Derivs - FX

Regulatory requirements that would force banks to make significant investments in IT and infrastructure that couldn’t be reused in different jurisdictions would be a worrying outcome for dealers, according to Eric Auld, global head of fx at BNP Paribas in London.

Investors are buying short-dated at-the-money or near out-the-money U.S. dollar, India rupee or USD, Indonesian rupiah calls to protect against further weakening of emerging market Asian currencies.

StormHarbour Securities has hired Magnus Orgard, the former European head of solutions and derivative sales at WestLB, to work in the firm’s client solutions team in London.

Investors have been selling risk-reversals on the euro against the U.S. dollar, and sterling against USD ahead of Federal Open Market Committee meeting minutes, due to come out Wednesday.

Patrick Law, managing director and head of north Asia rates and fx trading at Barclays in Hong Kong, is joining Bank of America Merrill Lynch.

Standard Chartered’s China renminbi-focused client solutions team will have full access to the firm’s suite of offshore RMB derivatives and structured products, according to a spokesperson at the firm.

The Hong Kong Exchange is planning a round of simulations in the third quarter of this year, to test its newly constructed central counterparty for clearing over-the-counter derivatives, according to a statement in its financial results.

Despite the low volatility fx market environment, demand for options has increased this year creating a competitive market, where dealers have had to make prices that can be challenging to risk manage, Paul Richards, managing director and head of fx distribution for the Americas at UBS in Stamford, Conn. told DW in an exclusive interview. “You’ve got increased demand in the market plus you’ve got the advent of larger funds trying to access the same liquidity and the net result has typically meant more warehousing of liquidity by banks,” said Richards. “We’ve now got the hint that the biggest central bank in the world is going to start tapering, that in itself should elevate volatility, and I think when volatility starts to increase, liquidity can be expected to become more of a premium.”

Investors are increasingly shorting the Brazilian real as the currency continues to weaken, using structures such as longer-dated risk-reversals to do so.

The Hong Kong Securities and Futures Commission will require clearinghouses seeking recognition to submit a self-assessment detailing how they comply with the standards for financial market infrastructure set out by the Committee on Payment and Settlement Systems of the Bank for International Settlements and the International Organization of Securities Commissions.

Gerrard Katz, former head of fx Asia at Banco Bilbao Vizcaya Argentaria in Hong Kong, has joined Scotiabank.

An institutional investor snapped up a sizeable two-month straddle on the U.S. dollar against the yen last week, while selling a three-month straddle on the same cross as the Japanese unit fell--hitting a seven-week low of 95.81 during New York morning trading Thursday.