Derivs - Credit

A single European central counterparty backed by the European Central Bank is still being considered by some members of the European Parliament, according to Kay Swinburne, member of the Parliament’s Economic and Monetary Affairs Committee.

Exchanges have already begun the process of preparing to set up clearinghouse capabilities for over-the-counter derivatives in Canada, senior exchange officials told Derivatives Week.

Some derivatives lawyers are working on a strategy for large endusers to snuff out the practice of rehypothecation—where dealers use collateral pledged by a customer to back the sellsiders own trades.

Firms would be prohibited from entering into credit default swaps that relate to an obligation of that firm’s home member state under new proposals floated in Europe.

Chinese banks have begun trading credit risk mitigation warrants, the second type of credit derivative to begin trading in China.

Nomura has hired Emilia Mann as a trader of high-yield corporate credit default swaps and cash bonds in its London office.

Sovereign spreads hit a new record on Friday, despite the best efforts of European Union governments to stem the panic.

Abu Dhabi Commercial Bank has filed a lawsuit in New York against Credit Suisse and Standard Poor’s, alleging it was misled over a structured investment vehicle entered into in 2007.

Korea has vowed to support financial markets and ensure sovereign credit default swap spreads and non-deliverable forward rates recover. The two rose sharply after the North Korean attack on Yeonpyeong Island.

Banks are expected to start piling into trades to cover mismatches in their structured credit books.

The TRW Pension Scheme is considering an investment of around GBP1 billion in a synthetic credit overlay to get extra yield from the asset class.

The China Banking Regulatory Commission will reportedly allow banks to use credit derivatives for market-making and hedging purposes when it releases its expected guidelines, a change from earlier drafts.