News

Current Articles | RSS Feed RSS Feed

Korea Reveals Derivatives Safety Measures

By Song Jung-a
Published August 29, 2014 Financial Times

Korea Exchange said on Friday it would introduce safety measures to protect investors and counterparties from the fallout of erroneous derivatives transactions.

The exchange, one of the world’s largest derivatives exchanges for trading index options, will introduce a real-time price limit system and increase the number of underlying equities for stock futures.

full article describe the image (subscription)

SocialTwist Tell-a-Friend Related Posts with Thumbnails

Deutsche Bank Fined $7.8 Million Over Faulty Reports on Swaps

By Chad Bray
Published August 28, 2014 The New York Times/DealBook

A British regulator fined the German lender Deutsche Bank 4.7 million pounds, or about $7.8 million, on Thursday for having failed to properly report certain swaps transactions over a period of almost six years.

The regulator, the Financial Conduct Authority of Britain, said the bank had improperly reported about 29.4 million equity swap contracts handled by its London operations from November 2007 to April 2013 because of a computer software problem.

 full articledescribe the image (subscription)

SocialTwist Tell-a-Friend Related Posts with Thumbnails

Huge Spike in China-related Derivative and ETF Volumes

By Aarom Woolner
Published August 28, 2014 Risk.net

China-related futures, warrants and exchange-traded funds (ETFs) have all seen a massive spike in volumes over the past two months, which market participants say is driven by investors positioning their portfolios ahead of the opening of the Shanghai-Hong Kong stock connect in October, as well as a general increasingly positive view of the China economy.

The Singapore Exchange's (SGX) China A50 futures index – the only offshore contract on the China A-share market – saw 3.2 million contracts traded in July up 85% from a year earlier, which in turn was 47.3% higher than the 2.3 million contracts exchanged in June.

 full articledescribe the image (subscription)

SocialTwist Tell-a-Friend Related Posts with Thumbnails

No Arbitrage: New Rules Make Markets 'Less Efficient'

By Kris Devasabai
Published August 29, 2014 Risk.net

It's the free lunch Wall Street can no longer stomach. In August, analysts at Bank of America Merrill Lynch argued CMBX indexes were becoming "glaringly cheap" as yield-hungry real-money investors snapped up the commercial mortgage-backed securities they reference. For one version of the index, referencing 2012 vintage deals, the bonds tightened 135 basis points between the start of 2014 and the end of July, while the index itself narrowed about half as much, causing a 70bp basis to open up between the two, including a 35bp jump in July alone. For an earlier, less-liquid vintage of the index, the basis was closer to 200bp in mid-August, according to one hedge fund.

In the past, the widening basis would have alerted arbitrageurs to an opportunity – playing the bonds and index off against each other, hedge funds and bank prop desks would have pocketed the gains as the two snapped back into line. Not any more. The Volcker rule prevents banks from playing this game, and arbitrage specialists in the hedge fund world are finding it harder to find the liquidity or leverage they need.

full article describe the image (subscription)

SocialTwist Tell-a-Friend Related Posts with Thumbnails

New Framework for Sovereign Defaults

By Elaine Moore
Published August 28, 2014 Financial Times

A group representing more than 400 of the world’s largest banks, investors and debt issuers has agreed a plan for dealing with financially stricken countries and their creditors, in a bid to prevent a repeat of the wrangling that has pushed Argentina into default.

After months of talks convened by the US Treasury in the wake of Greece’s restructuring, global debt experts will on Friday unveil a new framework that could transform the relationship between critically indebted nations and lenders.

full articledescribe the image (subscription)

SocialTwist Tell-a-Friend Related Posts with Thumbnails

FSB Meeting on Asia Reviews OTC Markets and Regional Integration

Published August 28, 2014 Automated Trader

The Financial Services Agency Japan has hosted the seventh meeting of the Financial Stability Board (FSB) Regional Consultative Group for Asia in Kyoto, Japan.

Members of the FSB Regional Consultative Group for Asia began by reviewing the FSB's policy priorities and work plan, focusing on initiatives in four key areas, namely building resilient financial institutions, ending too-big-to-fail, transforming shadow banking and making OTC derivatives markets safer. This was followed by a discussion of recent economic and financial developments affecting the Asian region, including transitions in the global economy following the financial crisis and potential implications for Asia.

full article describe the image (subscription)

SocialTwist Tell-a-Friend Related Posts with Thumbnails

Powell Says Fed Will ‘Make Sure’ Swap Market Can Ditch Libor

By Joe Rennison, Duncan Wood
Published August 28, 2014 Risk.net

Derivatives markets have two years to end their Libor love affair, but may need help to do so. They will get it, says Jerome Powell, a member of the Board of Governors of the Federal Reserve System.

Powell co-chaired the group of 21 officials behind a Financial Stability Board (FSB) report published in July, which advocates moving the market to a variety of new benchmarks – a revamped, tamper-proof Libor, as well as a selection of near-risk-free rates, with at least one of the latter to be up and running by mid-2016. The report warns that market participants are unlikely to switch to the new benchmarks of their own accord, so central banks and supervisors may have to intervene.

full article describe the image (subscription)

SocialTwist Tell-a-Friend Related Posts with Thumbnails

Regulators to Weigh Hedging Rules

By Victoria McGrane and Andrew Ackerman
Published August 27, 2014 The Wall Street Journal

Large U.S. corporations will learn next week whether U.S. banking regulators are going to exempt them from having to put up cash, securities or other collateral when hedging business risks such as changes in jet-fuel costs or food prices.

 The Federal Reserve, Federal Deposit Insurance Corp. and the Comptroller of the Currency are expected to re-propose a rule next week requiring certain trades that aren't routed through central clearinghouses to be backed up with cash or other collateral, known as margin. Swaps, which were at the heart of the 2008 crisis, are complex contracts that allow financial firms and their clients to hedge against risks or bet on an asset's value

full article describe the image (subscription)

SocialTwist Tell-a-Friend Related Posts with Thumbnails

Banks' Pressure Stalls Opening of U.S. Derivatives Trading Platform

By Karen Brettell
Published August 27, 2012 Reuters

The first interdealer trading platform aimed at opening up credit derivatives markets to new competition has hit roadblocks due to resistance from some banks that dominate such trading, according to several people familiar with the situation.

Derivatives markets continue to revolve around the small group of dominant banks, and credit markets have become more - not less - concentrated since the 2008 global financial crisis.

full article describe the image (free)

SocialTwist Tell-a-Friend Related Posts with Thumbnails

U.S. Bank Watchdogs to Adopt Liquidity, Margin Rules

By Douwe Miedema
Published August 27, 2012 Reuters

U.S. regulators will next week vote to adopt two major rules to reduce risks to banks, the Federal Reserve said, including a plan for them to hold enough easy-to-sell assets to survive a future financial crisis.

The regulators will also draw up rules for money that buyers and sellers need to set aside - known as margin - when trading swaps without the intervention of a clearing house, which acts like a middleman to make the deals safer.

full article describe the image (free)

SocialTwist Tell-a-Friend Related Posts with Thumbnails
All Posts