Derivs - Credit

Series 34 of the iTraxx Europe Crossover index saw seven fallen angels join the index, following the three added in March’s roll, as the coronavirus pandemic pressures sectors such as autos, transport and retail.

The European Commission on Tuesday gave the derivatives clearing industry a lifeline by granting an 18 month equivalence decision that will allow European firms to keep using UK central counterparties.

As political tensions rise over the UK-EU trade negotiations, concerns in the derivatives market are growing as the lack of equivalence between trading venues causes jitters once again.

Market observers believe that investors in open-ended debt funds need to be disincentivised more than they are at present from scrambling to liquidate their holdings in a market downturn.

Traders across asset classes are beginning to position in size as the US presidential election approaches, with an expected tight run-off making it very hard to time the market.

Derivatives counterparties breathed easy in March when the Basel Committee on Banking Supervision and the International Organisation of Securities Commissions announced a year’s delay in the introduction of initial margin rules. But in Europe — with the deadline already passed — legal confirmation has still not appeared.

Klaus Löber has been selected by the European Securities and Markets Authority as chair of its CCP supervisory committee. ESMA has also picked two other members; all three will be assessed by the European Parliament.

FTSE Russell and Singapore Exchange (SGX) have teamed up to offer investors a range of products across asset classes. It follows the termination of an agreement between SGX and MSCI.

A tumultuous week in Turkish currency markets ended with the lira hitting new lows against the dollar and the Central Bank of the Republic of Turkey finally taking action to try and calm volatility. Amid such swings, a sovereign bond issue looks unlikely.

Some of the world’s top-tier financial institutions want changes in how central counterparty clearing house (CCP) resolutions are executed.

Société Générale will make its structured products less risky, it said, after a difficult first half of the year in its equities business.

Falls in the Turkish lira have reignited concerns about a currency crisis this week, with the Central Bank of the Republic of Turkey’s (CBRT) unorthodox exchange rate policy raising questions from investors about the robustness of the country’s respected banking sector. Mariam Meskin and Ross Lancaster report.