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REUTERS/Dado Ruvic/IllustrationNEW YORK, June 20 (Reuters) - Foreign-exchange investors are moving more of their over-the-counter (OTC) derivatives trades to lookalike products on exchanges to avoid higher costs due to recent global regulations, helping inject transparency into a multitrillion-dollar market that is largely hidden from the public eye. The gradual behavioral change in FX derivatives trading is being caused by increasing margin and collateral costs, said Joe Midmore, chief commercial officer at OpenGamma, a derivatives analytics firm. OTC derivatives are privately negotiated contracts while cleared derivatives, though bilaterally negotiated, are booked with a clearinghouse such as a listed exchange. "They will also incur the operational, legal and custody costs of setting up margin facilities as well as the capital costs of posting margin," Houston said. "There is inherently risk involved in lots of people transacting derivatives with each other," said Riddle.
Persons: Dado Ruvic, Ben Feuer, Joe Midmore, , Michael Riddle, Paul Houston, Houston, ForexClear, James Pearson, Tom Arnold, Joe Spiro, Peter Vassallo, Riddle, Laura Matthews, Shankar Ramakrishnan, Megan Davies, Matthew Lewis Organizations: REUTERS, Societe Generale, Banking Supervision, International Organization of Securities Commissions, CME, CME Group, FX, Reuters Graphics British, Financial, ForexClear, BNP, Management, Thomson Locations: Saudi, New York, Hazeltree
Credibility crisis requires BoE to write new plot
  + stars: | 2023-06-20 | by ( Francesco Guerrera | ) www.reuters.com   time to read: +7 min
LONDON, June 20 (Reuters Breakingviews) - Since May 24, thousands of British people have had their homeowning dreams dashed by a sudden spike in mortgage rates. Unlike many other central banks, the BoE doesn’t provide its own forecasts of how consumer prices will evolve in coming years. The whiplash occurred because traders had to digest the inflation shock without any interest rate guidance from policymakers. Because most banks price home loans off those derivatives, it sent mortgage rates rocketing. The BoE announces its latest interest rate decision on June 22, with traders expecting a 25-basis-point hike, to 4.75%.
Persons: , Paul Gascoigne, BoE, Andrew Bailey, That’s, Bailey, , Charles Goodhart, , apocryphally, Seneca, David Roberts, George Hay, Oliver Taslic Organizations: Reuters, Bank of England, Monetary, U.S . Federal Reserve, European Central Bank, Reuters Graphics Reuters, MPC, Financial Times, Fed, Thomson Locations: policymaking, BoE’s
LONDON, June 19 (Reuters) - The pound hit a 10-month high versus the euro on Monday as investors waited for British inflation data and a Bank of England decision later in the week. The pound was down 0.13% against the dollar at $1.281, not far below the 14-month high of $1.285 touched on Friday. Goldman Sachs said that, according to its trade-weighted measure of sterling, the pound is at its highest since mid-2016, just after the Brexit referendum. Reuters GraphicsThe latest British inflation data is due out on Wednesday. According to pricing in derivatives markets, traders expect rates to peak at around 5.8% in early 2024 as the BoE battles inflation.
Persons: Sterling, Goldman Sachs, Pushkar Jha, BoE, Harry Robertson, Susan Fenton Organizations: Bank of England, Goldman, " Bank of America, Barclays, Reuters, Thomson Locations: Britain, United States, Europe
LONDON, June 19 (Reuters) - The Bank of England has launched its first system-wide liquidity 'stress test' to establish how big banks, insurers, clearing houses and investment funds respond collectively during extreme stresses in markets, it said on Monday. The BoE had said in December that investment funds and other non-bank financial institutions would face their first 'stress test' to apply lessons from the near-meltdown in Britain's pension fund sector in September. Liability-driven investment (LDI) funds, used by pension funds to ensure their long-term payouts, struggled to meet collateral calls after turmoil caused by the fiscal plans of Liz Truss's short-lived government in September. Money market funds also came under "dash-for-cash" pressure during market stresses following economy lockdowns to fight COVID-19 in 2020. "The exercise is not a test of the resilience of the individual firms participating.
Persons: The BoE, BoE, Jon Cunliffe, Liz Truss's, lockdowns, COVID, Huw Jones, Emma Rumney, Kirsten Donovan Organizations: Bank of England, Money, Thomson
LONDON, June 16 (Reuters) - The pound was set for its biggest weekly rise in six months on Friday after days of economic data and central bank rate decisions, and ahead of the Bank of England's monetary policy meeting next week. It was up 1.72% since Monday, the biggest weekly increase since early December. "Tuesday's labour market data led Bank rate expectations to spend much of that evening flirting with a terminal (peak) rate closer to 6%," said Nicholas Rees, FX market analyst at Monex Europe. Reuters GraphicsHe said U.S. economic data released on Thursday, which showed weekly jobless claims were higher than expected last week, also helped boost sterling by weighing on the dollar. Sterling rose to its highest level against the yen in eight years following the BoJ's announcement, at 180.83 yen to the pound.
Persons: Nicholas Rees, Rees, Sterling, BoE, they're, Ben Laidler, Farouq Suleiman, Harry Robertson, Angus MacSwan Organizations: Bank, Analysts, Bank of England, FX, Monex, European Central Bank, Bank of Japan, ECB, U.S . Federal, Nationwide Building Society, Thomson Locations: Monex Europe, lockstep, Britain
Share Share Article via Facebook Share Article via Twitter Share Article via LinkedIn Share Article via EmailBlanch: There's a battle royale going on in the oil market between the Saudis and the FedFrancisco Blanch, global head of commodity & derivatives strategy at BofA Securities, discusses the case for WTI crude to average $75/bbl this year and Brent $80/bbl.
Persons: Fed Francisco Blanch, Brent Organizations: Fed, BofA Securities, bbl
Watch CNBC's full interview with Eric Johnston and Jack Ablin
  + stars: | 2023-06-12 | by ( ) www.cnbc.com   time to read: 1 min
Share Share Article via Facebook Share Article via Twitter Share Article via LinkedIn Share Article via EmailWatch CNBC's full interview with Eric Johnston and Jack AblinEric Johnston, Cantor Fitzgerald's head of equity derivatives and cross asset, and Jack Ablin, Cresset Capital founding partner and CIO, join 'Closing Bell Overtime' to discuss the bull and bear cases for the current financial markets.
Persons: Eric Johnston, Jack Ablin Eric Johnston, Cantor Fitzgerald's, Jack Ablin Organizations: Cresset
UBS’s state aid is a disaster insurance policy
  + stars: | 2023-06-09 | by ( ) www.reuters.com   time to read: +2 min
LONDON, June 9 (Reuters Breakingviews) - Sergio Ermotti has a taxpayer safety net, but it only kicks in if things get really bad. The state will eat 9 billion Swiss francs ($10 billion) of losses on certain assets once UBS has swallowed an initial 5 billion Swiss francs. The actual contract, despite being 94 pages long, is missing the most important number: how many assets are covered by the agreement. UBS in mid-May said it would write down the value of Credit Suisse’s assets by $10 billion. To breach its initial loss threshold, the assets would have to fall 11% below their already discounted value.
Persons: Sergio Ermotti, Liam Proud, Xavier Niel, George Hay, Oliver Taslic Organizations: Reuters, UBS, Credit Suisse, Finance, Suisse’s, Twitter, Toyota, Thomson
Goldman Sachs just lost one of its star traders to billionaire Ken Griffin. The move comes amid a fierce talent war for inflation traders. Goldman Sachs just lost one of its stars to billionaire Ken Griffin as demand for inflation traders burns up across Wall Street. Joaquin de Soto, a top inflation trader for Goldman Sachs in London, is heading to Citadel, the $60 billion hedge fund founded by Griffin, according to people familiar with the matter. Trader pay is also skyrocketing due to swelling assets at multistrategy funds like Citadel and Millennium, leading to a war for talent.
Persons: Goldman Sachs, Ken Griffin, Banks, Joaquin de Soto, Griffin, Brevan Howard, De Soto, efinancialcareers, Goldman, they've Organizations: Citadel, Wall, Goldman, Bloomberg, Vali Analytics, BLS, Trader, Millennium Locations: London
The loss protection agreement (LPA) will become effective with the completion of Credit Suisse takeover, expected as early as June 12, UBS said in a separate statement. The guarantees will kick in if UBS incurs losses from the sale of Credit Suisse assets beyond 5 billion francs that the lender is due to cover itself. The money was made available by the government to ease the emergency takeover of Credit Suisse, whose collapse risked triggering a global financial crisis. "To make the takeover possible, the government granted UBS a guarantee for any losses incurred in the liquidation of Credit Suisse assets," the government said in a statement. The agreement will remain in place until the final realisation of the Credit Suisse assets.
Persons: Denis Balibouse, Noele Illien, John Revill, Tomasz Janowski Organizations: Swiss, UBS, REUTERS, Suisse, Credit Suisse, country's Social, Credit Suisse's, Thomson Locations: Zurich, Switzerland, ZURICH, Swiss
It's time for the annual gathering of the trading community. Here's a rundown of some of the hot topics: Crypto in focus: SEC Chair Gary Gensler will be speaking at noon on Thursday. Electronic trading changed the trading world 30 years ago, is AI poised to do the same? Two pioneers of electronic trading, Virtu Financial founder Vinnie Viola and Peterffy, will be speaking at noon today, reflecting on the past and future of trading and will certainly be asked about the role AI will play in future trading. Tradeweb CEO Billy Hult and MarketAxess CEO Chris Concannon will discuss the growth in Treasury trading and the increasing electronification of the bond market.
Persons: I'm, Piper Sandler, Gary Gensler, Gensler, Binance, Michael Novogratz, Jean, Marie Mognetti, Vlad Tenev, Doug Cifu, Thomas Peterffy, Vinnie Viola, Peterffy, Ed Tilly, Terry Duffy, Billy Hult, Chris Concannon, Rich Repetto's, Rich Repetto Organizations: Piper, Piper Sandler Global Exchange, New York City, NYSE, Nasdaq, Cboe, London Stock Exchange, SEC, Galaxy Digital, Virtu, Global, Treasury, CME, Citadel, CNBC PRO Locations: New York
The S & P 500 is going from strength to strength this year, closing at a one-year high last Friday and up over 10% year-to-date. While many analysts have cautioned that the rally could be a narrow-based one, with gains driven by just a few major tech stocks, some Wall Street pros are expecting the S & P 500 to rally further. Evercore ISI's Julian Emanuel told CNBC's "Squawk Box Asia" on Tuesday that he has raised his S & P 500 price target from 4,150 to 4,450 . Emanuel said that the AI buzz driving stocks has turned into a so-called "momentum market" like the Internet-related rally of the late 1990s to 2000. "The Momentum broadened last week into the larger S & P 500 and importantly the Small Cap Russell 2000; this broadening is very positive and looks set to continue," he wrote in notes sent to CNBC.
Persons: Evercore ISI's Julian Emanuel, CNBC's, Emanuel, Russell, Brian Stutland, Stutland, we're, Paul Meeks, we'll, Evercore, laggards, Meeks Organizations: CNBC, Equity Armor Investments, Independent Solutions Wealth Management, Copa Holdings, Nvidia, Devices, Google, Marvell Technology
UBS’s $10 bln state guarantee is a useful fantasy
  + stars: | 2023-06-07 | by ( Liam Proud | ) www.reuters.com   time to read: +4 min
LONDON, June 7 (Reuters Breakingviews) - UBS (UBSG.S) and the Swiss government have negotiated a state backstop that neither side wants to use. The scheme, designed to sweeten the Credit Suisse (CSGN.S) rescue, would see the government cover $10 billion of losses on former Credit Suisse assets after UBS swallows the first $6 billion. One option could be for the state to guarantee only a limited subset of former Credit Suisse assets – just the ones that UBS plans to get rid of, for example, like fixed-income derivatives. The government could also insist on dividend or buyback restrictions if the Swiss bank ever taps the scheme. The guarantee would only kick in after UBS has swallowed 5 billion Swiss francs ($6 billion) of losses.
Persons: Sergio Ermotti, Karin Keller, Sutter, Ermotti, that’s, , Neil Unmack, Oliver Taslic Organizations: Reuters, UBS, Swiss, bank’s, Credit Suisse, Switzerland’s Social, , RBC, AG, U.S . Securities, Exchange Commission, Thomson Locations: Swiss
Share Share Article via Facebook Share Article via Twitter Share Article via LinkedIn Share Article via EmailSilverman: Markets could enter a scenario where mega-cap tech and small-caps both rallyAmy Wu Silverman, Head of Derivatives Strategy at RBC Capital Markets, discusses small caps, mega-cap tech, and what's driving the markets.
Persons: Silverman, Amy Wu Silverman Organizations: Markets, RBC Capital Markets
The exchange offers spot and derivatives trading and a host of services from non-fungible tokens (NFTs) to crypto loans and asset management. FINANCESBinance's global trading platform, Binance.com, is by far the world's biggest cryptocurrency exchange. Last year it processed crypto trades worth about $65 billion a day, Binance said, dominating the crypto trading landscape with more than half of the market, CryptoCompare data shows. Binance last year extended its reach beyond the crypto sector in 2022, investing $500 million in Tesla boss Elon Musk's takeover of Twitter. A top Binance executive told the Wall Street Journal in February that the company expected to pay penalties to resolve U.S. investigations.
Persons: Changpeng Zhao, Binance, Zhao, Yi He, Yi, Noah Perlman, Morgan Stanley, Richard Teng, Teng, Elon Musk's, Cristiano Ronaldo, Tom Wilson, Hannah Lang, Marguerita Choy, Nick Zieminski Organizations: U.S . Securities, Exchange Commission, SEC, U.S . Commodity Futures Trading Commission, Binance, Reuters, Twitter, Lazio, Argentina national, of Nations, U.S, Justice, Wall Street, Thomson Locations: WASHINGTON, U.S, Shanghai, Tokyo, Malta, Cayman Islands, Canadian, China, United States, Italian, London, Washington
June 6 (Reuters) - It's a tense time for bitcoin investors. The capricious cryptocurrency's been uncommonly quiet over the past four weeks, bound in the range of $28,452 and $25,800. Bitcoin's volatility index is near 64, well below the 2023 peak of 116.5 touched in January, according to CryptoCompare. "Trading volatility, buying options in the absence of a price move, that's what people might do in this market." Market positioning indicates the maximum pain level for the June 2023 options expiry for bitcoin is at around $24,000, which could act as a support or resistance level, according to analysts at Bitfinex.
Persons: CryptoCompare, Noelle Acheson, Matthew Weller, Luuk Strijers, Strijers, Thomas Kralow, Medha Singh, Lisa Pauline Mattackal, Pravin Organizations: bitcoin, BULLS, Kralow, Pravin Char, Thomson, Reuters Locations: Bengaluru
June 5 (Reuters) - Cryptocurrencies and shares in crypto and blockchain-related companies tumbled on Monday after the U.S. securities regulator sued crypto exchange Binance, another blow to the industry. The SEC crackdown has prompted some crypto companies to increase compliance, spike products, and expand overseas, moves that some marketwatchers said would likely be accelerated by this latest action against the world's largest crypto exchange. In April, the SEC charged crypto exchange Bittrex Inc with operating an unregistered securities exchange, broker and clearing agency, and settled with Kraken in February for $30 million over the exchange's U.S. crypto staking service. Shares of Coinbase (COIN.O) were down 9.1% on the news of the SEC's charges against Binance. Both Coinbase and crypto exchange Gemini launched international exchanges for crypto derivatives in May.
Persons: Binance, Changpeng Zhao, Binance's cryptocurrency, Gary Gensler, marketwatchers, John Reed Stark, Kraken, Bittrex, James Angel, Gemini, Rajeev Bamra, Sinéad Carew, John McCrank, Manya Saini, Hannah Lang, Michelle Price, Leslie Adler, Lisa Shumaker Organizations: U.S . Securities, Exchange Commission, Reuters, SEC, Washington , D.C, Internet, Coinbase Global Inc, Georgetown University, Binance, Inc, Marathon, Mining, Moody’s Investors Service, Thomson Locations: Washington ,, U.S, New York, Bengaluru, Washington
The U.S. Commodity Futures Trading Commission approved Cboe Digital to be the first U.S.-regulated crypto exchange and clearinghouse platform to offer leveraged derivatives when the contracts launch in the second half. The margined contracts will let users trade crypto futures while putting less collateralized capital up front, with trades executed and cleared through an approved set of member futures commission merchants, Chicago-based Cboe said. Cboe Digital currently allows trading and clearing of bitcoin and ether futures on a fully collateralized basis, meaning users must provide the full amount of futures contracts upfront. Cboe Digital also supports the spot trading of bitcoin, bitcoin cash, ether, litecoin and USDC. On Oct. 20, 2021, Chicago-based Cboe announced its intention to buy crypto exchange and clearinghouse ErisX.
Persons: Cboe, John Palmer, Jane Street, FTX, John McCrank, Hannah Lang, David Gregorio Our Organizations: YORK, U.S . Commodity Futures Trading Commission, Cboe, Robinhood Markets, Interactive, Virtu, IG Group, CFTC, Thomson Locations: U.S, Chicago, Washington
German financial expert Gerd Kommer breaks down the biggest mistakes young people make with money. One, he said, is the belief that interest-bearing bank deposits will earn them a lot of money. Wealth accumulation through interest-bearing bank depositsBelieving that wealth can be built through interest-bearing bank deposits is wrong, Kommer said. Believing that capital-building life insurance policies are sensible wealth-building productsA capital-building life insurance policy is a form of life insurance where the policyholder pays regular premiums and, in return, receives a guaranteed sum at the end of the term. There is also the risk that the insurance company may encounter financial difficulties, endangering the guaranteed payout, Kommer added.
Persons: Gerd Kommer, , Kommer Organizations: Service, Gerd Kommer Invest GmbH Locations: Germany, South Africa, United Kingdom, London
CDS panel asked whether payment failure occurred for Casino
  + stars: | 2023-06-02 | by ( ) www.reuters.com   time to read: +1 min
June 2 (Reuters) - An investor has asked a panel that rules on credit default swaps (CDS) whether a "failure to pay" credit event has occurred for French retailer Casino (CASP.PA), which could trigger a payout on the derivatives used to insure against default. A CDDC meeting on that question, which could also lead to a payout on CDS, is scheduled for later on Friday. A number of circumstances can constitute a credit event that can trigger a payout on CDS, which insure against losses from exposure to corporate or sovereign debt. There were $428 million of net notional Casino CDS outstanding as of May 19, according to DTCC data. Credit rating agency Moody's said on Wednesday it had downgraded Casino to "CAA3" with a negative outlook which reflected "very high probability of default".
Persons: Casino, Moody's, Yoruk, Mark Potter Organizations: Casino, EMEA, CDS, Thomson
Crypto exchange Gemini to soon operate in the UAE
  + stars: | 2023-06-01 | by ( ) www.reuters.com   time to read: +1 min
June 1 (Reuters) - Gemini will "soon" start the process of buying a crypto license to operate in the United Arab Emirates, and the team has met stakeholders throughout the region to learn more about local regulatory requirements, the crypto exchange said late on Wednesday. Gemini, founded by cryptocurrency pioneers and identical twins Cameron and Tyler Winklevoss, is aiming for the "adoption of crypto globally across 20 countries." "By applying for a license, we will be taking another step towards making Gemini a truly global company," the exchange said in a blog post. Digital assets industry is recovering from several blow-ups last year, including the bankruptcy of Sam Bankman-Fried's crypto exchange FTX and companies are looking to expand their global footprint amid escalating tensions between the crypto sector and regulators in the United States. Gemini, earlier in May, also launched a derivatives platform for trading perpetual futures, outside the U.S. jurisdiction.
Persons: Cameron, Tyler Winklevoss, Sam Bankman, Mrinmay Dey, Nivedita Organizations: United Arab, Gemini, UAE . Digital, Thomson Locations: United Arab Emirates, UAE, Gulf, United States, Bengaluru
Treasury buyers live for the moment, unfortunately
  + stars: | 2023-06-01 | by ( Ben Winck | ) www.reuters.com   time to read: +4 min
The bill to suspend the so-called debt ceiling, approved by the House of Representatives on Wednesday, solves the most immediate threat to the government’s creditors. The Federal Reserve’s fight against inflation also stands to knock Treasury prices, while pushing up yields. Spending caps and other measures in the debt ceiling deal are projected to save $1.5 trillion over the next decade, the Congressional Budget Office said Tuesday. Treasury Secretary Janet Yellen warned on May 26 that the federal government would be unable to pay its bills on June 5. The U.S. House of Representatives voted 314-117 on May 31 to suspend the debt ceiling, a legislative cap on how much the Treasury can borrow that had been set at $31.4 trillion.
Persons: Goldman Sachs, That’s, Sam, Janet Yellen, Joe Biden’s, John Foley, Sharon Lam, Streisand Neto Organizations: Reuters, Treasury, Reuters Graphics Reuters, Refinitiv, Congressional, U.S . Congress, U.S . House, Senate, U.S, Treasury Department, Thomson Locations: Treasuries, U.S, Washington
Artificial intelligence is rapidly gaining momentum this year as it gets more advanced. Here are 15 buy-rated stocks from Goldman Sachs that investors can get exposure to now. Once a niche technology, artificial intelligence (AI) has moved firmly into the mainstream in 2023 and become too big to ignore, according to Goldman Sachs. Goldman Sachs15 AI stocks to add exposure to nowInvestors who are interested in profiting from the AI wave should consider the 15 stocks that were highlighted in Phani's note that have a buy rating from Goldman Sachs and are either directly advancing AI or are indirectly enabling it. Below are the 15 stocks tied to AI that Goldman Sachs is bullish on right now.
Persons: Goldman Sachs, Phani Organizations: Nvidia, Microsoft, Google, Companies, Investors
LONDON, May 31 (Reuters) - The European Commission will propose greater transparency in the trading of credit default swaps of eight top banks to mirror rules in U.S. markets, a European Union document seen by Reuters showed on Wednesday. So-called single name credit default swaps have come under regulatory scrutiny after the fall and state-backed rescue of Credit Suisse triggered high volatility on the CDS market for some systemic banks, Deutsche Bank in particular, on March 24. "One of the conclusions on the events of Friday, 24 March, was that single name CDS contracts are opaque and illiquid," the EU executive body said in a document for a meeting of EU states on Thursday. The Commission said it proposes to re-insert CDS on Santander, BNP Paribas, Credit Agricole, Deutsche Bank, ING Bank, Intesa Sanpaolo, Societe Generale and DZ Bank into the scope of derivatives transactions subject to post trade transparency. Incomplete and asymmetrical reporting of CDS contracts linked to systemically important banks causes insecurity in markets during shocks, the paper said.
Persons: Intesa, Huw Jones, Jon Boyle, Kirsten Donovan Organizations: European, Reuters, Suisse, Deutsche Bank, Santander, BNP, Credit Agricole, ING Bank, Societe Generale, DZ Bank, Thomson Locations: EU
UK regulator makes 'final call' to switch off Libor
  + stars: | 2023-05-31 | by ( Huw Jones | ) www.reuters.com   time to read: +2 min
The London Interbank Offered Rate (Libor) reflected the cost of lending between banks, using quotes from panels of banks in 35 variants across five currencies. "This is the last remaining Libor panel and its end marks another critical milestone in the transition away from LIBOR," the FCA said in its "final messages" on the rate. "Firms must continue to actively transition contracts that reference Libor to appropriate, robust reference rates, and we continue to expect firms to deliver demonstrable progress," the FCA said. Market participants were given permission to continue using dollar Libor in new contracts on a limited basis, but the FCA said on Wednesday this would end on July 1. The 1, 3 and 6-month dollar Libor rates only will be published in a "synthetic form" for legacy contracts from July 3 to end-September 2024.
Persons: DTCC, Huw Jones, Mark Potter Organizations: Authority, Federal Reserve, Thomson Locations: LIBOR
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