Derivs - Credit

Margin requirements for non-centrally-cleared derivatives proposed by the Basel Committee on Banking Supervision and the International Organization of Securities Commissions could force traders to choose less effective means of hedging or to leave the underlying risks unhedged entirely, rather than raising or diverting funds to comply.

Requiring swap execution facilities to post position data for traders would be a difficult requirement for SEFs to meet, according to brokers. In a letter to the Commodity Future Trading Commission, Stephen Merkel, chairman of the Wholesale Markets Brokers’ Association Americas in New York, wrote, “While SEFs will monitor for manipulative and abusive behaviour, given the competitive relationship among trading systems and platforms, SEFs will be unable to obtain position data from other SEFs.”

Credit Suisse has hired Victor Lin as a U.S. dollar interest rates options trader in New York.

David Gallers, the former head of credit default swaps index trading at UBS in New York, has joined corporate credit investment manager Lucidus Capital Partners as a portfolio manager.

Portugal has certainly suffered since the debt crisis started, though it is the medicine being applied to the economy that is doing the damage.

Market participants, and particularly buyside firms, are looking to standardize derivatives products which will accelerate the move to electronic trading, according to panelists at the Futures Industry Association’s Expo in New York this morning.

Central counterparties that accept non-cash variation margin are taking on significant risk, according to Daniel Maguire, head of SwapClear U.S at LCH.Clearnet.

Distributors in South Korea and private banks in Asia Pacific are buying UCITS-compliant fund-linked structured products that mainly offer fixed coupons. The move comes as investors opt for UCITS funds over custom indices as they provide greater transparency and liquidity.

Nomura is considering expanding its clearing team in Asia. “It’s one of the growth areas for the bank, as we expect the market to expand quite rapidly,” Lee McCormack, client clearing business development manager in London, told DI in an interview.

Hedge funds and institutional investors are taking profits on strategies that are long the iTraxx Main and short the DAX.

Three senior fixed-income officials from merchant bank Heritage Capital have joined Exotix, the boutique investment bank, to form part of the firm’s new fixed-income credit markets group.

Financial transaction tax proposals being drawn up by some European Union member states may force some firms to open subsidiaries outside the tax zone, according to ICAP.