Derivs - Equity

The International Swaps and Derivatives Association has set out the potential issues that Japanese market participants could face following the adoption of U.S. Commodity Futures Trading Commission guidance and the European Market Infrastructure Regulation in the E.U.

Variance swap strategies through long exposure to iShares MSCI Emerging Markets Index exchange-traded fund (EEM) volatility against S&P 500 (SPX) volatility are likely to spike as hedge funds are deploying the trades to profit from an anticipated appreciation in the realized volatility spread between the underlyings.

Kurt Overley, a pioneer in the hedge fund derivatives market for more than 20 years, has joined StormHarbour.

Matt Johnson, the ex-head of flow equity derivative sales for Europe, the Middle East and Africa at Bank of America Merrill Lynch in London, has joined ETF Securities in a new role.

Global market participants are already migrating their trading of over-the-counter derivatives onto central clearinghouses or switching their allocation to exchange-traded alternatives ahead of mandatory clearing laws, according to the World Federation of Exchanges.

The International Swaps and Derivatives Association has voiced opposition to requiring mandatory initial margins for non-centrally cleared swaps, according to a response letter to the Basel Committee on Banking Supervision and the International Organization of Securities Commissions.

Société Générale’s subsidiary Lyxor Asset Management has teamed with Fortune SG and Winton Capital to launch China’s first managed futures fund.

The European Securities and Markets Authority has declined to adopt straight-through-processing for its final regulatory technical standards for over-the-counter derivatives, central counterparties and trade repositories.

The Royal Bank of Scotland is set to reduce the size and footprint of its investor products and equity derivatives unit globally in an effort to take out significant costs from the business, according to officials. As part of the move, led by Peter Nielsen, ceo of markets, the investor products and equity derivatives unit will be integrated with the firm’s non-linear trading business.

RBC Investor Services has launched a global middle and back-office platform for listed and over-the-counter derivatives.

Structured product dealers in Asia Pacific are redeeming legacy transactions across asset classes on their call dates. The moves wind down deals with high funding costs and allows banks potentially to issue simpler lower cost notes, according to structurers in Hong Kong and Tokyo.

Hedge funds globally have been buying end-of-year-dated upside calls within the last two weeks on the Nikkei and HSCEI, with out-the-money strikes of between 103-105% of spot.