Derivs - Equity

Royal Bank of Scotland strategists are suggesting investors go long Hang Seng China Enterprise Index volatility by buying variance swaps, while shorting Hang Seng Index volatility by selling variance swaps.

Fuzzy language in the draft over-the-counter reform legislation revealed earlier today did little to quell concerns about the extent of forthcoming regulations, but there were some surprising nuggets in the concept paper.

Morgan Stanley Smith Barney and Wells Fargo are considering suspending the sale of leveraged exchange-traded funds. Spokeswomen for both firms said non-traditional ETF policies are currently under review mostly because of a notice from the Financial Industry Regulatory Authority last month that called leveraged ETFs unsuitable for long-term retail investors.

Citigroup issued USD53.5 million in reverse convertible notes yesterday, its biggest such offering since March and a sign that the market for retail structured products is thawing after a long freeze.

Justin Golden, a principal in institutional equity derivatives sales at Bank of America in London, has joined B of A’s former head of equity sales trading Dean Curnutt at Macro Risk Advisors in New York.

Mike Ebert, a senior index trader at Merrill Lynch in London, is moving to New York to head U.S. equity index trading at the firm. He will help rebuild the desk in the wake of the departure of several senior staffers for Citadel Investment Group in May.

A number of Bank of America flow equity derivatives traders have been let go in London, following perceived overlaps with the equivalent team at Merrill Lynch.

Outright put options, compared to spread strategies like put spreads or risk reversals, are now the most cost-effective way to play Australian financial names, strategists at Morgan Stanley believe.

A District of Columbia appeals court ruling ordering the U.S. Securities and Exchange Commission to reconsider its proposal of regulating equity-linked annuities as securities has not settled the issue, instead drawing a mixed reaction from insurers.

Standard Chartered is expected to begin trading equity derivatives in India by next year.

The International Swaps and Derivatives Association is expected to complete equity options documentation for closed markets in Asia—India, Malaysia, Korea and Taiwan—next month, with emerging markets in Europe following in October or November.

Daiwa Securities SMBC has launched a delta one business and hired Simon Roche, ex-desk head of delta one trading at Merrill Lynch in London, to head it.