Derivs - People and Markets

Credit and equity markets are “entirely unprepared” for volatility in the coming month, say traders, with any big surprises likely to wrong-foot swathes of market participants.

The European Union this week added to the sense that global derivatives market regulation is set for a shake-up, with the European Securities and Market Authority calling for changes to “third country” central counterparty treatment and for a softer stance on how some market participants adhere to clearing rules.

Deutsche Börse is working on a “collateralised coin” using blockchain technology, which it hopes could ease payments and the moves of collateral between the clearing members of its centralised counterparty (CCP), Eurex. The initiative follows closely on the heels of two earlier blockchain-inspired collaborative efforts that aim to ease cross-border collateral transfer and the securities settlement process.

Following Lloyds Bank's creation of the "CB markets" division, combining trading with capital markets origination, James Garvey, the division’s boss, has laid out the management team for the new structure.

Eris Exchange, the US based swap futures exchange, added to its clearing members this week and appointed a global business development head to bring on board critical support providers for clearing, order management and execution.

ED&F Man Capital Markets, the financial brokerage business, has become the fifteenth clearing member of the ERIS Exchange.

The chairman of the European Securities and Market Authority, Steven Maijoor, has complained of a mismatch in the treatment of EU central counterparties by other regulatory authorities versus that of overseas CCPs operating in the EU, at a time when a change of US regulatory direction appears imminent.

TP Icap, the interdealer brokerage arising from the recently merged Tullett Prebon and Icap, has made its first senior hire of the year, to replace chief operating officer Ken Pigaga, who is leaving.

The European Energy Exchange is to introduce a German intraday floor futures contract as well as Swiss day and weekend futures contracts.

London based clearing house LCH made further inroads into the US this week, with the Commodity Futures Trading Commission (CFTC) giving LCH.Clearnet and its clearing members permission to portfolio margin customer positions.

The derivatives market obtained its strongest sign yet that US regulations are soon to move in a more trading friendly direction, with J Christopher Giancarlo not only confirming that he is the acting chairman of the Commodity Futures Trading Commission but also indicating that he will soften rules governing variation margin posting and swap execution facilities.

UK prime minister’s speeches have rarely been market-moving events, despite what some of the more breathless commentators in the broadcast media would have you think. But perhaps this has changed since the Brexit referendum in June, even if the spin doctors manage the message in advance.