Egypt bourse plans to launch derivatives market in ’09

June 25, 2006

From Gulf Times:
The Egyptian Exchange will operate under a new, faster trading platform from next month and plans to launch a new derivatives market next year, its chairman said on Monday.

These moves form part of its plan “to enhance the liquidity (in the exchange) and provide more instruments and more sophistication to our market,” Maged Shawky Sourial told Dow Jones Newswires.

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Daiwa turns the tables with derivatives foray

June 23, 2006

From Financial Times:
Daiwa SMBC, the Japanese investment bank, is setting up a derivatives business in London and Asia in an effort to expand its global reach and take advantage of western banking woes.

The move highlights the degree to which Japanese institutions wish to capitalise on the strength of their financial health relative to US and European counterparts hit by the credit crunch.

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All about currency derivatives

April 30, 2006

From The Hindu:
Indian companies have, in recent times, grabbed headlines for all the wrong reasons. Swaps, options, exotic derivatives, structured product…the list is endless. As a shareholder, one has seen companies booking losses owing to ‘currency derivatives’. Naturally, everybody is petrified at the mention of currency derivatives.

Business Line sent some posers to Mr M. Sitarama Murty, an expert who worked in SBI, Paris in-charge of forex and money markets during the critical years of 1990-93. Before that Mr. Murthy headed the International Division of State Bank of Hyderabad at Chennai for more than 6 years (1984-90).

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Banks will have to keep aside more capital for credit derivatives exposure

April 30, 2006

From Economic Times:
The Reserve Bank of India (RBI) has finally broken its silence on the huge derivatives books run by banks which resulted into corporate booking huge losses due to unexpected movements in the currency market. Even though the regulator made no reference to recent losses suffered by corporates and banks, it has spelt out that banks will soon need to set aside more capital for off-balance sheet exposures, which include credit derivatives. In its annual policy review, the central bank said that it would now review banks’ off-balance sheet exposures.

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Libor to Rise as Banks Stay Wary, Derivatives Signal (Update3)

April 24, 2006

From Bloomberg:
Interest-rate derivatives are signaling that the rate banks charge for loans in dollars in London may rise further as financial institutions remain reluctant to lend.

The difference between the rate of three-month loans in London relative to the overnight index swap rate, known as the Libor-OIS spread, is 87 basis points. The gap reached 90 basis points on April 21, the widest since Dec. 12.

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US regulator lambasts FSA over derivatives oversight

April 24, 2006

From FTAdviser.com:
The FSA has rebuked claims from across the pond critical of its oversight in the derivatives markets.

Speaking before the Futures and Options Association in London, Bart Chilton, a commissioner at the US regulator Commodity Futures Trading Commission, told his audience: "I am generally concerned about a lack of transparency and the need for greater oversight and enforcement of the derivatives industry by the FSA.

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Derivatives by daylight

April 2, 2006

From Investors Chronicle:
Ben Bernanke! Mervyn King! Alistair Darling! Stand by for the answer. Not to securitised debt. Not to institutionalised greed. Not to "other people's money". And not to sheer bloody stupidity. For those answers, you will have to come back in future weeks. Today's answer addresses derivatives.

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Equity derivatives open interest nears 1-yr low

April 2, 2006

From Reuters India:
Open interest positions in the equity derivatives market are near 12-month lows, suggesting the main indexes are close to bottoming out as investor interest remains low, analysts said on Wednesday.

The outstanding open interest on National Stock Exchange was in a range between 840 million and 1.05 billion shares for stock and index futures at the end of the expiry of March contracts, data compiled by Reuters from four broking firms showed.

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Sell Side To Spend $70 Million On Derivatives Processing in ’08, Buy Side Far Less, Says Tabb Group

March 18, 2006

From Wall Street & Technology:
In a research note published today, "OTC Derivatives Processing: Blazing a Trail to Automation," the Tabb Group says that although top-tier, sell-side broker dealers have invested millions of dollars since the mid-1990s developing best-of-breed processing for their burgeoning OTC derivatives businesses, many other counterparties, including mid-tier banks, hedge funds and other trading firms have yet to implement any kind of automated solution, a problem that has not gone unnoticed by the Federal Reserve.

According to Kevin McPartland, senior analyst at TABB Group and author of the note, "When the Fed first instructed major dealers in 2005 to catch up on unconfirmed trades, additional personnel provided most of the ammunition for shrinking the confirmations backlog. As recent credit market turmoil has shown, simply adding staff to solve a problem is insufficient." He goes on to explain that during a three-month period, June to August 2007, the total number of backlogged confirmations jumped 250%.

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Banks' derivatives exposure may be capped

March 16, 2006

From Business Standard:
The Reserve Bank of India is planning to overhaul the norms for all foreign currency derivatives. The move could increase the provisioning requirements and restrict banks' exposure to credit derivatives and currency and interest rate structures.

Sources familiar with the developments said the central bank has sought data from banks to assess their total exposure to foreign currency derivatives, both in the domestic and in the overseas markets.

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Derivatives the new 'ticking bomb'

March 10, 2006

From MarketWatch:
"Charlie and I believe Berkshire should be a fortress of financial strength" wrote Warren Buffett. That was five years before the subprime-credit meltdown.

"We try to be alert to any sort of mega-catastrophe risk, and that posture may make us unduly appreciative about the burgeoning quantities of long-term derivatives contracts and the massive amount of uncollateralized receivables that are growing alongside. In our view, however, derivatives are financial weapons of mass destruction, carrying dangers that, while now latent, are potentially lethal."

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Overlooked – SocGen’s clever derivatives toys

March 2, 2006

From Financial Times:
With all the furore surrounding Jérôme Kerviel’s allegedly fraudulent trading activities at Société Générale, it is easy to forget about the French bank’s brilliant inventiveness when it comes to equity derivatives, the division where Kerviel toiled away.

If SocGen’s equity derivatives activities go down in history as just the place that housed the rogue of rogues, it would be a deeply unfair development. Particularly because the fallout had nothing to do with the area where the bank has outshone its competitors for years, namely extremely complex structured products. Mr Kerviel dealt only with the plainest of vanilla equity derivatives, and belonged to a low-profile, low-risk group.

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Morley buys UK property derivatives, eyes slump end

February 29, 2006

From The Economic Times:
One of Europe's biggest real estate investors, Morley Fund Management, is betting on an end soon to Britain's post-summer slump in commercial property by buying property derivatives, a firm official said on Friday.

In an interview, Morley's head of property strategy Nick Mansley told Reuters the firm bought "significant volumes" of UK property derivatives earlier this year and wanted to buy more if prices continued tumbling.

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Nord Pool eyes derivatives push with Nasdaq help

February 29, 2006

From Guardian.co.uk:
Norway-based electricity exchange Nord Pool seeks to expand its power and carbon derivatives markets with the reach, financial muscle and technology of its new strategic partner Nasdaq OMX, its boss said on Friday.

Chief Executive Torger Lien said Nord Pool would soon feel the benefits of the $440 million sale of its clearing and consulting operations and international derivatives products to Swedish operator OMX, bought by U.S. giant Nasdaq.

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Derivatives Push Reliant Energy Profit

February 26, 2006

From Forbes:
Reliant Energy Inc. said Tuesday it swung to a profit far higher than Wall Street had expected in the fourth quarter as strong derivatives gains led to better margins at both wholesale and retail operations.

The electricity provider posted a net income of $227 million, or 66 cents per share, from a loss of $53.7 million, or 17 cents per share, a year earlier. Revenue rose 13.2 percent to $2.65 billion from $2.34 billion.

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Derivatives usage drives up staffing

February 25, 2006

From Financial Times:
Fund management companies operating in the UK have expanded the size of their operational risk and compliance staff by 50 per cent over the past three years, and will continue increasing headcount by 10-15 per cent a year, according to a survey by Investit Intelligence , an industry forum.

The figures come just weeks after the Financial Services Authority warned that the increasing use of derivatives by asset managers "poses a range of risk" and called for "enhanced risk-management systems, controls and p