Derivs - Interest Rate

Draft proposals in Germany would limit foreign counterparties’ ability to terminate contracts with German institutions at risk of insolvency, which market participants fear will put a damper on trading with them.

The limited development of the derivatives markets in Asia-Pacific helped to reduce the potential losses to counterparties during the credit crisis three years ago, the Bank of International Settlements said today.

Buyside firms are looking for industry-wide standardized clearing documents in coming months as the newly-signed U.S. Dodd-Frank Act pushes much of the over-the-counter market towards central clearing.

Société Générale has hired Alex Tan to head up its emerging markets interest rates trading desk, say people with knowledge of the move.

Close-out netting under International Swaps and Derivatives Association Master Agreements could become less effective once regulatory reform forces companies to separate various types of derivative activity.

A new market trading the FTSE MTIRS Index could see 10-40% of the USD153 trillion of U.S. dollar-denominated interest rate derivatives market moved to index trading, according to Kepler Capital Markets, citing discussions with industry officials.

A number of corporates are taking an early view that the Reserve Bank of Australia will hike interest rates to 4.75%, as the overnight indexed swap market pricing in a probability of a 20% chance for RBA rate move on Aug 3.

Net derivative liabilities, under Basel II standards, will be taken into account when calculating a firm’s U.K. bank tax, according to a consultation released by H.M. Treasury today.

The New Zealand Ministry of Economic Development has issued a consultation paper that proposes to overhaul existing derivatives regulation in the country.

Registered funds that use exotic, riskier derivatives would have to set aside more assets to counterbalance their trades than plain vanilla users under a newly floated proposal.

Lutfey Siddiqi, a former-Barclays Capital managing director and founding head of its Asia-Pacific head of corporate risk advisory business, is reportedly set to head up corporate fixed income currencies and commodities sales for Asia at UBS.

Asian institutional investors are buying simple, bespoke hybrid notes linked to interest rate or foreign exchange movements and juicing up the payout by betting on the risk of default of a well-known credit name or sovereign.