The difference between prices of longer-dated interest rate swaps linked to the Secured Overnight Financing Rate and the effective federal funds rate has tripled since June. Experts say the difference can be attributed to participants positioning for an expected SOFR-EFFR basis spike ahead of the discounting switch at clearinghouses coming in October.
After seeing a €200 million loss during Q2, Societe Generale plans to sell some legacy structured products books to rival firms. But Societe Generale deputy chief Severin Cabannes noted that the "structured products portfolios are not easy to sell because there are not so many counterparts in a position to buy it."
The Monetary Authority of Singapore hopes to spur hedging in Singapore Overnight Rate Average derivatives by issuing SORA-linked floating rate notes this month. MAS deputy managing director Jacqueline Loh says the move will "complement the recently announced industry proposal to shift to a SORA-centered Singapore dollar interest rate market by enhancing the robustness of SORA and supporting the development of deep, liquid and efficient SORA markets."
The Australian Securities Exchange's four-week CHESS replacement timeline consultation found that 91% of participants say they will be ready for the proposed April 2022 go-live date. ASX managing director and CEO Dominic Stevens said, "we are excited by the fact we are close to 100% complete on customer functionality and set to move into industry-wide testing in the coming months."
The Securities and Exchange Commission is looking to develop a blockchain forensics tool to monitor smart contract code and is allowing firms to submit proposals until August 13. The SEC wants the software to also include security and vulnerability analysis capabilities.
In 2020, dozens of large US companies have filed for bankruptcy protection, and professor Edward Altman, creator of the Z-score, says many more are coming as companies continue to take on debt. "Now, seems like companies again are exploiting what seems to be a crazy rebound," said Altman.
Investors are showing sustained interest in Bitcoin as a store of values similar to gold in the current environment of low-to-negative interest rates and ongoing volatility in equity markets. "Bitcoin is gaining traction as the digital version of gold," writes Mike McGlone for Bloomberg.
The first loss ever reported by Banco Santander SA illustrates how the economic downturn in Europe is hitting banks. Barclays Plc saw a steep profit decline, while Deutsche Bank AG reported lower revenue.
Companies dealing with the challenges of the ongoing coronavirus pandemic are increasingly faced with credit downgrades that move them from a investment-grade to the non-investment-grade category. So far, most companies have been able to maintain a BBB rating.