Derivs - Equity

Alexander Justham, ceo of the regulated subsidiary of the London Stock Exchange, has been named as a new member of the European Securities and Markets Association’s Securities Markets Stakeholders Group.

Demand for call options on volatility target strategies is expected to grow in 2014 as institutional investors increasingly get to grips with the benefits of such investments that aim to mitigate recent price rises, while optimising long-call exposures.

The number of single name dividends futures contracts is expected to grow next year, according to Jad Comair, managing director of Melanion Capital in Paris, and Tobias Ehinger, v.p. at Eurex in London.

Some macro investors have switched their preference for long strategies on Nikkei Dividends to the Nikkei cash index, buying Dec. 2014 16,500-17,500 upside call spreads with an 18,500 knock-in barrier at JPY324. The play could be funded by selling a 105% out-the-money call on the 2015 Nikkei Dividends at 2.1%.

The Volcker Rule, which was approved by five regulatory agencies on Tuesday, is fundamentally flawed and imposes significant obligations upon market participants at a considerable cost, according to Scott O’Malia, Commissioner at the U.S. Commodity Futures Trading Commission.

The International Swaps and Derivatives Association has sought understanding from the Basel Committee on Banking Supervision and the International Organization of Securities Commissions’ Working Group On Margin Requirements to develop a standard initial margin model for margining non-cleared derivatives.

Daniel Even, a former index arbitrage and delta one trader at Nomura in London, has joined U.K.-based interdealer broker Square Global Markets as head of delta one and securities finance, also in London.

STOXX has launched the Europe 600 EM Exposed Index, which references companies in the Europe 600 Index that derive a substantial part of revenues from emerging markets.

Seoul-based financial boutique Arirang Exchange-Traded Fund has listed on the Korea Exchange South Korea’s latest synthetic ETF, which uses the MSCI All Country World Index as its underlying benchmark.

New swap execution facilities are going to struggle to compete with other more established SEFs in 2014, according to Will Rhode, principal, director of fixed income at TABB Group, in New York.

The South Korean Financial Services Commission is seeking to support the introduction of futures on the Kospi 200 Volatility Index next year and is also considering creating a market for new derivatives, such as sector index futures.

The search for alpha has led more and more buyside organizations, including pension funds, to turn to derivatives. But, in many cases, investor appetite for these products has outpaced the technology used for processing them.