Derivs - Credit

Fast money investors have been seen selling at-the-money volatility on iTraxx Main in the aftermath of the European Central Bank’s asset purchasing announcement last week, following a trend for buying gamma prior to the meeting.

The revived attempt to pass a financial transaction tax in Europe could end up caught between a rock and a hard place — a relief for market participants who have seen the tax as yet another potential restriction on trading businesses grappling with a raft of other regulatory burdens.

Overall interest rate derivatives trading that was reported to swap data repositories last week decreased by 12% from the previous two weeks, according to data from the International Swaps and Derivatives Association.

Hedge funds took profit on a long stocks, short credit default swaps relative value trade on Monday after Syriza's victory in the Greek election failed to dampen expectations in equities, while the iTraxx wobbled slightly wider.

Clearing houses should avoid resolution at all costs, according to a recovery framework published by the International Swaps and Derivatives Association on Monday, which said that even when prefunded resources such as member contributions have been exhausted, recovery of a clearing house is always preferable to closure.

European credit default swap indices tightened yesterday on news that the European Central Bank would buy €60bn worth of bonds a month until September 2016 or later, with the iTraxx Main closing 3bp tighter at 54.7bp and the Crossover also tightening approximately 3bp to 303.1bp.

Hedge funds and asset managers are increasingly turning to short term options and short dated derivatives products as ways of maximising liquidity in an increasingly illiquid market, according to TABB Group.

The controversial topic of skin in the game for clearing should focus largely on the contributions that each clearing member must make and not that of the central counterparty, said CME Group, firing back at those who say it is not contributing enough in its US business.

MarketAxess and BlackRock have brought their trading alliance to Europe, launching an all-to-all trading platform for Eurobonds.

Commentators on financial markets are sometimes prone to hyperbole, but it is surely no exaggeration to say that the next few days are crucial in determining sentiment for 2015 and beyond.

The credit spreads of five major US banks have widened since they posted fourth quarter earnings results, regardless of whether the earnings posted were above or below expectations, according to a new report by Markit. The report suggests that credit market participants are showing caution on US financial names as regulatory charges heighten investors' awareness of credit risk.

Overall interest rate derivatives trading that was reported to swap data repositories last week increased by 14% from the previous week, according to data from the International Swaps and Derivatives Association.