Derivs - Equity

The Singapore Exchange will likely share its clearing technology and expertise with the Korea Exchange, following the signing of a memorandum of understanding to collaborate on the development of over-the-counter derivative clearing.

Uptake of client clearing of over-the-counter derivatives in the Asia region will be much slower than Europe and the U.S. due to lack of certainty over when mandatory client clearing will start in each region.

Regulatory proposals surrounding margin requirements for non-cleared derivatives may increase risk, hamper economic growth and result in the implementation of unsuitable hedges by market participants.

The Depository Trust & Clearing Corp. has landed approval as Japan’s first third party-trade repository, as the Japan Financial Services Agency moves to implement an April 1 deadline for the reporting of over-the-counter derivative trades.

Retail investors and private banks in Japan are buying three-to-five-year worst of barrier structured products with a 105% strike that reference a basket of either Nikkei, S&P or Dow Jones stocks, as the equity markets in the U.S. and Japan continue to grow.

Japanese investors this year are shunning complex structured products, such as so called double and triple deckers, in favor of simpler equity and fx bond funds.

Credit Suisse has launched tracker certificates linked to an actively managed notional variable weight and composition total return portfolio that is long a basket of between 15 to 20 shares in Asia Pacific—pitched by the firm as a dragon basket.

BNP Paribas strategists are touting a duo of cross-asset option plays, one on the iTraxx Senior Financials and DAX, and another on the CDX IG and S&P 500.

Benchmark-setting rules should apply to strategy and proprietary indices, as well as the widely-used benchmarks and indices already targeted by European regulators, according to the influential Securities and Markets Stakeholder Group.

Hedge funds are looking to trade the April-June S&P500 future roll through jelly rolls in an attempt to profit from future increased roll costs on the back of growing dislocation between the two expirations. Funds are considering the trade now as the March-June roll has widened significantly over recent days.

Deutsche Bank is suggesting going long puts on the Vstoxx, financed by selling call spreads on the index to capture declines in volatility and take advantage of potential mean reversion.

Elie Scemama, the ex-head of equity derivative hedge fund sales for Europe, the Middle East and Africa at UBS in London, has launched an interdealer brokerage firm—Square Global Markets—in London.