Derivs - Credit

GlobalCapital is pleased to reveal all the winners of its 2023 Americas Derivatives Awards

New instrument follows green and SRI bond futures — more products to come

Barclays has hired a senior trader from JP Morgan in New York to replace Naseer Al-Khudairi as head of electronic trading and digital strategy for its markets division.

Some €700m of CDS contracts referencing Europcar’s debt have been rendered worthless thanks to a technical squeeze in the CDS auction on Wednesday, in a blow for investors who thought they’d hedged their exposure to the troubled car rental firm. The controversial result threatens to reignite debates about whether the CDS market is fit for purpose, ahead of an expected wave of restructurings in the year to come.

The lack of clarity over whether the UK and the EU will clinch a trade deal before the end of the year also makes it harder for those in financial markets to know whether equivalence decisions will be granted for the trading obligations for derivatives (DTO) and shares (STO).

Whether or not Schuldschein debt is deliverable under CDS auctions is becoming more than an academic discussion, as analysts look to companies like travel firm Tui’s financial future. While the instrument fits the criteria as relevant debt for a CDS auction, the private nature of the contract could prevent the Determinations Committee from ruling.

As market participants prepare for the end of the Brexit transition period on December 31, the European Securities and Markets Authority has said it will not change requirements on where derivatives can be traded, even though this could cause problems for UK branches of EU investment firms.

The US Commodity Futures Trading Commission and the Bank of England signed a memorandum of understanding on Tuesday regarding the oversight of derivatives clearing.

Permira opted to rescue its debt purchasing portfolio company Lowell from the restructuring that many thought was imminent, with the largest slug of equity support any sponsor has injected in Europe since the coronavirus pandemic began. Covid-19 has crushed cashflows for some debt purchasers, but next year should be a bumper year for NPL buying — for those firms with cash to do so, writes Owen Sanderson.

Citi has appointed Christopher Perkins and Sabrina Wilson as global co-heads of its futures, OTC clearing and FX prime brokerage business, following Jerome Kemp’s retirement from the industry.

Interdealer broking giant TP ICAP has advanced further into buy-side revenue streams, with specific plans to target fixed income markets, as it clinched its acquisition of trading platform provider Liquidnet for an initial $575m last Friday.

GlobalCapital is delighted to announce the winners of its 2020 Global Derivatives Awards.

Series 34 of the iTraxx Europe Crossover index saw seven fallen angels join the index, following the three added in March’s roll, as the coronavirus pandemic pressures sectors such as autos, transport and retail.

The European Commission on Tuesday gave the derivatives clearing industry a lifeline by granting an 18 month equivalence decision that will allow European firms to keep using UK central counterparties.

As political tensions rise over the UK-EU trade negotiations, concerns in the derivatives market are growing as the lack of equivalence between trading venues causes jitters once again.

Market observers believe that investors in open-ended debt funds need to be disincentivised more than they are at present from scrambling to liquidate their holdings in a market downturn.

Traders across asset classes are beginning to position in size as the US presidential election approaches, with an expected tight run-off making it very hard to time the market.

Derivatives counterparties breathed easy in March when the Basel Committee on Banking Supervision and the International Organisation of Securities Commissions announced a year’s delay in the introduction of initial margin rules. But in Europe — with the deadline already passed — legal confirmation has still not appeared.

Klaus Löber has been selected by the European Securities and Markets Authority as chair of its CCP supervisory committee. ESMA has also picked two other members; all three will be assessed by the European Parliament.

FTSE Russell and Singapore Exchange (SGX) have teamed up to offer investors a range of products across asset classes. It follows the termination of an agreement between SGX and MSCI.

A tumultuous week in Turkish currency markets ended with the lira hitting new lows against the dollar and the Central Bank of the Republic of Turkey finally taking action to try and calm volatility. Amid such swings, a sovereign bond issue looks unlikely.

Some of the world’s top-tier financial institutions want changes in how central counterparty clearing house (CCP) resolutions are executed.

Société Générale will make its structured products less risky, it said, after a difficult first half of the year in its equities business.

Falls in the Turkish lira have reignited concerns about a currency crisis this week, with the Central Bank of the Republic of Turkey’s (CBRT) unorthodox exchange rate policy raising questions from investors about the robustness of the country’s respected banking sector. Mariam Meskin and Ross Lancaster report.