China’s recent bond market sell-off, which sent sovereign yields to a three-year high in November, could pressure the world’s second-largest economy to develop an interest rate options market, allowing investors to hedge their exposure, according to market participants.
With existing interest rate swaps exposing bond investors to basis risk, the creation of an options market would allow participants to express two-way views on the direction of yields more easily, thereby reducing the risk of
- Brexit novations ‘on hold’ to gain reg relief
- Banks hope final FRTB rules will ease NMRF burden
- Functional programming reaches for stardom in finance
- People moves: Bank of America names new Apac chiefs, Wilkinson leaves LGIM, Lloyds loses Coutte, and more
- Mifid data publishers drag feet on Esma guidelines