Derivs - Credit

ICE Benchmark Administration, a unit of Intercontinental Exchange, is to assume the secretarial role on the credit derivatives determinations committees previously held by the International Swaps and Derivatives Association.

Financial credits and stocks were focal points for derivatives traders this week, with a big rally in banks aided by perceptions of a more hawkish stance on interest rate hikes by the US Federal Reserve. But although volatility has largely abated from credit and equity markets with the passing of the Fed meeting, traders warned that Banca Monte dei Paschi di Siena and the credit index options expiry next week could still bring upsets before the end of the year.

It’s that time of year when analysts dust off their crystal balls and make predictions for the next 12 months. In December 2015 not many were forecasting that Britain would vote to leave the EU, and even fewer were betting on a Donald Trump presidential victory, so investors would be wise to treat such missives with caution. Political risk is a capricious beast, even for the most seasoned market observers.

Intercontinental Exchange has obtained approval from the European Securities and Markets Authority (ESMA) for its ICE Clear US business to be recognised as a third country central counterparty under the European Markets Infrastructure Regulation (EMIR).

Tradeweb Markets, the New York-headquartered fixed income, derivatives and exchange trader fund marketplace provider, has reported a big rise in credit volume for November in both the US and overseas.

The Chicago Mercantile Exchange has appointed a president for clearing and post trade services, a newly created title at the firm.

Options trading picked up this week as the Italian referendum and European Central Bank meeting drove markets. But with few obvious catalysts for upset left in 2016 after these events, the focus is turning to the financials sector as the year’s last bastion of volatility.

All central counterparties, by their nature, are systemically important. But some are more systemic than others. Regulators should adopt a more tiered, and more technological approach to CCP recovery and resolution.

The spectacle of Italian prime minister Matteo Renzi’s political suicide did little to rattle financial markets on Monday morning, with any immediate negativity in credit and equity that had not already been priced in ahead of the country’s Sunday referendum quickly eased over by shorters monetising their gains.

Clearing houses, lawyers and derivatives specialists have spent this week poring over Europe’s proposed rules for central counterparty recovery and resolution, with question marks still hanging over how each case will be assessed and how banks should capitalise their exposures.

Pressure mounted on Italian sovereign bonds and credit default swaps this week, as rumours of increased European Central Bank support were quickly dampened and traders positioned for a 'No' vote in this weekend’s referendum.

When a company announces that it is increasing the amount paid out to shareholders, it is not typically greeted with enthusiasm by credit investors. But Glencore is no ordinary company in the credit default swap world, and its announcement on Thursday wasn’t a standard change in financial policy.