The US Commodities Futures Trading Commission has fined interdealer broker Tullett Prebon $13 million for false or misleading statements made to clients by voice brokers concerning US dollar interest rate swaps transactions. The CFTC says Tullett Prebon failed to supervise its interest rate swaps trading desk's voice brokers or take corrective action when the misconduct was uncovered.
The derivatives market may or may not be overreacting to how the attack on the Saudi Arabian oil supply will disrupt oil prices, depending on which energy experts are asked. Analysts from Argus Media Group, Tradition Energy and S&P Global Platts are expressing mixed views over whether the market will see high derivatives volumes in the coming days, or whether cooler heads will prevail.
The International Swaps and Derivatives Association plans to launch a final consultation this month on moving swaps contracts off Libor and onto those referencing alternative risk-free rates. ISDA will include the proposed methodology for inserting fallback language into swaps contracts.
The US-China trade war has created challenges for brokers and clearing firms that participate in the agricultural futures markets. But the international trade tensions have also offered opportunities to create a handful of new products and more sophisticated risk management.
Bloomberg's Multi-Asset Risk System now includes the latest value adjustments, capturing complex credit and counterparty risk metrics. "These data-heavy, complicated tasks have made it necessary for participants to call on technology that can provide comprehensive analytics and a range of market data to manage such compliance processes," according to Bloomberg.
A new survey by Accenture finds financial firms and banks expect LIBOR to continue beyond its planned 2021 phaseout. "Regulators are pushing so hard for this consistent adoption at the end of 2021 because everyone sees the risk that there could be market disruption if they don't," said Samantha Regan of Accenture.
The People's Bank of China is changing its approach to benchmark interest rates in a bid to become more responsive. China is seeking to grow small business lending by 30%.
The inversion of the yield curve for treasuries in August triggered questions about a looming US recession give the five-decade record of such an inversion portending economic contraction. "Although the yield curve has historically been predictive of a forthcoming recession, global current events around the world may be the best indicator of when we might actually enter a recession as well as how long it could last," writes Scott Bauer.
European Central Bank has signaled ongoing quantitative easing and appears unlikely to raise interest rates for some time. The ECB's actions will tamp down volatility and support credit, according to Pimco.
Morgan Stanley is using machine learning to sift through massive amounts of paperwork that accompany state and local bond issues. The machines are programmed to detect risk of default.