Banks scoop up Lehman's derivatives clients
Dealers have reported a surge in business in the wake of the bankruptcy of Lehman Brothers, as former clients of the failed investment bank look for new counterparties to replace hedges.
"We are seeing more and more enquiries. Clients had hedges with Lehman Brothers and they need to replace them, says one London-based interest rate trader. We've been swamped over the past few days and we've seen hundreds of trades on the exotic side.
Ninety-nine borrowers have outstanding structured notes and private placements that had been issued through Lehman Brothers, including the Republic of Italy, KfW and Freddie Mac, according to mtn-i.The bank's collapse would have left many of those issuers with unhedged exposures and in desperate need of new swap counterparties. Lehman Brothers acted as dealer on $48.6 billion of outstanding structured notes and private placements, with structured notes accounting for $30.5 billion of that total, according to mtn-i.
However, activity goes far beyond clients looking to replace hedges on structured note issuance dealers are reporting activity across asset classes and from a broad variety of clients.
Some clients are coming to us with an entire portfolio, while others are taking it trade by trade. We're expecting to see increased client requests until at least the end of the week, adds another London-based trader.
Only users who have a paid subscription or are part of a corporate subscription are able to print or copy content.
To access these options, along with all other subscription benefits, please contact info@risk.net or view our subscription options here: http://subscriptions.risk.net/subscribe
You are currently unable to print this content. Please contact info@risk.net to find out more.
You are currently unable to copy this content. Please contact info@risk.net to find out more.
Copyright Infopro Digital Limited. All rights reserved.
You may share this content using our article tools. Printing this content is for the sole use of the Authorised User (named subscriber), as outlined in our terms and conditions - https://www.infopro-insight.com/terms-conditions/insight-subscriptions/
If you would like to purchase additional rights please email info@risk.net
Copyright Infopro Digital Limited. All rights reserved.
You may share this content using our article tools. Copying this content is for the sole use of the Authorised User (named subscriber), as outlined in our terms and conditions - https://www.infopro-insight.com/terms-conditions/insight-subscriptions/
If you would like to purchase additional rights please email info@risk.net
More on Regulation
Industry calls for major rethink of Basel III rules
Isda AGM: Divergence on implementation suggests rules could be flawed, bankers say
Saudi Arabia poised to become clean netting jurisdiction
Isda AGM: Netting regulation awaiting final approvals from regulators
Japanese megabanks shun internal models as FRTB bites
Isda AGM: All in-scope banks opt for standardised approach to market risk; Nomura eyes IMA in 2025
CFTC chair backs easing of G-Sib surcharge in Basel endgame
Isda AGM: Fed’s proposed surcharge changes could hike client clearing cost by 80%
UK investment firms feeling the heat on prudential rules
Signs firms are falling behind FCA’s expectations on wind-down and liquidity risk management
The American way: a stress-test substitute for Basel’s IRRBB?
Bankers divided over new CCAR scenario designed to bridge supervisory gap exposed by SVB failure
Industry warns CFTC against rushing to regulate AI for trading
Vote on workplan pulled amid calls to avoid duplicating rules from other regulatory agencies
Bank of Communications moves early to meet TLAC requirements
China Construction Bank becomes last China G-Sib to release TLAC plans
Most read
- Top 10 operational risks for 2024
- Top 10 op risks: third parties stoke cyber risk
- Japanese megabanks shun internal models as FRTB bites