Derivs - FX

Onshore China yuan non-deliverable forward prices have not followed the recent strong appreciation of RMB’s spot price, meaning that interest rate differentials are now driving NDF rates.

The Monetary Authority of Singapore is planning to exempt fx forwards and swaps from mandatory clearing and trade reporting when it moves to implement the regulation sometime next year, according to Lee Chuan Teck, assistant managing director at the authority.

Bank Vontobel is set to launch a customized version of its electronic structured products platform in Hong Kong and Singapore. The firm also plans to add autocallable and equity-linked notes to its list of structured products in a bid to woo Asia-based investors. It will gradually add Singapore, Hong Kong and Japanese stocks and indices as underlyings.

Regulatory proposals for initial margin requirements for non-centrally cleared derivatives could lead to a funding shock in the market. There may also be less availability and liquidity in risk management instruments, according to a report from the International Swaps and Derivatives Association.

Swedish asset manager Coeli AB has launched its Coeli Spektrum investment program on Deutsche Bank’s dbSelect hedge fund platform.

South Korea’s central clearing counterparty will not be ready for operation by the G20 end-of-year deadline and could have to wait until after mid-2013 for needed government approval, according to lawyers in Seoul.

Australia-based funds may not be ready to comply with the Dodd-Frank Act when acting as a counterparty with U.S.-registered swap dealers, cutting off a significant market to U.S. firms, according to market officials.

The South Korean government’s threat to intervene in its currency appreciation and limiting the fx derivative positions of local financial firms will have little impact on volatility in outstanding fx derivative contracts that reference the won, according to Robert Minikin, senior foreign exchange strategist at Standard Chartered in Hong Kong.

JPMorgan is advising investors to position for a potential weakening of the Japanese yen against the Korean won by buying three-month one-touches on the cross.

The implementation of new regulations including the Dodd-Frank Act, the Markets in Financial Instruments Directive II, the European Market Infrastructure Regulation and Basel III is significantly increasing the cost of capital and forcing banks to re-evaluate the economics of their over-the-counter trading businesses.

E.U. short selling regulation that was introduced earlier this month is putting pressure on the compliance functions of some structured product issuers globally. According to lawyers, those under the most pressure are global financial institutions with multiple affiliates and branches, with it likely that new compliance units will have to be set up to track and match short and long positions across the entire group.

Société Générale is pitching a play to take advantage of a potential weakening of the New Zealand dollar in buying three-month NZD/U.S. dollar 1x1.5 put spreads.