Derivs - People and Markets

Derivatives market participants must embrace new technologies to meet the challenges it faces in seeking greater standardisation and efficiency, the International Swaps and Derivatives Association has said. These include opportunities for use of blockchain, ‘RegTech’, product identifiers and ‘common domain models’.

The decision of buyside participants in credit and equity markets to remove near term hedges in favour of end-of-year trades has been called into question this week, with volatility picking up after the the summer lull and several potential catalysts for further upset looming next week.

The Chicago Board Options Exchange plans to launch options trading on the FTSE Emerging Index next week, offering market participants exposure to the performance of large and mid-cap companies from advanced and secondary emerging markets.

Interest rate swap trading platform trueEX has set its sights on a narrowing pool of remaining dealers it has not signed up, as the addition of BNP Paribas this week took its market haul to 21.

Several new avenues for commodities traders have opened up through the Chicago Mercantile Exchange, with trading in the first European Union wheat futures contracts beginning this week and an October rollout slated for the first exchange-traded precious metals spread and ratio futures contracts.

CME Group is set to roll out trading in what it claims are the first-ever exchange-traded precious metals spread and ratio futures contracts.

Credit risk has awakened from its summer slumber over the last couple of days with the CDX IG and iTraxx main index now trading 8% and 11% higher than their close on Thursday. While it’s still too early to see whether this latest surge is a passing event or a longer lasting trend, both indices are still below their 12 month averages and now trade roughly 40% off the highs set earlier in the year.

Goldman Sachs has signed up many of its major dealer counterparties to new CSA documents for non-centrally cleared OTC derivatives in the last couple of weeks, using a Euroclear service to manage the collateral transfers. BAML, Barclays, Credit Suisse, HSBC, JP Morgan, Morgan Stanley and RBS are some of the firms that signed the new agreements with Goldman between September 2 and September 6.

Hong Kong’s Securities and Futures Commission has reprimanded HSBC and fined it HK$2.5m ($$322,260) for regulatory breaches and internal control failings linked to position limit failures, it said in a statement.

IHS Markit has hired a senior official from ICAP to help grow its foreign exchange business.

The International Swaps and Derivatives Association has appointed a senior official of the European Bank for Reconstruction and Development to its board of directors, in its first ever appointment of a supranational institution.

IHS Markit will not overhaul the iTraxx Europe credit default swap index at the September roll next week to address UK bank debt regulations, say analysts, but the index operator will look at whether to change its rules in the near future.