As of Friday, only one company had stepped forward to apply to be a swaps-execution facility: Bloomberg, the firm that sued the Commodity Futures Trading Commission to alter its SEF collateral framework. The CFTC is aiming for Dec. 9 as the date that such facilities will begin operating.
The London Stock Exchange says that starting in the fourth quarter, bond-trading platform MTS Europe will let institutional investors trade interest-rate swaps, which are the biggest part of the $633 trillion over-the-counter derivatives market. Societe General, UBS, HSBC Holdings and other major banks have signed on to support the platform, the LSE says.
One Equity Partners will raise funds from outside sources for its next fund as JPMorgan Chase spins the group out into its own entity, according to a bank announcement. The move is part of JPMorgan's plan to simplify its structure and focus on its client business, a source said.
The sovereign debt crisis has raised concerns among derivatives market participants about the possible correlation with collateral posted by local banks denominated in domestic currencies. Dealers say counterparties commonly post government debt issued by their own country in collateral agreements. Michael Clarke, UBS' global head of collateral management and client valuations, said dealers carefully structure collateral agreements to address the risk.
The largest pension funds in the world either reduced or left unchanged their stock holdings during the steepest rally in decades. "Given the storm in financial markets that we have seen, the name of the game is risk management," said Dirk Popielas, head of JPMorgan Chase's Pension Advisory Group in Germany. "The majority of pension funds have not finished taking risk off their portfolios. Some have not even started."