Derivs - FX

European exporters operating in China have been replacing option hedges with forwards on the euro against the offshore renminbi following a weakening of the former, offering investors good entry levels to lock in to a trade. The forwards typically have a duration in excess of one year.

Market participants have been picking up calls on the dollar against the yen on the back of expectations that the pair will continue to move higher following the Bank of Japan’s decision to increase its monetary stimulus at the beginning of November.

Investors should look at buying call spreads on the euro against the Swiss franc following a recent spike in volatility on the pair, which has driven spot down to 1.20 – the lowest level since 2012, according to strategists at Credit Suisse.

Ian White, managing director and senior fx options trader at Nomura in New York has left the firm.

Reporting of over-the-counter and exchange traded derivatives to repositories is floundering in its aim to make trading more transparent, some seven months since reporting started in Europe. Market participants say a broken system consisting of multiple trade repositories could harbour risk, rather than reduce it.

Tim Sharp, ex-FX options trader at UBS in Zurich, has joined BlueCrest Capital Management as a portfolio manager, based in London.

The European Commission is discussing its rules on anti-procyclicality — measures to prevent the build up of margin required in times of stress — with the Commodity Futures Trading Commission in an effort to grant equivalence to US clearing houses. However, the US must look to reciprocate by acting with deference to other country’s regimes, according to Patrick Pearson, head of financial markets infrastructure at the EC.

Options trading volumes on the dollar against the yen has continued to spike following the Bank of Japan’s unexpected announcement that it would ramp up its monetary stimulus in another round of quantitative and qualitative easing.

Hedge funds and real money investors are targeting a long spot position on the Turkish lira against the Russian ruble, on the back of expectations that the ruble will continue to weaken. This comes following the decision from the Central Bank of Russia not to shift to a free-floating or discretionary intervention currency strategy at its monetary meeting on October 31.

A review of the fixed income, currency and commodity markets in the UK is likely to spark further debate surrounding the way in which regulators define derivatives instruments. The Fair and Effective Markets Review launched by the Bank of England on Monday invites market participants to help judge the regulatory changes that have been made to the industry in the UK, in order to assess whether these are adequate to ensure safer markets and better trading practices in the future.

Market participants have relentlessly been selling risk-reversals and volatility on the dollar against the yen, as the spot rate on the pair has largely remained range-bound over recent days.

The Hong Kong Exchange has extended its After Hours Futures Trading (AHFT) session by 45 minutes for its Hang Seng Index futures, H-Shares Index futures, Mini HIS futures, Mini HHI futures and renminbi currency futures. The close of the after hours futures trading clearing session will also be extended.