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Talking Point

In Talking Point we present our take on current affairs and developments in the worlds of business, financial markets and politics.

6 Documents
November 20, 2019
Analyst:
1
Trading volumes in foreign exchange instruments have increased significantly across the board in 2019 compared to the last global FX survey three years ago. Surprisingly, the pivotal role of London as the main trading location was reconfirmed, despite fears around the impact of Brexit. Yet a general move to central clearing might challenge this after the UK leaves the EU. [more]
December 19, 2016
Region:
Analyst:
2
Regulatory reforms have already reshaped derivatives trading in Europe. The upcoming potential shift towards central clearing for some derivatives classes and the availability of CCPs globally will likely result in some fragmentation in derivatives trading. FX derivatives markets are providing first insights into this: Asia already makes up 26% of global FX derivative trading volumes in 2016. As the Asian exposures of European firms and Asian financial sector grow, hedging currency risks in local Asian markets seem to be becoming common practice. This may fuel the ongoing decentralisation of global derivatives trading and give rise to higher costs for market participants. [more]
June 14, 2016
Region:
Analyst:
3
Since the ECB’s announcement to include investment-grade corporate bonds in its QE programme (CSPP), corporate bond issuance has surged in the euro area. However, even though this is a boon for issuers, benefits for the real economy may be quite limited. The value added for SMEs is hard to see, and funds raised will most likely be used predominantly for refinancing of existing debt and for stock buybacks instead of new investments. Moreover, potential side effects of the corporate bond programme such as inefficiencies in the pricing of risks and deterioration in liquidity could increase the distortions in bond markets. [more]
January 27, 2015
Region:
Analyst:
5
SMEs' access to finance problem constitutes a considerable impediment to the recovery in many European countries, therefore prompting calls for policy action. Among the options to spur bank lending to SMEs, covered bonds backed by SME loans are currently discussed as a potential remedy. Despite SME-covered bonds offering lucrative features for investors and issuers alike, there are significant constraints that may limit their potential to revitalise bank lending to SMEs for the time being. [more]
November 11, 2013
Analyst:
6
Among the agreed derivatives market reforms, the central clearing of OTC derivatives contracts has a pivotal role that changes the existing risk management and collateralisation practices tremendously. Nevertheless, to date, there is little empirical evidence on the impact of the new market infrastructure on CDS spreads. Controlling for a number of factors, our results indicate that the costs of central clearing seem to be passed on to end-users in the form of increased CDS spreads. [more]
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