Feature
Forging an index
Efforts by miner BHP Billiton to create an iron ore index that would represent the underlying benchmark for a series of derivatives instruments appear to be floundering as Chinese steel producers press hard for pricing advantage. Kathleen Kearney reports
KO-ed in Korea
Derivatives litigation has reached a new level in South Korea, where early court rulings on corporate currency options positions went against financial institutions and threatened the legal enforceability of derivatives contracts in the country. A change…
Structural simplicity
Restoring confidence in structured products is top of equity derivatives dealers' agenda as they move to offer less complex instruments to jittery investors. But the industry faces a long haul to bring business back to levels witnessed in 2007. Jill Wong…
Piloting policy
The privately negotiated derivatives industry congregated in Beijing last month for the International Swaps and Derivatives Association's annual general meeting. Top of the agenda were efforts to formulate a strategic response to calls for more…
Fair's fair?
Fair value accounting has received much criticism during the financial crisis of the past 20 months. While it is unlikely to be suspended, its execution in inactive markets remains the subject of much debate. Could independent valuation providers offer a…
Exploiting Japan's renegade repos
Japanese equities
Exchange proliferation
Regional commodity exchanges are expanding to secure more corporate hedging business and flows from speculators keen to exploit pricing anomalies at a time when volatility is high and bilateral counterparty risk is a major worry. Georgina Lee reports
It's all relative
Commodity-focused hedge funds have faced a torrid past nine months, suffering large losses and widespread redemptions. Yet some funds, notably relative-value arbitrage strategies, have performed better than most. By Richard Jackson
Transition revamp
The asset transition business is undergoing a major transformation, with strong risk management and pre-trade analysis capabilities becoming an increasingly important service differentiator. How are transition managers meeting the needs of Asian clients?…
Urgency and uncertainty
The Basel Committee published further clarification on its proposal for a new incremental risk charge in January. What challenges does this pose from a systems perspective, and how are banks and technology vendors responding? By Clive Davidson
Courting attention
While standardised documentation for complex financial products has been in place for some time, dispute resolution for those products is often performed on an ad hoc basis. But a new initiative looking at the possibility of establishing a specialised…
A new master
China took another significant step forward in the development of a unified single master derivatives contract in March with the launch of the revised Nafmii Master Agreement. Chin-Chong Liew, Simon Zhang and Chris Zhao of Linklaters look at the…
The fast track
Modern trading and risk technology systems are large and complex, but banks are becoming increasingly wary of running into implementation difficulties. As a result, technology vendors are packaging their systems so they are quicker and simpler to get up…
Formula, non
The decision by the French government last year to alter its Livret A inflation-linked savings rate formula introduced huge complexity for banks offering Livret A hedges. However, a further change this year has proven to be the last straw, forcing many…
Raiders of the loss arc
Regulators are looking at ways to remove pro-cyclicality from accounting standards, with some advocating the scrapping of incurred loss models in favour of dynamic provisioning
Out of the comfort zone
US banking supervisors will complete stress tests early this month to determine if the country's largest banks need to hold more capital to withstand a worsening in economic conditions. But industry practitioners raise concerns about the effectiveness of…
Setting global standards
Accounting
An aversion to variance
As volatility spiked in late 2008, variance swaps contributed to huge bank losses, particularly in single stocks. Some dealers have now stopped quoting single-stock variance swaps, while activity in the broader market has been scaled back. Mark Pengelly…
Cutting hedges
Buoyed by a strong local currency and surging commodities prices in recent years, many Russian corporates eschewed derivatives to hedge risks. But with both the rouble and commodity prices plummeting in recent months, it may be time for a rethink…
Building a new house
International Derivatives Clearing House, a new clearing service for interest rate swaps, was launched in December. Christopher Edmonds, its chief executive, talks to Ryan Davidson about the venture
Crude but credible
Regulators are warming to the idea of introducing a leverage ratio to limit the excessive build-up of assets on bank balance sheets. But they face an uphill battle to create an internationally consistent measure that addresses differences in accounting…
Providers bank on Russia recovery
Arc Capital and Income has launched the second tranche of its Emerging Markets Russia plan for UK investors. The latest issue follows the launch of four new tradeable Russian sector indexes on March 31 by the Vienna Stock Exchange (VSE), which are…
Badie to partner at Allen & Overy in London
Parya Badie has been promoted to partner in the London offices of law firm Allen & Overy.
JP Morgan strengthens business in India
JP Morgan has appointed Kaku Nakhate as vice chairperson of the bank's Indian operations. Nakhate will be responsible for cash equities, equity derivatives and futures and options, while having a supervisory role for the custody business in India. Mumbai…