Derivs - FX

It is difficult to predict whether E.U. regulation will be aligned with the U.S. in exempting fx forwards and swaps from the clearing obligation, Rodrigo Buenaventura, head of markets at the European Securities and Markets Authority, told DI.

The Hong Kong Exchange has seen a 6% increase in its derivative market turnover from July 2011 through June 2012, with 135 million contracts executed, up from 127 million.

A Swiss hedge fund has pocketed a USD2 billion one-month five-delta call on the U.S. dollar against the Korean won.

Proposals to ring-fence significant market-making activities of European banks would increase funding costs and restrict banks’ ability to offer cost-effective financing and risk management services to clients, according to a letter from the International Swaps and Derivatives Association and the Association for Financial Markets in Europe.

UBS is launching outperformance bonus certificates that enable investors to benefit from the appreciation of an emerging market currency basket against the euro.

Short-dated calls and at-the-money options on the U.S. dollar against the yen have been in demand on the back of a sudden rally in the cross. The flow followed the recent purchase of a USD2 billion call by a U.S. investment bank on behalf of a client.

The Hong Kong Monetary Authority is expected to keep the Hong Kong dollar pegged to the U.S. dollar, despite recent inflows strengthening the currency and moving it close to its upper barrier, according to fx traders.

Citigroup has hired Daniel Mitchell, former co-head of Central and Eastern Europe, Middle East and Africa options trading at the Royal Bank of Scotland in London, as a CEEMEA fx options trader, also in London.

Corporates in Asia are buying one-year onshore China yuan, U.S. dollar straddles, with a strike of CNY6.35, in preparation for two-way volatility in the currency pair next year, according to fx traders.

Banks will be required to hold more capital against exposures to central counterparties should a draft regulation from the European Commission be enacted.

Rep. Scott Garrett, R-N.J., vice-chairman of the House Budget Committee, criticized the lack of coordination between the Commodities Futures Trading Commission and the Securities and Exchange Commission on regulation at the SEFCON III conference in New York today.

Notional outstanding over-the-counter derivatives have decreased over the last six months, with the total down 1% to USD639 trillion by the end of June 2012, according to the Bank for International Settlements.