Depending on your viewpoint, and choice of metaphor, the derivatives market has either dodged a few bullets this year, or continues to skate on thin ice.
To purchase printed copies or a PDF of this report, please email leonie.welss@lseg.com and shahid.hamid@lseg.com
Broader credit spreads have come back quickly from the effect of hedging of correlation losses. Although the slump in credit correlation in May caused losses for both dealers and their hedge fund clients alike, dealers say that models were not to blame. Nevertheless, models will ultimately change. Jean Haggerty reports.
Alan Greenspan has been agonising in public through his last year as Federal Reserve chairman about the conundrum of stubbornly low long-end interest rates in the face of central bank short-dated hiking. Mark Pelham looks at how swap dealers and their clients are coping with flat interest-rate curves.
Equity options volatility has held close to decade-long lows for most of this year, challenging equity derivatives houses to become more creative in their structuring. Greater competition in the equity derivatives space is further accelerating the pace at which the industry’s cycle of products and ideas reaches the mainstream. Jean Haggerty reports.
Software vendor Trading Technologies (TT) has surprised the exchange traded markets this year with successful moves to enforce its futures trading execution patents. TT’s success is serving to stiffen US derivatives exchanges’ resolve to use patents as profit centres in a post-mutualisation world. Securitisation officials are trying to head off their own set of patent woes. Jean Haggerty reports.
The search for yield is driving structuring desks beyond cross-asset class combinations such as credit and rate trades towards commodity and energy-linked deals. With money pouring into commodities and existing investors taking more tactical views, the commodity-linked hybrid space is developing quickly. This development presents its own set of risk management challenges. Jean Haggerty reports.
The contribution to global bank profits from Asia's structured product markets has grown dramatically over the last five years. There are plenty of hurdles to building sustainable businesses, however. Nick Herbert reports.
Mounting credit derivatives confirmation backlogs have drawn increasing public expressions of concern from regulators in Europe and the US over the past 12 months, spurring dealers into action. Mark Pelham reports.
With derivatives exchanges reporting record volumes virtually every month, the industry appears to be in excellent health. The Chicago exchanges in particular have gained from moving electronic. Mark Pelham reports.