Derivs - Equity

This week, the German Federal Statistical Office reported that the country’s current account surplus rose to €23.1bn for October. Allowing for the September estimate, which was revised higher, this represents the third-highest level on record. While German competitiveness has explained, historically, some of the surplus, International Monetary Fund and European Commission officials have long warned that the country’s current account imbalance amounts to a policy of needlessly importing demand in a world already starved of it.

A range of six MSCI options indices have been slated for addition to the Chicago Board Options Exchange (CBOE) for 2015 in a partnership intended to increase the diversity of options indices available to consumers worldwide. The MSCI indices will provide substantial exposure to a variety of both US and non-US products for investors seeking risk hedging while simultaneously transacting on one exchange.

The Chicago Board Options Exchange (CBOE) has partnered with MSCI to offer options trading on six MSCI indices. The move comes with broad based asset managers devoting more of their portfolios to non-US exposure for diversification purposes.

Asset managers, including hedge funds and others, are increasingly using equity index derivatives and futures to better allocate capital, minimise transaction costs and execute international exposure strategies, according to a report by market research firm TABB Group.

Retail investors and asset managers have been shorting volatility via exchange-traded funds and exchange-traded notes, building up a short position of more than $135m in vega, the highest short net position in ETFs and ETNs to date. That is a potential source of instability.

Commodity Futures Trading Commission commissioner Mark Wetjen claimed that central counterparty risk mitigation and management strategies need more coordination and harmonisation. But legislative bodies should take note of the potential negatives associated with harmonisation and the centralisation of counterparty risk before pursuing new rules, said lawyers.

A lack of clarity over Canadian rules and regulatory oversight between provincial regulators has posed some challenges for derivative market participants. As Canada looks to fulfil components of the G20 reform mandate for OTC derivatives trading — including trade reporting, clearing and margin requirements — a lack of uniform compliance among participants and rulemaking differences between regulators pose hurdles for the market.

The European Securities and Markets Authority (ESMA) signed a memorandum of understanding (MoU) with the Australian Securities and Investments Commission (ASIC), which grants Australian authorities access to derivative contracts data from EU trade repositories (TRs) outside of their jurisdiction.

Daniel Petherick, ex-managing director and head of equity derivative flow sales for Europe, Middle East and Africa at Citigroup in London, has joined Société Générale as head of European flow derivatives sales, also based in London.

The Depository Trust and Clearing Corporation has partnered with TriOptima, enabling daily reconciliation of over-the-counter derivatives trades that are reported to DTCC’s European trade repository via triResolve, as mandated by the European Market Infrastructure Regulation.

In its 2014 annual report, the US Treasury’s Office of Financial Research (OFR) highlighted three threats to financial stability. One of these deserves investors' closest attentions.

Intercontinental Exchange will list Eris futures and options from the first quarter of next year, heralding the onset of swap futures trading on the exchange.