Derivs - Interest Rate

Jakub Kaplan, exotic interest rates trader at UBS in London, has joined Citigroup in a similar role, also in London.

Deutsche Bank is recommending buying a U.S. dollar 6m30y payer ladder at-the-money-forward to position for a moderate normalization of U.S. rates over the course of the first quarter in 2013.

Swap dealers have landed some relief from recently imposed Commodity Futures Trading Commission pay-to-play rules.

The Singapore Exchange’s first successful compression of Singapore dollar interest rate swaps, cleared via its central clearing counterparty, could reduce member fees if the bourse decides to link compressions to its fee structure.

Regulatory proposals for initial margin requirements for non-centrally cleared derivatives could lead to a funding shock in the market. There may also be less availability and liquidity in risk management instruments, according to a report from the International Swaps and Derivatives Association.

South Korea’s central clearing counterparty will not be ready for operation by the G20 end-of-year deadline and could have to wait until after mid-2013 for needed government approval, according to lawyers in Seoul.

Deutsche Bank is recommending buying three-month forward 2y-5y-30y conditional butterflies in sterling, using three-month at-the-money forward receivers as a cheap convex and carry-efficient bullish trade.

The implementation of new regulations including the Dodd-Frank Act, the Markets in Financial Instruments Directive II, the European Market Infrastructure Regulation and Basel III is significantly increasing the cost of capital and forcing banks to re-evaluate the economics of their over-the-counter trading businesses.

E.U. short selling regulation that was introduced earlier this month is putting pressure on the compliance functions of some structured product issuers globally. According to lawyers, those under the most pressure are global financial institutions with multiple affiliates and branches, with it likely that new compliance units will have to be set up to track and match short and long positions across the entire group.

Credit Suisse is restructuring its business, siphoning off investment banking into a separate division, while combining private banking and asset management to form the private banking and wealth management division.

The Hong Kong Exchange has seen a 6% increase in its derivative market turnover from July 2011 through June 2012, with 135 million contracts executed, up from 127 million.

Credit Suisse is recommending entering 2s5s repurchase agreement interest rate swap spreads on the Chinese reminbi, as it believes the swap curve will steepen on the back of better liquidity conditions arising from growth.