Derivs - Credit

Annual turnover in Asia’s over-the-counter derivatives markets grew 2.2% a year between 2008 and 2012, with annual turnover reaching USD186 trillion last year, according to the International Swaps and Derivatives Association.

A lack of progress and co-ordination in developing cross-border rules is fragmenting the over-the-counter derivatives markets, and will in turn dampen liquidity, investment and growth, according to a letter from numerous Finance Ministers addressed to the U.S. Treasury and other U.S. regulators.

Investors should buy payer spreads on the iTraxx Main and iTraxx Senior Financials, as such indices will be the most negatively affected should concerns surrounding the stability of Eurozone sovereigns escalate.

Market participants should sell delta-hedged 3mx5y straddles on the Japanese government bond yield as monetary policy undertaken by the Bank of Japan should depress volatility, according to JPMorgan.

Standard Chartered has hired Petter Sternby, the ex-head of the financial institutions group Asia ex-Japan at Nomura in Hong Kong, as head of Southeast Asia financial institutions strategic coverage in Singapore.

Peter Tierney, former coo Asia at NYSE Technologies in Singapore, has joined the Depository Trust & Clearing Corp.

Fragmented central clearing in Asia could hit bid/ask spreads and liquidity of cleared over-the-counter derivatives if dealers and end-users are forced to join a number of separate national clearinghouses.

To position for no hikes in Swedish rates, the Royal Bank of Scotland is recommending a 2y forward 2s10s steepener in the Swedish krona.

From 1 April 2013, a new financial regulation framework took effect in the U.K. The Financial Services Authority (FSA) is replaced by the Financial Conduct Authority (FCA) and the Prudential Regulation Authority (PRA), the Bank of England is to have overall responsibility for financial stability and a new Financial Policy Committee (FPC) of the Bank of England is being created. However, the Financial Services Act 2012 does more than just give effect to these regulatory reforms.

New York-based Javelin Capital Markets, which runs an interest rate swaps and credit derivatives trading venue, has opened an office in London following a spike in demand from end users in Europe.

Investors should buy protection on the iTraxx Asia Ex-Japan IG following a slide in the yen and a slowing of cyclical recovery in China, according to strategists at Société Générale.

The International Organization of Securities Commissions has issued a consultation paper on its proposed Principles for Financial Benchmarks noting that compilation, distribution and governance for financial benchmarks should be undertaken by an administrator.