Feature
To be clear on OTC regulation
The US House of Representatives passed a bill on December 11 requiring all standardised derivatives contracts traded between dealers and major swap participants to clear through a registered clearing organisation. The Senate is preparing to debate its…
Return to variance?
Banks and investors were hammered on short single-stock variance positions during the crisis, causing many dealers to pull back from the variance swap market altogether. Instead, some have been pushing volatility swaps as an alternative, but not everyone…
Now you PRDC them...
Power-reverse dual-currency notes proved a bonanza for dealers when markets were tame, but risk-managing the product has become a drain on resources and cash in recent years. As a result, some firms have decided to exit the market. Mark Pengelly…
The hedge costs explosion
High volatility in foreign exchange markets over the past year has forced many corporates to reassess their hedge books. A number of banks have increased their advisory services to help companies conduct an in-depth analysis of their exposures as a…
The algorithm method
Algorithmic trading was once the preserve of the equity market, but is winding its way into foreign exchange trading. However, some question whether these services can be properly provided by dealers acting as principal. By John Ferry
Signed and sealed?
A lawsuit filed by two major dealers against Bank of America alleges the firm failed in its role as custodian to prevent the loss of $1.7 billion held by a special-purpose entity. What impact could the case have on the future of custodial agreements?…
The CME Icebreaker
The Chicago Mercantile Exchange launched a clearing service for credit default swaps on December 15, with several major dealers and buy-side firms as founding members. Will it capture market share from rival IntercontinentalExchange? By Alastair Marsh
Liquidity flow charting
New rules on liquidity risk from the Basel Committee and the UK Financial Services Authority have left banks scrambling to get the necessary risk and reporting systems in place. Clive Davidson looks at the challenges they face
Best practices in compliance
With regulators’ power set to increase and individual executives increasingly likely to be prosecuted when there is a compliance breach, it is crucial that the compliance function is properly structured. In part two of their series, Michael Berry and…
Smart grid: Diverging demands
Rachel Morison concludes her two-part series by looking at the impact of smart grids on supply and demand fundamentals and possible changes to the traded markets
Will Russia leave Europe out in the cold?
After numerous disputes with its neighbours, Russia is looking beyond Europe for more reliable gas consumers. But with worldwide production on the up, Europe also has other options. Lianna Brinded asks whether Russia can afford to turn its back on the…
Dry freight and regulation: Tides of change
The dry freight FFA market has undergone significant changes in the past two years, with a marked increase in clearing and financial players. Participants are now looking at how potentially tighter OTC regulation may impact trading. By Pauline McCallion
Insurance inroads
Structured product manufacturers have targeted the insurance sector as a potentially important new distribution channel following the collapse in volumes of products sold through retail banks in the Asian region. Ben Marquand finds out if they are…
Chinese insurers face-up to the risk management challenge
The Chinese insurance sector has experienced an unprecedented level of growth in recent years, but as the premium inflows pile up, is their risk management approach adequate? Aaron Woolner reports
Escape from Solvency II - insurers consider the offshore option
Many UK insurers faced with growing regulatory pressure are seeking a move offshore to escape the forthcoming Solvency II regulations and the high capital charges they bring. But do lower capital charges equal lower standards for consumers? Blake Evans…
Defining dependence - the changing face of asset class correlation
Diversification let the industry down in the last two years, as alternative asset classes moved in tandem with equity and fixed income. With its estimation so volatile, and its theoretical validity tarnished, correlation’s role in risk management is…
A race against the future - how governments are tackling the issue of rising state pension costs
Reforming state pensions is a top priority in Europe as governments attempt to plug huge deficits exacerbated by the global financial crisis. Andrew Sheen examines the current state of European pensions
Commodity Rankings: Going for gold
HSBC topped the precious metals categories of this year’s commodity rankings, swapping places with runner-up and last year’s winner UBS in a gold-dominated 12 months. Société Générale maintained its dominance in base metals, while Goldman Sachs climbed…
Commodity Rankings: Reclaiming the top spot
The 2010 Risk/Energy Risk Commodity Rankings reveal which companies have been able to prosper despite the difficult conditions of 2009. Lianna Brinded analyses the results and talks to key market participants about their views
The lure of click-to-trade systems
Growing demand from high-net-worth investors for bespoke structured products is leading to smaller deal sizes. As a result, arrangers are planning to increase their use of automated systems to mitigate the costs of delivering and servicing small trades…
In search of the perfect match
Demand from pension funds for structured products has slumped during the financial crisis due to the great sell-off of equity risk. But the downturn has raised awareness of how derivatives can help match assets and liabilities, a strategy that is on the…
The Thais that bind
The Bank of Thailand relaxed its regulations covering the use of derivatives towards the end of 2009. While retail investors are already allowed to buy structured notes and deposits linked to some foreign variables, the relaxation of rules has provided…
Capital increase
Exposures to counterparty credit risk have been scrutinised by the Basel Committee on Banking Supervision, which published proposals designed to increase capital requirements in the middle of December. The measures will be completed and implemented by…
Variable annuities: waiting for the next generation
A few years ago European insurers were issuing increasing numbers of guaranteed products that resembled structured notes. What scope is there for this type of business today? By John Ferry