Derivs - FX

Quest Investimentos, a hedge fund and asset management firm in Sao Paulo, is going long the real in expectation that the Banco Central do Brasil will cut rates further.

Hedge funds are purchasing two-to-three-month downside put spreads on the euro/Swiss franc with strikes at CHF1.17/1.18, despite market sentiment that the Swiss National Bank will not allow the enforced CHF1.20 floor to break.

The U.S. Financial Industry Regulatory Authority will not intervene in the retail structured products market by banning specific structures that it feels are complex.

A provision of the Dodd-Frank Act requiring banks to spin off some of their riskiest swap trading such as uncleared credit default swaps, as well as energy and metal swaps, has been delayed until July 13, 2013.

Electronic fx trading hit 61% in the third quarter of 2011, up from 57% a year earlier, with the sharpest increase from 51% in 2010 to 60% last year, according to Greenwich Associates.

European Union regulators have begun investigating companies that trade derivatives linked to the Tokyo interbank offered rate for potential manipulation, expanding beyond its probes of activity tied to Libor and Euribor, according to Joaquin Almunia, the E.U.’s competition commissioner.

Introducing an identifier that would determine whether a UCITS exchange-traded fund is synthetic or physical would mislead investors, according to a letter from the Joint Associations Committee on Retail Structured Products to the European Securities and Markets Authority.

Hedge fund FX Concepts is considering adding portfolio management staff to its Singapore office.

India’s Competition Appellate Tribunal has rejected a bid by the National Stock Exchange for a stay on an order for it to maintain separate accounts for its fx derivatives and other businesses.

Banco Santander is developing an electronic platform in Europe that will allow investors to trade structured products. The firm is also considering a partnership with a third party distributor.

Onshore Chinese yuan non-deliverable forwards are likely to gain less traction from market participants as the price difference between it and its deliverable offshore counterpart become tighter.

China’s State Administration of Foreign Exchange is encouraging dealers operating onshore to increase the innovation in fx options they offer to corporates for hedging purposes.