ISDA made a summary of a recent BIS paper on the OTC market. One highlight which is astounding is that the average daily turnover of OTC rates business has risen from$1.7trn per day in 2007 (pre-crisis) to $6.5trn per day. This suggests that the market reforms for capital, clearing and margining must be making OTC products ever more popular.
This paper highlights changes in the size and structure of global over-the-counter interest rate derivatives (IRD) markets from 2007 to 2019, using data from the Bank for International Settlements (BIS) Triennial Central Bank Surveys.
Investors are being left in the dark as to the huge additional costs their asset managers are incurring to transact highly complicated derivatives. OpenGamma research shows that transaction costs incurred when trading FX Options can be misrepresented to investors by as much as 400%. Transaction costs are the difference between the price of a trade an asset manager decides to buy […]
We have now had six SOFR swap trades hit the SDRs. Both Basis vs Fed Funds and Outright OIS has traded. All trades have been $50m and one year maturity. It looks like they were all cleared at LCH. The first swap was done on the TP-ICAP SEF. SOFR Everything you need to know about […]
Much like the SEF mandate in the US, following MIFID II certain OTC products must now trade on an electronic platform, for which the PDF below is the list. Products outside this list can still trade directly by other means.
The transatlantic trading platform cousins have officially been recognised as twins, on 5 November the European Commission announced its long-promised equivalence decision in respect of U.S. swap execution facilities. The CFTC plans to reciprocate by exempting MTFs and OTFs from U.S. registration requirements. The mutual recognition comes just in time before the 3 January 2018 […]
I wrote this article before the 2015 UK General Election but Channel 4 asked me to keep it under wraps so not to give away what I was working on. Now that my documentary on LOBO borrowing has been broadcast, the article provides a broader perspective. The premise is that at the local government level, there exists data that allows us to test the link between political complexion and financial competence in a simple way.
The consultation below is the first stage of moving Europe towards having the equivalent of the US SEFs, under MiFIR. It is likely that some of the products subject to the EMIR Clearing Obligaiton will also become subject to the Trading Obligation too. Anecdotally from a conference last week, the buy-side love SEFs, as they give them live prices they can execute at without any further phone calling or price discovery, making the trading process far more efficient.