Derivs - Equity

Bank of America Merrill Lynch sold two tranches of USD30 million in notes linked to front-month corn futures contracts last Thursday, all to individual investors. A firm official said commodities have begun to compose a “much larger percentage of our business, more than we’ve seen in years” and the group would likely link products to corn again in the near future.

Brokers are against further restrictions on trading facilities to which over-the-counter derivatives will be moved under the latest revisions to the E.U. Markets in Financial Instruments Directive.

Plans by the European Commission to implement a so-called European Contract Law for consumers and businesses operating in the E.U. is unlikely to affect derivatives or similar financial contracts, according to a senior Commission official involved in the legislation.

Hedge funds have been picking up short positions via total return swaps on the Vanguard Emerging Markets ETF this week. The trades are an alternative to shorting the iShares MSCI Emerging Markets ETF.

Derivatives accountants have defended new proposals released by the International Accounting Standards Board and the Financial Accounting Standards Board, after the International Swaps and Derivatives Association yesterday opposed new rules for the reporting of derivatives in financial statements.

The Japan Financial Services Agency plans to begin taxing over-the-counter derivatives used by individual investors the same way as their listed counterparts, meaning gains will get charged a flat 20% instead of being lumped into general income where gains could be taxed as much as 50%.

The Malaysia Securities Commission has released proposed rules that would widen several investor definitions for investment products, including structured products.

One buysider has sold a few billion dollars in notional strangles with out-of-the-money puts and calls on the S&P 500 over the past six months.

The European Structured Investment Products Association has urged the European Commission to conduct a study for the development of a so-called risk classification system for packaged retail investment products, such as structured products, that is separate from UCITS risk classifications set out by the European Securities and Markets Authority.

Mike Fullalove, the former head of equity derivatives at Nomura in London, has joined UBS in a new role as global head of alternative fund distribution, also in London, according to a memo seen by Derivatives Week.

The recently-approved new over-the-counter derivative rules from the China Banking Regulatory Commission will open the derivatives market to asset managers as well as dealers, according to a report by Allen & Overy lawyers.

One of the stories of 2011 has been the outperformance of European stocks over U.S. stocks, with the EuroStoxx 50 up over +7% in comparison to the U.S. which is only +3.5% higher. The financial sector has been one of the main drivers over this decoupling, with the European Financials Sector index having gained over +8% on the US Financials Sector.