Derivs - People and Markets

BNP Paribas is six months away from finalising its acquisition of the Royal Bank of Scotland’s equity derivatives business, according to Nicolas Marque, global head of equity derivatives at BNP Paribas in London.

Market participants are unlikely to have documentation in place to meet the G20's initial margin and variation margin requirements in time for the December 2015 deadline, according to lawyers, who said the buyside faces the greatest challenge to comply.

Market participants have been trading risk-reversals on the euro against the Swiss franc, effectively betting that the Swiss National Bank will have to lower its floor following renewed eurozone troubles, despite implementing negative deposit rates in December.

Downside trades, such as puts and put spreads, on the iPath S&P 500 VIX short-term futures exchange-traded note (VXX) are expected to increase in popularity as a way to mitigate the risk of volatility spikes in 2015.

Talks over a European Financial Transaction Tax have been revived since 2014’s European elections. The tax is now being deliberated between 11 key EU member states. Although the scope of its coverage appears to have shrunk, the uncertainty may lead to unforeseen costs for derivatives market participants. Gabriel Suprise reports.

An institutional investor was seen picking up call options on the Chicago Board Options Exchange Volatility Index on Monday as market participants look to close out volatility positions that were sold in December.

The start of the Shanghai-Hong Kong Stock Connect pilot is helping to drive up offshore renminbi futures volumes, particularly from international investors, as market participants look to manage currency risk from growing A-share exposure.

Overall credit default swap notional that was reported to swap data repositories last week increased by 44% from the previous week, according to data from the International Swaps and Derivatives Association.

Harmonisation and crossborder issues are key concerns for the International Swaps and Derivatives Association as markets enter 2015. As Scott O’Malia, CEO of ISDA and former commissioner at the Commodity Futures Trading Commission, tells Beth Shah, regulators need to ensure that crossborder oversight is based on risk and not location.

A report from the Commodities Futures Trading Commission on central clearing for non-deliverable forwards warned of possible problems if a mandate is applied incorrectly, urging coordination and standardisation of practices, according to lawyers

CLS Group will expand its third-party settlement services in Korea following a recent announcement from the Bank of Korea that the central bank is expanding the range of FX transactions eligible for CLS payment-versus-payment settlement to include those of non-bank of financial institutions.

The Japan Securities Clearing Corporation and its affiliates have been granted time-limited, no-action relief by the US Commodities Futures and Trading Commission to continue to conduct business despite the fact it has not yet been approved as a derivatives clearing organisation.