Fri, Feb 24, 2017
A A A
Welcome Guest
Free Trial RSS
Get FREE trial access to our award winning publications
Alternative Market Briefing

Buy-side firms threaten to stop using swaps over fees - Tabb Group

Wednesday, June 13, 2012

amb
Will Rhode
Bailey McCann, Opalesque, New York: Investors and firms are entering the era of transparent, cleared swaps. However, some firms are threatening to stop using swaps as fees have risen to cover the costs of clearing these activities. The capital requirements for using swaps may also be difficult for these firms to maintain, according to a new report from Tabb Group.

The industry will need $1.6tn to comply with new rules, requiring that margin to be deposited with central clearing counterparties (CCP). As firms start to do the math on finding this capital and still more to cover fees, many are finding it hard to justify the cost of swaps. Dealer fees have also increased as dealers sense a new market share opportunity.

"With a dip in liquidity a near certainty, waiting to see who blinks first is never comfortable," says Will Rhode, a TABB principal, director of fixed income research and author of "US Buy-Side Swaps Trading 2012: I Can See Clearing Now," the research firm�s first annual study on buy-side swaps. "Everyone knows clearing�s coming but there�s been little movement, even as the deadlines bear down. These are high-stakes games."��

Report data shows that many firms are taking a wait and see approach to implementation. "Futures will be a beneficiary, and the buy-side will have to learn how to handle basis risk. The mor......................

To view our full article Click here

Today's Exclusives Today's Other Voices More Exclusives
Previous Opalesque Exclusives                                  
More Other Voices
Previous Other Voices                                               
Access Alternative Market Briefing

 



  • Top Forwarded
  • Top Tracked
  • Top Searched
  1. People - Kuwait wealth fund head Al Saad said to step down after 14 years[more]

    From Bloomberg.com: Kuwait Investment Authority is set to name Farouk Bastaki as managing director, replacing Bader Al Saad who ran the world's fifth-largest sovereign wealth fund for 14 years, a person familiar with the matter said. The KIA, as the fund is known, is finalizing the appointment, said

  2. Investing - Hedge funds loading up on this dividend stock, The biggest hedge funds have been piling into bank stocks[more]

    Hedge funds loading up on this dividend stock From Incomeinvestors.com: Hedge funds are backing up the truck on Cameco Corp stock. Billionaire Jim Simons owns 389,000 shares. Other Wall Street titans - including Ray Dalio, Ken Griffin, and Chuck Royce - have been quietly building positio

  3. Legal - Fannie, Freddie shares dive after U.S. appeals court ruling[more]

    From Reuters.com: Shares of Fannie Mae and Freddie Mac tumbled more than 30 percent on Tuesday after a U.S. appeals court shut down efforts by hedge funds and other investors to pursue numerous legal claims accusing the U.S. government of seizing their profits following taxpayer bailouts. By a

  4. Institutional investors plan to raise allocations to alternative assets in 2017[more]

    Komfie Manalo, Opalesque Asia: A survey by Context Summits Miami showed that nearly 72% of institutional investors and family offices plan to raise their allocations to alternative asset managers this year, suggesting continued strong demand for the industry. "As many large, brand name f

  5. Comment - Mortgages, mergers and hedge fund fees, Fairholme's Berkowitz responds to court ruling against hedge fund suits of Fannie Mae[more]

    Mortgages, mergers and hedge fund fees From Bloomberg.com: Yesterday the U.S. Court of Appeals for the D.C. Circuit handed down an odd decision in a lawsuit over the government's nationalization of Fannie Mae and Freddie Mac. The key issue is what's called the "Third Amendment," the 2012