Derivs - Interest Rate

The Singapore Exchange plans to implement client clearing for central clearing counterparty members. It is also gearing to bolster protection for customer collateral in an event of default scenario. The ideas have been included in a SGX public consultation.

More swaps dealers are likely to become designated contract markets, rather than swap execution facilities. That’s according to a TABB Group report, which notes DCMs have a more favorable regulatory touch and the rules for SEFs remain largely unclear.

The default of Lehman Brothers in 2008 brought attention to counterparty risk and collateral management in the financial markets, to the extent that they are now board-level issues for both banks and fund managers. The regulatory reform that is underway, and which resulted from the need to reduce systemic risk, has, in many ways, increased the number of challenges related to accessing and managing collateral. This Learning Curve explores those challenges and examines how they can be addressed.

The International Swaps and Derivatives Association has set out the potential issues that Japanese market participants could face following the adoption of U.S. Commodity Futures Trading Commission guidance and the European Market Infrastructure Regulation in the E.U.

Kurt Overley, a pioneer in the hedge fund derivatives market for more than 20 years, has joined StormHarbour.

Simeon Tsonev, an fx options trader at Credit Suisse in London, has joined Westpac in a similar role.

Trad-X, the euro interest rate swaps hybrid trading platform run by Tradition, has seen a substantial increase in volumes during the summer, with a record month for euro IRS.

Philip Turner, a managing director in Royal Bank of Scotland’s global structuring group in London, has left the firm.

Global market participants are already migrating their trading of over-the-counter derivatives onto central clearinghouses or switching their allocation to exchange-traded alternatives ahead of mandatory clearing laws, according to the World Federation of Exchanges.

The International Swaps and Derivatives Association has voiced opposition to requiring mandatory initial margins for non-centrally cleared swaps, according to a response letter to the Basel Committee on Banking Supervision and the International Organization of Securities Commissions.

Insurance companies, bank treasury desks and private banks in South Korea and Taiwan have been buying over USD1 billion notional in structured interest rate notes over the last two weeks, which represents a 50% increase in volume, according to structurers in Asia Pacific.

The European Securities and Markets Authority has declined to adopt straight-through-processing for its final regulatory technical standards for over-the-counter derivatives, central counterparties and trade repositories.