Derivs - Equity

Unpredictable trend reversals are causing investors to shy away from options and short-term hedging strategies on the Chicago Board Options Exchange Volatility Index, even though vols have been on the rise since December 2014, according to equity derivatives strategists.

The made-available-to-trade process is not fit for purpose and should be eliminated, according to Christopher Giancarlo, commissioner at the Commodity Futures Trading Commission.

More swaps trading being pushed onto exchanges and other venues will not eliminate the presence of volatility in derivatives markets. However, the move to electronic trading has increased matched trades and efficient sourcing of capital.

UBS this week trumpeted the recent launch of an exchange traded note that provides investors with hedged exposure to the Chicago Board Options Exchange Market Volatility Index (VIX).

The financial crisis caused a surge in demand for systematic strategies, but the market environment now may be easier to navigate with qualitative, human intelligence.

The Intercontinental Exchange Benchmark Administration (IBA) is reforming the methodology for the ISDAFIX derivative benchmark calculation, which represents a first ever move from calculating the rate on a submission-based panel of banks to tradable quotes listed on regulated trading venues.

Alberto Pravettoni, managing director and global head of exchanges at LCH.Clearnet in London, has left the firm.

Institutional investors have been trading single stock options following a rebound in European equity markets. Despite concerns of turmoil ahead of a potential Greek exit from the eurozone following the country's elections, options trading appeared to be unaffected, with equity derivatives analysts tipping this to continue until action by other leftist parties in eurozone countries becomes clearer.

The Financial Stability Oversight Council in the US is changing the classification process for systemically important financial institutions, prompting concern about the government's extended remit over insurance, clearing and other non-financial organisations. With no hard set of rules and procedures for the new classification system yet released, lawyers are concerned that the statute is ambiguous, inherently flawed and opaque.

Hedge funds and asset managers are increasingly turning to short term options and short dated derivatives products as ways of maximising liquidity in an increasingly illiquid market, according to TABB Group.

In recent months, risks have been emerging from nearly every corner of the market. 'Policy divergence' may sound academic, but the effects of changing flows may prove all too real.

John Grace, ex-senior managing director at AIG, has joined the Options Clearing Corporation as executive vice president and chief risk officer.