In a discussion with a colleague about how much was going on in the world I was reminded of Sir Peter Blake. Sir Peter led Team New Zealand to successive victories in the America’s Cup yacht competition and the key to this success was that he focused the team on one question, which they asked about everything that they did. The question was simply this: “Will it make the boat go faster?”

So why is CurveGlobal going faster?

With record volumes and open interest we’ve clearly got the wind behind us. But what’s driving uptake and volumes? The transition from LIBOR to SONIA futures is definitely a major factor, as is the fact that we have significant liquidity – and more importantly banks and funds trading – in the CurveGlobal product. Of special interest is the inter-commodity spread (ICS), which allows participants to trade the LIBOR and SONIA leg with no legging risk. This is appealing to an increasingly wide group of clients. 

LCH, our clearing partner, goes live on 19 November with the latest version of portfolio margining. Already approved, this will allow you to margin LIBOR swaps, OIS/SOFR swaps, LIBOR futures and SONIA futures into one risk pool. Go LCH! Given the growing volume of OIS swaps and developing term structure, the potential ability to margin futures with LIBOR and OIS swaps is clearly of interest. Ian shows some great examples of the numbers in his Trade Concept.     

The LCH release also includes long-dated bond futures, and here the eliminated and reduced margin can be very significant, as we also show below.

Much of the world is focused on Brexit. Following the minutiae is enough to have anyone reaching for an aspirin – and no doubt it seems so easy from the sidelines for the folk that are negotiating the terms. My only comment is that it’s often much more difficult and complex than the commentariat would acknowledge. What we can say for certain is that CurveGlobal is and will be a viable and compelling alternative. Our products are traded on a UK-based RIE and cleared at LCH. 

If you’re not located in the EU27 you have two options:

Option 1 – continue to trade on shore in EU27, at a local European vertical exchange silo, and risk EU rule changes, Direct Market Access constraints (DMA), uncertainty, and potential transaction taxes.

Or

Option 2 – trade offshore in an open market and clear at a diversified clearing house with significant global memberships. 

It’s not surprising that regardless of the potential range of outcomes people are valuing the certainty of option 2 – and taking onboard the benefits of CurveGlobal.

It’s just left for me to say thanks to all those who are trading, offering advice and supporting us. We are getting ever closer to becoming a meaningful competitor, bringing great benefits to the whole market in terms of true competition. 

Thanks,
Andy Ross
aross@curveglobal.com

CurveGlobal 2nd Anniversary Video

Last month CurveGlobal celebrated its second anniversary. Watch the team reflect on the remarkable progress we’ve made – thanks to your support. Click on the image below or here to view the video on our website.
 

Trade Concept

LCH Portfolio Margin opportunities with CurveGlobal Futures

By Ian Murphy

On 19 November 2018, LCH will widen portfolio margining to include the CurveGlobal® Three month SONIA Future and the four bond futures, Gilt, Bund, Bobl and Schatz. This will mean all CurveGlobal products are now available for potential portfolio margining, along with OTC positions held within LCH SwapClear, through LCH Spider.

This trade concept highlights three trading examples and the potential change in Initial Margin requirement. The last trade example combines all three trades into a single portfolio.

Portfolio Margin Reduction Benefits

• Significant potential to reduce Initial Margin requirements when Listed and OTC positions are combined at LCH
• Opportunity to eliminate Initial Margin requirement at competing CCPs
• Potentially lower default fund contributions and capital requirements for the Clearing Bank holding their own and client positions

LCH Spider is an automated tool that analyses your listed interest rates portfolio to find trades that are eligible to offset against correlated positions in your OTC interest rates portfolio.

LCH Listed Rates Service 
LCH Spider

Please check with your Clearing Member or LCH to see how these changes can benefit your trading and hedging. 

Examples provided for illustrative non-reliance purposes only, potential benefits indicated are approximate and may not be realised. Data is 20 August 2018.

All initial margin levels for aggregate positions and portfolio positions use LCH Smart.

Monthly Volumes and Open Interest

Have Your Say

Does the market need a term SONIA future? Let us know.

Team Spotlight 60 Seconds with...

Sherrie Payne, Executive Assistant at CurveGlobal

1. What are you listening to/reading these days?

I’m reading Evolve Your Brain by Dr Joe Dispenza. As a qualified hypnotherapist I have a fascination with how the mind works. But what is learnt and what have we inherited? Can you teach old dogs new tricks? It’s not the lightest of reads and I find myself staring at diagrams of brains and neural pathways with glazed eyes some mornings! But it is opening my mind (literally) and pushes the boundaries of what we are told are our physical and mental limits – and I like that.  

2. What is the one thing you can’t live without?

My little girl. She is phenomenal and I am truly blessed to be her mummy. I couldn’t live without her – even when she’s driving me absolutely nuts!

3. If you could invite any four dinner guests past or present who would you choose?

That's a tough one. Dr Wayne Dyer for a deep and meaningful, enlightening chat; Michael McIntyre for the laughs; Melissa Tiers, an amazing hypnotherapist; and Milton Erickson, a psychologist and one of the founders of clinical hypnotherapy.
 
4. You can do any job for just one day, what would it be?

I’d love to work at the orangutan school in Borneo, so I could feed and cuddle the babies!

5. Ten years ago, where did you think you would be now?

Pretty much where I am now – happy and content with my day to day life. 

Press Articles of Note (subscription content)

SEC RULES NYSE AND NASDAQ DID NOT JUSTIFY DATA FEE INCREASES
FT.COM

LIBOR TO BECOME THIRD-COUNTRY BENCHMARK UNDER NO-DEAL BREXIT
RISK.NET

STUCK IN TRAFFIC: EU TURF WAR HOLDS UP CCP RESOLUTION RULES
RISK.NET

IBA LAUNCHES TERM RISK-FREE RATES
RISK.NET

BANK AND CITY URGE EU TO TACKLE BREXIT DERIVATIVES UNCERTAINTY
FT.COM

BREXIT: LISTED DERIVATIVES FACE OTC MUTATION
RISK.NET