Derivs - Credit

The Bank of Portugal’s decision to transfer €2bn of bonds from Novo Banco to ‘bad bank’ Banco Espírito Santo was not a succession event, ISDA’s European Determinations Committee ruled this week in a decision that could increase the pain for holders of the affected bonds.

European bond yields have fallen to new recent lows as the market takes an increasingly dim view of growth prospects, which has in turn put insurance bonds under increased pressure.

Tradeweb Markets, a fixed income and derivatives marketplace operator, has bought CodeStreet, a firm that specialises in developing data-driven trade identification and workflow management software.

Intercontinental Exchange (ICE), the exchange, clearing house and data services operator that is circling an approach for the London Stock Exchange, has agreed to buy Standard & Poor’s Securities Evaluations and Credit Market Analysis.

Equity, currency and rates futures traders adopted a riskier posture last week after market prices stabilised, the weekly Commitment of Traders report showed.

Senior capital markets bankers are preparing their teams for months of speculation on Britain’s possible exit from the European Union, after the markets treated them to a glimpse of investors’ uncertainty on the issue this week.

A merger between London Stock Exchange Group and Deutsche Börse could bring huge cost savings and margin benefits — but would concentrate clearing house risk, running directly against the regulatory desire to end "too big to fail".

Mounting clamour around the prospect of the UK voting this summer to leave the European Union raised the risk stakes for currency and options traders this week, but some volatility traders preferred to pin their hopes on the European Central Bank producing another ‘big bazooka’ next month.

The industry-wide unsupported exposure of the derivatives market to collateral settlement failure is $27bn for sellside firms alone, the Depository Trust & Clearing Corporation said this week.

Last summer investors turned to shorting bond exchange traded funds as the bond market kicked back into life amid the Greek crisis. Volatility has continued in earnest in 2016 as the Markit iTraxx Europe index, which tracks CDS spreads across investment grade issuers, hit a three year high of 121bp earlier this month.

Regulators should focus on broad outcomes and similarities between US and European Union trading platforms rather than conduct a granular, rule-by-rule comparison of the two frameworks, the International Swaps and Derivatives Association has said.

The shrinking of balance sheets has become a common theme in recent years, particularly in the financial sector. Investors are punishing banks that are either unwilling or unable to implement a more conservative financial strategy.