Derivs - People and Markets

The mutual exchange offering between Hong Kong and Shanghai stock exchanges will drive Chinese and Hong Kong equity product trading, innovative derivatives strategies and growth in other Southeast Asian markets.

Investors should look at buying call spreads on the euro against the Swiss franc following a recent spike in volatility on the pair, which has driven spot down to 1.20 – the lowest level since 2012, according to strategists at Credit Suisse.

Agency trading is an important tool for avoiding basis risk in package trades, especially for the more complex structures that are yet to be made available to trade on swap execution facilities (SEFs), according to speakers at the Sefcon V conference in New York.

Ian White, managing director and senior fx options trader at Nomura in New York has left the firm.

The Commodity Futures Trading Commission needs to grant permanent registration for swap execution facilities in order to avoid hindering the evolution of businesses following the implementation of Dodd-Frank. Additionally, the slew of continuing no-action letters is resulting in regulatory uncertainty, according to speakers at SEFCON V.

Reporting of over-the-counter and exchange traded derivatives to repositories is floundering in its aim to make trading more transparent, some seven months since reporting started in Europe. Market participants say a broken system consisting of multiple trade repositories could harbour risk, rather than reduce it.

The overall interest rate derivatives trading volume reported to swap data repositories last week was up 27% from the previous week, according to data from the International Swaps and Derivatives Association. This follows several weeks of consistent decline in the figures.

Some derivatives market participants are weary of using credit hubs as they act as one single point of failure if a transaction were to fail because many parties are involved, according to panellists at the SEFCON V conference in New York on Wednesday. Parties at risk include swap execution facilities, clearing houses, futures commission merchants as well as their clients, the conference heard.

The risk reflected in options on crude oil is near the highest levels since the commodity began selling off in July, according to one estimate.

The European Securities and Markets Authority (ESMA) has asked market participants if it should prescribe which counterparty should be responsible for the creation and transmission of the unique trade identifier (UTI) in trade reporting. The UTI allows two counterparties to pair and match two sides of the same trade at a trade repository, however confusion over how one is generated has blighted reporting since it became mandatory earlier this year.

Tim Sharp, ex-FX options trader at UBS in Zurich, has joined BlueCrest Capital Management as a portfolio manager, based in London.

For anyone who works outside the rarefied world of financial markets, Markit might sound like something an errant tomcat gets up to. But after listing his company for $1.5bn on Nasdaq in June just eleven years after founding it in his garden, CEO Lance Uggla is unlikely to be suffering much angst about his choice of name.