Derivs - Credit

The Obama administration’s proposal to rein in proprietary trading has predictably drawn fire from industry watchers. At issue is how to distinguish market making for clients from excessive risk-taking using proprietary capital.

Wayne Smith, deputy head of markets and investment firms at L’Autorité des Marchés Financiers, and other European regulators are calling on the European Securities and Markets Authority to oversee trade repositories.

Trading activity in Asian high-yield credit default swaps is on the uptick as spreads in investment-grade names continue to tighten and investors move down the credit spectrum to capture more yield. Underscoring the trend is the fact Credit Suisse recently started quoting sovereign CDS on Sri Lanka, which one desk head in Hong Kong said he could not recall having seen for a long time.

Hedge funds and corporates have been buying short-term calls on the U.S. dollar against the euro this week, as investor concerns heighten over the swelling budget deficit in Greece.

Royal Bank of Scotland has made several senior appointments within its global banking and markets business in Singapore.

Europe is zeroing in on taxing financial transactions, with specific reference to over-the-counter derivatives.

Société Générale is planning to expand its flow fixed income and currencies sales force throughout Asia Pacific in the next two to three months.

The Japanese Financial Services Agency is considering giving a future central counterparty clearing outfit the power to determine when credit default swaps referencing Japanese companies should be triggered.

Merrill Lynch Credit Products has purchased a USD228 million derivatives claim against the Lehman Brothers estate.

A master agreement for entering into Shariah-compliant derivatives transactions is likely to be initiated in March, according to an official at Bahrain’s International Islamic Financial Market.

Donal Galvin, the former head of exotics trading and structuring at Rabobank in London, has joined Mizuho Securities Asia in Hong Kong.

Guy Cornelius, head of fixed income at boutique Evolution Securities in London, has left the firm.