Derivs - Credit

Market participants that are found guilty of committing fraud or manipulation in the E.U. could face jail under rules agreed by the European Parliament and E.U. member states today.

Financial counterparties and non-financial counterparties will be required to delegate risk-management procedures and arrangements to an asset manager who is providing portfolio management services to the counterparty on an agency basis, according to the European Securities and Markets Authority.

Strategists at BNP Paribas are recommending investors position for spread compression on the iTraxx Main 5/10y, noting that it is trading more than 20 basis points above 2009 and 2010 levels, when the 5y was trading in the 70-80 bps range.

ING Investment Management International has launched the Frontier Markets Debt Hard Currency fund. The fund invests in debt instruments–including credit defaults swaps– denominated in currencies approved by the Organization for Economic Co-operation and Development.

The FIG market was given an extra lift on Thursday — if it needed one — by the US Federal Reserve’s decision to taper its $85bn quantitative easing programme by $10bn on Wednesday, with bankers saying the market’s positive reaction to the announcement had banished fears that the bull run of the last couple of months could be derailed before the end of the year.

Rules from the U.S. Commodity Futures Trading Commission that require derivatives to be traded on a swap execution facility have resulted in fragmented liquidity and decreased derivatives trading volumes, according to a survey conducted by the International Swaps and Derivatives Association.

Strategists at BNP Paribas in New York are recommending investors buy payer spreads on the CDX IG and HY indices and June and March expiries to hedge for March or June, when potential debt ceiling issues could increase volatility and lead to wider spreads.

MarketAxess has launched the first independent central limit order book for single name CDS, allowing market participants to send and receive anonymous orders.

Filippo Olivetti, managing director and co-head of markets structuring for Asia Pacific at the Royal Bank of Scotland in Tokyo, has taken a sabbatical.

Strategists at Société Générale are recommending relative value trades on iTraxx Main and Eurostoxx 50 after a dislocation between the two indices corrected by almost half earlier today.

LCH.Clearnet has begun offering client clearing for single name credit default swaps with the addition of 187 names to its CDS clearing service.

The current mismatch between supply and demand of volatility in European rates has opened up the opportunity to buy EUR at-the-money-forward payers versus out-of-the-money payers, according to Credit Suisse.