Derivs - FX

Adjusted volumes of over-the-counter derivatives have dropped by 5.3% from USD440.1 trillion at year-end 2011 to USD416.9 trillion June 30, 2012, largely due to compression and clearing, according to an analysis by the International Swaps and Derivatives Association.

The European Securities and Markets Authorities has published guidelines stating that a national competent authority should assess and ensure that a central counterparty has put in place a framework to identify, monitor and manage potential risks arising from interoperability arrangements.

Structured product volume on the Scoach Switzerland exchange is declining, reflecting waning investor concern over counterparty credit and the lack of appetite for the fees associated with listing.

The Australian Securities and Investments Commission has released regulatory guidance for domestic and overseas clearing and settlement providers wanting to operate within the domestic Australian market.

A German bank was buying one-year at-the-money straddles on the euro against the U.S. dollar Monday, according to traders in London. The trade had a notional of USD400 million and stood out in what has been a quiet fx options so far this week.

Regulatory proposals for initial margin requirements for non-centrally cleared derivatives will severely impact liquidity and could increase systemic risk, according to trade associations.

Barclays is advising investors to buy one-month seagulls on the U.S. dollar against the Korean won to position for a near-term won rally due to USD/yen strength and concerns over the U.S. fiscal cliff.

A new strategy of selling cross-asset short maturity out-of-the-money strangles, while deploying a shadow profit and loss risk enhancement, has been devised by Société Générale as a way to monetize the tail premium within options volatility.

A hedge fund made a profit in excess of USD20 million on a one-touch option on U.S. dollar/yen after the JPY83.00 barrier was hit during London afternoon trading Wednesday, according to traders, who declined to name the fund due to confidentiality agreements.

Market participants in Asia are shifting focus from the extraterritoriality implications of the U.S. Dodd-Frank Act to the European Market Infrastructure Regulation, with concerns that many clearinghouses in the region may not be able to register under the E.U. rules.

JPMorgan is touting a cross-asset play to take advantage of differences in volatility across equity and fx.

Structured investment products dominate Hong Kong’s non-exchange traded investment landscape, with transactions accounting for 56% of the HKD584 billion market up to March 31, 2012, according to a Hong Kong Securities and Futures Commission survey.