Derivs - Equity

The Australian Securities and Investments Commission has decided to reject a proposal that would require large foreign subsidiaries of Australian authorised deposit-taking institutions and Australian financial services licence holders to report their over-the-counter transactions to data repositories.

The International Swaps and Derivatives Association is proposing a Standard Initial Margin Model process for multi-asset swap transactions to reduce initial margin and to promote transparency via risk-based modelling for market participants.

UBS has won a High Court fight with the hedge fund which formerly backed its structured products business, with the judge agreeing that deep cuts in UBS’s fixed income division did not breach the terms of the agreement.

Substantially high volumes of speculative contracts on the Chicago Board Options Exchange Volatility Index and a downsizing of short-term risk positions, predominantly by hedge funds, is displaying increased levels of risk aversion in the equity derivatives market. This comes on the back of volatility stemming from oil and currency markets which has spilled into equity options pricing, according to strategists at Société Générale.

One of the simplest and most familiar options strategies has struggled in recent years, but in the near-term may be one of the best since the financial crisis.

Lawrence Wong, head of listings at the Singapore Exchange, has been appointed as head of the firm’s China business.

The Chicago Board Options Exchange is expanding trading hours for CBOE Volatility Index options and S&P 500 options, adding more than six hours of trading per day, five days a week.

Investors are now actively trading the UBS delta-hedged short volatility strategic index launched last year that seeks to replicate a series of short S&P 500 options as market participants look to gain risk premium exposure.

Market participants are showing substantial interest in structured products on the iBoxx Euro Contingent Convertible Index on the back of a surge in popularity of contingent convertible (CoCo) bonds. This comes after the European Central Bank’s decision to introduce quantitative easing last month.

The cost of downside put protection rose over the past week, suggesting continued risk aversion among investors as they weigh a diverse set of obstacles to stability and global growth.

Asset managers are increasingly trading products that are based on the Chicago Board Options Exchange Volatility Index on the back of a spike in volatility. According to UBS, asset managers are looking to the VIX as a tool for hedging, in addition to a product that they can trade in their clients’ portfolios.

The UK Structured Products Association has introduced a new set of risk ratings to enable financial advisers to compare different structured products more easily and help select products that match their clients’ risk profiles more closely. Up until now, there has been no numeric risk value assigned to structured products.