivatives regulation since the global financial crisis in 2008. So it will come as no surprise that US buy and sellsiders are also ahead in implementing compression and similar tools to tidy up their balance sheets. However, Europe is not far behind, as Hazel Sheffield reports.

Talks over a European Financial Transaction Tax have been revived since 2014’s European elections. The tax is now being deliberated between 11 key EU member states. Although the scope of its coverage appears to have shrunk, the uncertainty may lead to unforeseen costs for derivatives market participants. Gabriel Suprise reports.

New futures on a 10 year US Treasury Note Volatility Index, which allow investors to hedge interest rate volatility with a single product for the first time, are gaining traction. As the US is ending quantitative easing, market participants are tipping volumes to surge in the first quarter of 2015 as investors look to hedge their fears over looming rate hikes. Beth Shah reports.

Harmonisation and crossborder issues are key concerns for the International Swaps and Derivatives Association as markets enter 2015. As Scott O’Malia, CEO of ISDA and former commissioner at the Commodity Futures Trading Commission, tells Beth Shah, regulators need to ensure that crossborder oversight is based on risk and not location.

Real money investors, and other investors with a long cash portfolio, have been buying volatility on European credit default swap indices.

It seems like an aeon ago that a relatively small country in south-eastern Europe held the fortunes of the global economy in its hands. But less than two years has passed since Greece’s debt was restructured, and it is all too apparent that the sovereign still has the capacity to create a noise that belies its modest size.

Market participants are unlikely to have documentation in place to meet the G20's initial margin and variation margin requirements in time for the December 2015 deadline, according to lawyers, who said the buyside faces the greatest challenge to comply.

Talks over a European Financial Transaction Tax have been revived since 2014’s European elections. The tax is now being deliberated between 11 key EU member states. Although the scope of its coverage appears to have shrunk, the uncertainty may lead to unforeseen costs for derivatives market participants. Gabriel Suprise reports.

Hedge funds and absolute return fund managers are going long the EuroStoxx 50 while shorting iTraxx Main on the expectation that stocks will outperform synthetic credit indices after the recent decline of the euro, which reached a multi-year low against the dollar on Monday.

Overall credit default swap notional that was reported to swap data repositories last week increased by 44% from the previous week, according to data from the International Swaps and Derivatives Association.

Overall credit default swap notional that was reported to swap data repositories last week increased by 49% from the previous week, according to data from the International Swaps and Derivatives Association, continuing a multi-week trend of increasing notional.

The implementation of a stay on the contract termination rights of derivative counterparties by global regulators could change the face of derivatives trading, forcing counterparties to look at amending their agreements away from the prevalent two-way payment system, according to lawyers.