Top Stories

Volumes in market adjusted coupon swap trading are increasing due to margin efficiencies, increased liquidity and the ease of trading, according to speakers at the TABB Forum Fixed Income 2015 conference in New York on Thursday.

As buyside firms transact in ever larger volumes, asset managers need to reduce the delta risk, known as DV01, the change in the value of their trades caused by a basis point change in rates. However, this is very difficult as capital requirements for investment banks mean that a dealer’s ability to warehouse risk for its buyside clients is diminished.

Tools that enable firms to reduce the number of line items in a portfolio, while keeping the same risk profile, are changing the way market participants trade derivatives. These tools are becoming the new market norm as users look to optimise their balance sheets as increased regulation envelops the derivatives market. Gabriel Suprise was granted an exclusive interview with Lucio Biase, CEO, and Hilary Park, chief strategy officer at LMRKTS, a new firm that offers a novel type of tool in order to minimise counterparty risk. Topics of discussion included what LMRKTS is, how it works and why it is different from other compression offerings in the derivatives marketplace.

UBS this week trumpeted the recent launch of an exchange traded note that provides investors with hedged exposure to the Chicago Board Options Exchange Market Volatility Index (VIX).

Compression is behind a 3.6% drop in gross notional outstanding of interest rate derivatives between December 2013 and June 2014, according to the International Swaps and Derivatives Association, who said that the growth in services available at central counterparties and other portfolio compression providers combined with regulatory pressure is driving the trend.

The Intercontinental Exchange Benchmark Administration (IBA) is reforming the methodology for the ISDAFIX derivative benchmark calculation, which represents a first ever move from calculating the rate on a submission-based panel of banks to tradable quotes listed on regulated trading venues.

Benoy Raveendran, head of options, exotics and cross-currency swaps trading at Deutsche Bank in London, has left the firm.

Alberto Pravettoni, managing director and global head of exchanges at LCH.Clearnet in London, has left the firm.

The average daily volume total for over-the-counter FX instruments in the US was up by 35% in October 2014 versus April 2013 surpassing $1tr, the highest volume recorded since the survey began in 2004.

ICAP Information Service has paired with Wind Information Company, a Shanghai-based market data provider, to offer a multi-faceted renminbi and Treasury data service to investors and market participants in China. The partnership will result in the first ever continuous, offshore financial data provision to Chinese markets.

Institutional investors have been trading single stock options following a rebound in European equity markets. Despite concerns of turmoil ahead of a potential Greek exit from the eurozone following the country's elections, options trading appeared to be unaffected, with equity derivatives analysts tipping this to continue until action by other leftist parties in eurozone countries becomes clearer.

Overall interest rate derivatives trading that was reported to swap data repositories last week decreased by 12% from the previous two weeks, according to data from the International Swaps and Derivatives Association.