Derivs - FX

Proposed changes regarding how U.K. client assets are held by non-bank clearing members may result in significant operational challenges and greater costs in futures clearing.

The Singapore Exchange plans to implement client clearing for central clearing counterparty members. It is also gearing to bolster protection for customer collateral in an event of default scenario. The ideas have been included in a SGX public consultation.

More swaps dealers are likely to become designated contract markets, rather than swap execution facilities. That’s according to a TABB Group report, which notes DCMs have a more favorable regulatory touch and the rules for SEFs remain largely unclear.

The default of Lehman Brothers in 2008 brought attention to counterparty risk and collateral management in the financial markets, to the extent that they are now board-level issues for both banks and fund managers. The regulatory reform that is underway, and which resulted from the need to reduce systemic risk, has, in many ways, increased the number of challenges related to accessing and managing collateral. This Learning Curve explores those challenges and examines how they can be addressed.

The International Swaps and Derivatives Association has set out the potential issues that Japanese market participants could face following the adoption of U.S. Commodity Futures Trading Commission guidance and the European Market Infrastructure Regulation in the E.U.

Dealers have been buying one-month calls on the euro against the U.S. dollar, positioning for the potential that the euro might rally following the European Central Bank press conference this Thursday.

Kurt Overley, a pioneer in the hedge fund derivatives market for more than 20 years, has joined StormHarbour.

Simeon Tsonev, an fx options trader at Credit Suisse in London, has joined Westpac in a similar role.

JPMorgan is advising investors to buy nine-month, double-no-touch options on sterling against the Canadian dollar, as the pair has exhibited a disciplined range over the last two years.

Philip Turner, a managing director in Royal Bank of Scotland’s global structuring group in London, has left the firm.

Global market participants are already migrating their trading of over-the-counter derivatives onto central clearinghouses or switching their allocation to exchange-traded alternatives ahead of mandatory clearing laws, according to the World Federation of Exchanges.

The International Swaps and Derivatives Association has voiced opposition to requiring mandatory initial margins for non-centrally cleared swaps, according to a response letter to the Basel Committee on Banking Supervision and the International Organization of Securities Commissions.