Derivs - FX

Active trading on central limit order books needs larger liquidity providers and better incentives for more dealers and buyside firms to actively participate, say market participants.

The Moscow Exchange is overhauling its settlement period for Russian federal government bond (OFZ) derivatives by focusing on the automatic delivery of traded contracts.

Eurex will launch options on Euro-Bund futures with weekly expiries in April, which will allow investors to gain short term exposure to interest rate moves and event-driven activity, experts say.

LCH.Clearnet is replacing Gavin Wells as global head of CDSClear by promoting the product's head of in-business risk.

As regulators begin imposing penalties for compliance transgressions in swaps markets, firms must build out their operational and reconciliation frameworks, as well as tracking the source of errors and adjusting to new problems dynamically, according to market officials.

Even though volatility risks in euro/dollar options are as high as before the Federal Open Market Committee meeting, medium term gains based on the currencies reaching parity and a strengthening dollar make buying calls with a focus on upside euro convexity a viable trade, according to strategists.

One investor was seen buying a sizeable number of put options on the PowerShares DB US Dollar Index Bullish exchange-traded fund this week, indicating that they are seeking to mitigate exposure to the US dollar if its performance slows down or weakens, according to strategists.

Market participants trading non-centrally cleared swaps have been given a reprieve as proposals from regulators regarding rules for initial and variation requirements have been delayed.

Moscow Exchange is now trading futures contracts on the onshore Chinese renminbi against the Russian rouble after a substantial increase in renminbi turnover on the exchange and growing volume of settlement in the currency between Russia and China, in addition to new demand for hedging of such transactions.

The rapid slide in the euro against the dollar has made buying shortdated puts an increasingly popular but expensive trade. As a result, investors are seeking to capitalise on further euro downside with more exotic trades on the back of higher volatilities.

Clearing houses are being forced to re-evaluate margin requirements and costs thanks to persistent incongruences in national jurisdiction rules for central counterparties.

Default fund contributions by central counterparties, known as skin in the game, are not the only risk management mechanisms for clearing house operations and resolution systems, and they do not compensate for other risk mitigation strategies, said market officials.