Derivs - FX

New swap execution facilities are going to struggle to compete with other more established SEFs in 2014, according to Will Rhode, principal, director of fixed income at TABB Group, in New York.

Investors should buy a six-month Australian dollar, U.S. dollar put spread with strikes at 0.88/0.83, activated only if USD, Japanese yen trades above 105 at the expiry, in a bid to play the expected weakening of both AUD and JPY against USD in 2014.

The China Securities Regulatory Commission plans to push for further foreign participation in the country’s derivatives markets in 2014, allowing foreign institutional investment firms to develop brokerages and overseas branches on the mainland.

The search for alpha has led more and more buyside organizations, including pension funds, to turn to derivatives. But, in many cases, investor appetite for these products has outpaced the technology used for processing them.

Lawyers expect the U.S. government to issue an extended delay to the implementation of the foreign accounting tax compliance act, due to the burdensome requirements for financial institutions in complying.

Structurers are seeing a renewed appetite for structured products on the U.S. dollar against both the onshore and offshore Chinese yuan, playing the view that USD/CNY and USD/CNH will steadily decline.

Natixis is expanding its financial institution investor coverage in the Asia Pacific, hiring Daniel Yap from Credit Industriel et Commercial in Singapore.

South Korean trusts and discretionary investment managers will be permitted to engage in trading of foreign currency-denominated derivatives and derivative-linked securities next year.

The Korea Exchange has delayed the launch of its over-the-counter clearinghouse until March 3, 2014 at the behest of foreign investment firms.

The Asia Pacific Regional Committee of the International Organization of Securities Commissions has written to Michel Barnier, European Commissioner for internal market and services in Brussels, warning that derivatives trading could dry up in Asia if central counterparties there are not granted a six-month extension to complete equivalence assessments that allow them to be recognized as qualifying CCPs under European Markets Infrastructure Regulation.

Standard Chartered has hired two Citigroup officials to head its newly created services team, which is focused on helping clients navigate the current challenges in the over-the-counter derivatives market.

The Royal Bank of Scotland has halted new offerings in Japan of fixed rate notes denominated in emerging market currencies and equity-only structured products.