Derivs - Equity

Coordination between Europe and the U.S. is essential in an effort to regulate the over-the-counter derivatives markets, Gary Gensler, chairman of the Commodity Futures Trading Commission, told a European Commission gathering in Brussels this morning.

The multi-billion dollar Indian participatory note market is at risk following a regulatory proposal that threatens to nix tax treaties that have allowed noteholders and issuers hedging those instruments to avoid capital gains tax.

Barclays Capital will issue USD100 million in structured notes next week linked to Citigroup stock. The offering is the biggest registered in months, according to market watchers.

European regulators are warning against adopting the same over-the-counter regulatory proposals being put forward in the U.S.

BNP Paribas and Credit Suisse are marketing a one-year equity yield note linked to a basket of three stocks.

A new over-the-counter derivatives bill put forward by Sen. Jack Reed (D-RI) would give the Securities and Exchange Commission oversight of all security-based derivatives, including those referencing broad-based indices—indices with 10 or more component securities.

The Obama administration’s proposed over-the-counter derivatives reforms have got some hedge funds pondering the future of synthetic prime brokerage under a mandate that could see standardized OTCs centrally cleared and traded on exchange.

Luxembourg Financial Group, a structuring boutique, is launching a fund dedicated to trading equity/index correlation. The LFG Equity Correlation Fund will be managed by Chris Craig-Wood, the former head of equity index trading at Deutsche Bank. He left the bank in May to launch the fund.

Sen. Jack Reed (D-R.I.) introduced a new over-the-counter derivatives bill this afternoon, a month after the Obama administration presented its own OTC bill to Congress.

Tomorrow’s deadline for filing claims against Lehman Brothers could prompt a flurry of trading in derivatives contracts where the bank served as swap counterparty, according to market watchers.

Darren Baggett, a managing director in index trading in London, who resigned from Morgan Stanley in January (DW Online, 1/29), rejoined the firm a few weeks ago in a newly created post.

Morgan Stanley is advising investors to sell Dec. 2010 variance swaps on the Hang Seng China Enterprise Index since the market is pricing in more volatility than the bank has forecasted.