Derivs - Interest Rate

Deutsche Bank is looking to steal a march on rivals with an interest rate swaption marketing effort in China—even though the onshore interest rate options market is not yet open. Deutsche Bank is positioning itself as Chinese authorities move to liberalize interest rates.

Obtaining high-quality assets to use as collateral may be destructive to the markets in which they are being used and they’ll be costly to get hold of, according to Michael Clarke, managing director at Goldman Sachs.

The market needs to ensure greater margin efficiency for buyside firms to produce returns for their clients, while the introduction of swap execution facilities is leaving buysiders with greater risk, according to Richard Prager, board member at the International Swaps and Derivatives Association and head of global trading at BlackRock.

LEONTEQ, formerly EFG Financial Products, has launched the first floating rate reverse convertible on long-term Swiss swap rates to retail investors in Switzerland. The firm has launched floating rate reverse convertibles on the CHF 20y swap, and is separately marketing the same structures on the CHF 30y swap and CHF 40y swap.

The Australian Securities Exchange’s over the counter derivatives clearinghouse cleared the first Australian dollar interest rate swap on Thursday between the Commonwealth Bank of Australia and Deutsche Bank.

Gerhard Seebacher, global co-head of fixed income, currencies and commodities trading at Bank of America Merrill Lynch in New York, is retiring from the firm at the end of the month.

The Japan Securities Clearing Corp. is looking to clear yen-denominated interest rate swaptions and could start clearing interest rate swaps denominated in other foreign currencies in 2014.

Systemically important persons that trade over-the-counter derivatives could need to register with the Hong Kong Securities and Futures Commission and comply with subsequent regulations should their OTC derivative position reach a certain threshold.

To position for a bull flattening of the three-month forward 2s/7s U.S. interest rates curve, JPMorgan sees value in initiating three-month receiver swaptions.

Investors should buy South Korean won-denominated 2014 steepeners in a bid to take advantage of flat Korean interest rates, according to Société Générale strategists.

Foreign investors looking to access the offshore yuan liquidity are better served in the cross currency swap market than entering the nascent CNH HIBOR interest rate swap market, launched earlier in summer.

There was a USD200 billion notional increase in the daily trade of over-the-counter interest rate derivatives from USD2.1 trillion per day in 2010 to USD2.3 trillion per day in April 2013.