Pandemic disruption, alt data and Argentinian rates problems

The week on, March 21–27, 2020

7 days montage 270320

Covid-19 disruptions expose Libor loan fallback flaws

Amending legacy loans during a crisis will prove challenging, ARRC member warns

FCA sizes up alt data for insider trading, irking funds

UK regulator examines new data sources’ potential to confer unfair market advantage

Seeing red over blue-chip swap in Argentina’s NDF fiasco

Emta protocol salve aside, peso settlement rate snafu is a warning for emerging market FX derivatives


COMMENTARY: Who’s an insider?

The law exists, at least in part, to stop the powerful from profiting unfairly from their power – hence insider trading laws. That’s why news of US senators trading on classified information about the true state of the Covid-19 pandemic – while publicly insisting that everything was fine – produced such public anger last week.

But the UK’s Financial Conduct Authority (FCA) is now pushing to extend the term ‘insider trading’ to cover the burgeoning alt-data industry – and running into resistance, as well as raising some unexpectedly fundamental questions about the point of having insider trading laws in the first place.

The touchstone for insider trading around the world is “material non-public information” – and whether this information is provided by someone at the company in question, a regulator, or a customer, trading on it is a crime (although not one where convictions are terribly common).

The FCA, however, is concerned that much of what’s classed as alt data could have the same market-distorting effects as true inside information. It doesn’t actually use the word “insider” at any point in its call for input paper, but warns that investors are increasingly reliant on datasets that are either very large (and thus taxing to process), such as credit card transaction information, or expensive to obtain, such as satellite imagery. Many are only publicly available in the loosest sense of the term; some are locked up by exclusive provision contracts with one or a few major investment firms.

As previously reported by, analysts are currently employing geospatial data to get a handle on the economic impact of the coronavirus. UBS, meanwhile, contends that without the efforts of vendors, some data would be unavailable to facilitate learning about the disease. 

Alt data’s defenders also point out, justly, that digging up your own information and trading on it is what investment is all about. Investors have watched for subtle signs of market movement for centuries, from weather forecasts and the state of the crops to rumours of war (or peace) and changing trends in fashion.

But this may be another case where technology is outstripping the law. A police officer standing on a corner looking out for a known fugitive offends no-one’s expectations. A city-wide system of CCTV cameras linked to accurate facial recognition technology is, in theory, the same thing – but no-one would regard it with quite the same degree of comfort.

So, too, for alt data. The point of financial market regulation is not to follow some instinctive model of justice or fairness – the point is to ensure the market works well to allocate capital and risk, which is the only reason financial markets exist. If the alt-data strategies that increasingly determine market movements are too expensive and complex for all but a few large investors, then they are distorting the market by effectively reducing competition. Call it inside information or not – in such a case, regulators must act.



Ice clearing houses have handled the largest volumes of credit default swaps on sovereign names since the start of the year, and beyond. March 20 saw combined cleared volumes at Ice Clear Europe and Ice Clear Credit hit $8.7 billion – their highest since December 2, 2019, when they spiked to $34.3 billion. Average daily volumes since February 28 have been $4.6 billion, compared with $1.9 billion for the rest of the year and $2.5 billion going back to January 2017.



“Most corporate treasurers who have swapped fixed rate US dollar bonds to floating over the last few years will say, ‘if I have to pay an extra basis point or two to swap market illiquidity to re-fix at current levels, I’ve still reduced the company’s interest cost by over 120bp’. That’s a significant saving for any corporate debt manager” – Ashley Parker, BNP Paribas

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