Derivs - Credit

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.

Investors should go long U.S. high yield credit default swaps and short the equivalent European index, BNP Paribas advises, as the best way to play what it sees as the richness of US high yield spreads.

The Hong Kong Securities and Futures Commission will require clearinghouses seeking recognition to submit a self-assessment detailing how they comply with the standards for financial market infrastructure set out by the Committee on Payment and Settlement Systems of the Bank for International Settlements and the International Organization of Securities Commissions.

A derivatives exchange opening next year will seek to introduce innovative fixed income futures products, hoping to capitalize on the shift to exchange trading under Dodd-Frank and E.U. regulation. Global Market Exchange Group International is being launched by Hirander Misra and Vijay Angelo and should be operational early next year. Misra was previously a co-founder of Chi-X Europe.

Credit Suisse recommends buying 6m3y receiver spreads on U.S. rates based on attractive volatility-adjusted rolldown.

Investors should consider selling five year credit default swaps on KPN, the Dutch telecom company, after a takeover bid by America Movil prompted spreads on the name to trade at 134 basis points, their tightest level since September last year.

The summer lull is well and truly here, with low volumes and a distinct lack of earth-shattering macro news.

Five year credit default swap spreads on Commerzbank tightened seven basis points today following better than expected second quarter results.

South Korea’s plan to introduce a derivatives transaction tax in 2014 could hurt volumes and liquidity in the KOSPI 200 futures and options market, and will face stiff opposition from the market.

Credit Agricole was the top performing name in the iTraxx Europe on Tuesday following second quarter results that prompted credit default swap spreads to tighten 14 basis points to 152 bps at their lowest.

Five-year credit default swap spreads on Telecom Italia pushed out 34 basis points over the weekend after a poor set of second quarter earning numbers.

Spreads on iTraxx indices have tightened to some of the lowest levels seen this year following the Federal Open Market Committee meeting on Wednesday. The U.S. Federal Reserve gave a cautious assessment of the U.S. economy and withheld further details of any tapering of monetary policy until September.