Derivs - People and Markets

Blockchain came sharply into focus this week for the derivatives market, as industry bodies warned on both the need for such technology and to regulate its use. Meanwhile, firms rolled out a range of new initiatives to address the market’s mounting challenges around margin and settlements.

Intercontinental Exchange, the US based exchange and clearing business, has made main board appointments and named a new chairperson for the board of its ICE Clear Europe subsidiary.

The distinction of being the widest constituent in the Markit iTraxx Europe is clearly one that most companies would prefer not to have. Yet Glencore has held this dubious honour since before the last index roll in March. It had a challenger in fellow miner Anglo American, but Anglo’s downgrade to junk and consequent removal from the investment grade index left the field open to the Swiss firm.

Indexes that invest in options strategies have historically generated better returns and lower volatility than other key stock, bond and commodity benchmarks, according to a study backed by the Chicago Board Options Exchange.

A surprise upgrade from Standard & Poor’s has prompted Hungary’s international debt to rally 30bp and take its credit default swap surging inside that of Italy, the most traded sovereign CDS reference entity.

The European Securities and Markets Authority has proposed making it mandatory to trade the iTraxx Europe and Crossover credit default swap indices on a regulated market or other recognised trading facility.

Synechron, a technology services provider, is targeting margin calls as one of six ‘blockchain accelerator’ applications for the financial markets.

The US Commodity Futures Trading Commission (CFTC) has penalised Russia’s VTB Bank and its London-based VTB Capital investment banking subsidiary over what the Commission called "fictitious" and "non-competitive" block trades of Russian ruble/US dollar futures contracts.

Hong Kong’s Securities and Futures Commission has begun consultations with market participants over plans to grow its futures and options market by relaxing trading position limits for listed derivatives.

Bursa Malaysia has overhauled a range of government securities futures products to create a Malaysian government bond benchmark for local and foreign investors.

ICE Clear Europe, the European clearing arm of Intercontinental Exchange, has been authorised by the Bank of England and by the European Securities and Markets Authority as a central counterparty (CCP).

Industry-wide collaboration on distributed ledger technology governance is needed and policymakers must plan ahead for the impact of such advances on securities markets and post-trade infrastructures, The Depository Trust & Clearing Corporation has said.