Derivs - Interest Rate

The Shanghai Clearing House is likely to start mandatory central clearing of yuan-denominated interest rate swaps before year-end, according to market participants.

The Japan Securities Clearing Corp. is aiming to begin its client clearing service for yen-denominated interest rate swaps in Q1 2014, according to market participants in the country.

For investors looking to position for a reversal of the recent sell-off in the belly of the sterling swap curve, strategists at Barclays recommend 3m*4y receiver spreads and 3m*(7y-30y) bull steepeners.

The first South Korean synthetic exchange-traded funds will likely reference U.S. and Korean high yield bonds and real estate investment trusts when the market starts trading sometime this summer.

Barclays made the most senior hire of the week, appointing ex-Goldman Sachs trader Michael Winkelgrund as head of exchange-traded fund trading. Deutsche Bank, meanwhile, hired Monty Lee as a senior index options trader from Barclays. In Asia Pacific, Nicholas Smith has replaced PJ Andersson as global head of pan-Asian equity derivative and convertible sales at Citigroup, after the latter left the firm last week.

Investors should look to receive euro 1y1y overnight index swaps as a cheaper and more conservative interest rates strategy, according to the Royal Bank of Scotland.

Credit Suisse is suggesting investors receive 5y5y Canadian dollar swaps against 5y5y U.S. dollar swaps with beta-adjusted risk weightings.

Private banks in Asia Pacific are showing less appetite for hybrid structured products that mix fixed income underlyings with equity, commodity or fx assets, with other specialized investors, such as hedge funds, instead driving the trend.

The International Swaps and Derivatives Association has published a new 2013 standard credit support annex to standardize market practices in collateral management for over-the-counter derivatives.

Hedge funds are buying structures that allow them to position for increased U.S. interest rates and currency appreciation simultaneously.

Stephen O’Connor has left his position as managing director at Morgan Stanley to take up the position of full-time chairman at the International Swaps and Derivatives Association.

The European Securities and Markets Authority and the European Banking Authority published their final report setting out principles governing transparency and robustness of benchmarks today.