Derivs - People and Markets

Equity derivatives, which have been a bright spot for investment banking divisions amid declining fixed income revenues in Q1, are primed for further growth, according to market participants.

The swap execution facility aggregation model, which allows market participants to connect to multiple SEFs without being a direct member, is favorable for buysiders who do not have the resources to connect to all facilities, according to speakers at the TABB Forum Derivatives 2014: A Market in Transition conference in Chicago, on Tuesday.

The access to electronic trading systems and the proliferation of technology over recent years is allowing all market participants to compete in the financial markets, advantaging buysiders and other trading firms, according to Zem Sternberg ceo & managing partner at Lake Hill Capital Management.

Speed has always been a defining feature of the trading process, especially across the very liquid equities and fx markets. Moving from the open cry through to the information age and high-speed computing, the quicker an order could be placed and the faster information could be gathered, the more competitive advantage a firm could gain over its rivals. As the new millennium kicked off, vast sums were being bought and sold in milliseconds, and an interminable arms race seemed to have become an industry staple, with trading firms racing towards zero latency.

Market disruption and dislocation could occur should third country central counterparties not receive recognition under the European Market Infrastructure Directive, according to Scott O'Malia, Commissioner at the US Commodity Futures Trading Commission.

Lloyds Banking Group has hired Josh Gonnella, the former global co-head of rates sales at UBS, as head of rates sales in London.

The US Commodity Futures Trading Commission has announced further implementation details surrounding the trade execution requirement for certain interest rate and credit default swaps, as swaps that are part of a package transaction will be required to be traded on a swap execution facility or designated contract market beginning May 16.

South Korean authorities are looking at two different ways a derivatives capital gains tax could be implemented; either an annual rate of 10% on capital gains earned in excess of KRW2.5 million, or an annual rate of 20% on total earnings from gold trading and financial investment products, including derivatives.

The likelihood of Taiwan’s Bank SinoPac being forced to unwind its US dollar, offshore China yuan target redemption forward positions rose yesterday as the country’s financial regulator banned the firm from issuing further notes.

The US Commodity Futures Trading Commission has issued another no-action letter for certain members of swap execution facilities and designated contract markets from the requirement to record oral communications, in connection with the execution of swap transactions.

Corporate investor that have successfully restructured US dollar, China yuan target redemption forwards over the last month could be in for more losses if the yuan continues to weaken against the dollar past 6.25.

Amendments to the trade reporting rule from the Ontario Securities Commission will delay the effective date of the reporting obligation for all counterparties, while also reducing the burden on local counterparties by removing the "fall-back" mechanism.