Derivs - Interest Rate

UK financial market regulators have demanded firms show clear evidence that they are engaging with the transition away from the Libor benchmark.

NEX Group is set to pay $50m after settling with the US Commodity Futures Trading Commission (CFTC) over allegations that brokers in its subsidiary ICAP helped bank traders in their attempts to manipulate the USD ISDAFix benchmark.

Moody's has praised Lloyds Bank’s first sterling Sonia-linked covered bond for being an "essential" development that will help to create a market for similar deals and limit disruption from the move away from Libor.

Derivatives clearing specialists were left scrambling for information this week as lone Norwegian trader Einar Aas defaulted on his Nordic and German power portfolio, creating a €107m hole in Nasdaq Clearing's €166m Commodity Member Default Fund.

European banks helping the transition to alternative euro risk-free rates on Thursday chose the European Central Bank's euro short-term rate (Ester) as the preferred alternative to the euro overnight index average (Eonia).

The Depository Trust & Clearing Corporation (DTCC) on Wednesday called for "esoteric" exchange traded funds (ETFs) to be “closely monitored” and for a further expansion of clearing of derivatives and cash markets.

More finance and derivatives industry groups this week came out against the leverage ratio and its impact on client clearing, backing the findings of an August report by global watchdogs. In a joint paper, trade bodies including the FIA also expressed concern over Brexit and its potential impact on client clearing.

Santander UK needed to offer an unusually attractive concession for its second euro covered bond deal of the year, but priced its first sterling Sonia-linked deal in line with Lloyds.

August was generally a healthy month for many global derivatives exchanges, though performance was not quite consistent across the industry.

Lloyds Bank attracted stellar demand for the first Sonia-linked trade from a FIG borrower. The covered bond format was swiftly followed by a senior unsecured deal from Royal Bank of Canada. Bill Thornhill reports.

Andrew Bailey, CEO of the UK Financial Conduct Authority (FCA), on Thursday backed calls for deference espoused by US Commodity Futures Trading Commission (CFTC) chair Christopher Giancarlo, in a speech at the Eurofi Financial forum in Vienna.

Marco Meijer has joined BNP Paribas as a senior interest rates strategist.