Derivs - Equity

The slower pace of regulatory change in Europe could benefit European dealers operating in Japan, as firms there diversify away from U.S. counterparties ahead of stiff Dodd-Frank regulations being implemented. Tomoko Morita, policy director and head of the Tokyo office for the International Swaps and Derivatives Association, said Japanese firms will be tempted to shift to European counterparties in order to sidestep registration as a major swap participant under U.S. regulation.“

UBS has begun cutting staff on equity derivative sales and trading desks as part of a cost reduction plan it announced earlier in the year.

Flow in put options on a host of U.S. airline stocks doubled on Wednesday. The increase in comes as the sector faces a loss in revenues due to the impact of Hurricane Sandy.

Australian firms preparing to register as major swap participants under the U.S. Dodd-Frank rules being implemented by the Commodity Futures Trading Commission could find it hard to comply with domestic over-the-counter derivative regulations.

Investors should look at buying a December 2013 worst-of call referencing a basket of companies that should benefit from a weaker yen, while selling Nikkei or Topix, in a bid to benefit from more aggressive monetary policy from the Bank of Japan.

Benoit Meulot, director and proprietary trader at Société Générale in Hong Kong, has joined the Royal Bank of Canada.

Attempting to simplify product information in a key information document for structured products may limit the usefulness of the disclosure and is likely to mislead investors, according to the Joint Associations Committee on Retail Structured Products.

UBS has begun cutting staff in its Tokyo and Hong Kong equity derivative sales and trading desks.

The Japan Securities Clearing Corp.’s move to become the first Asia Pacific clearinghouse to register as a derivatives clearing organization—or DCO—under the U.S. Commodity Futures Trading Commission could be an expensive venture for the CCP, but is needed to be competitive in the emerging global clearing marketplace, according to lawyers and officials in Tokyo.

As the derivatives market moves towards central counterparty clearing, initial margin has increasingly become a subject of industry discussion. CCPs require firms to post initial margin when entering into derivatives to provide protection in the event of a default; however, concerns over how the margin is calculated are growing. Market participants are now looking at the potential for standardizing initial margin.

U.S. firms operating in Japan are losing trades to European and domestic counterparties, as complying with Dodd-Frank rules adds an extra 10 minutes to the trading process, according to Hiroki Tomiyasu, executive director at Morgan Stanley MUFG Securities in Tokyo.

The International Swaps and Derivatives Association believes U.S. central counterparty clearing rules do not reflect the Basel Committee on Banking Supervision’s position.