Tue, Oct 6, 2015
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

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 firms first annual study on buy-side swaps. "Everyone knows clearings coming but theres 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. Performance - Hedge fund moguls Einhorn, Loeb, Rosenstein lose money in September, Risky strategy sinks small hedge fund[more]

    Hedge fund moguls Einhorn, Loeb, Rosenstein lose money in September From Reuters.com: Billionaire stock pickers David Einhorn, Daniel Loeb and Barry Rosenstein on Wednesday told their wealthy investors they lost money in September as market turmoil inflicted more pain on some of America'

  2. Opalesque Exclusive: IRAs represent billions of untapped capital for hedge funds[more]

    Benedicte Gravrand, Opalesque Geneva: Retirement accounts might not be the first source that comes to mind for those looking to raise funds, but they may represent billions of untapped capital. Unlike traditional retirement accounts,

  3. Opalesque TV: One way to access market hedge funds in the EU under the AIFMD radar[more]

    Benedicte Gravrand, Opalesque Geneva: While the Cayman Islands, the US and Hong Kong await the pan-European marketing passport to be extended to alternative investment fund

  4. U.S. hedge funds prepare for worst finish this year since 2008[more]

    Komfie Manalo, Opalesque Asia: U.S.-focused hedge funds are preparing for their worst year since the 2008 global financial crisis, following a series of letdown including the market sell-off in August and the sell-off in healthcare and biotechnology sectors last month, reported

  5. Vilas’ equity long bias hedge fund generates market-beating results[more]

    Komfie Manalo, Opalesque Asia: The Vilas Fund, an equity long bias fund managed by Chicago, Illinois-based Vilas Capital Management, posted five-year annualized returns, net of fees, of 23.47% vs. 15.87% for the S&P 500 Index, including divid