• Rise in queries from non-credit managers trading Greek stocks or swaps

​While credit traders watch out for decisions from the ISDA Credit Derivatives Determinations Committee, we are seeing a spike in queries from non-credit traders. Some of these queries include assessing potential FX issues if Greek stocks are denominated prior to closing out of a long or short position, how this can work to the advantage or disadvantage of the PM and, where there is potential negative exposure, how this can be managed.

  • Margin requirements for non-cleared derivatives in Europe

There is an increased focus on forthcoming margin methodology for non-cleared derivatives in Europe, specifically weighing the implications of standardised percentages established by regulation vs dealer-driven initial margin models. As these might produce very different margin numbers, issues being considered are the liquidity and leverage profile of a particular portfolio, and the relative importance of margin predictability and margin optimisation.

  • Euro-denominated exchange bonds issued by Argentina

​PMs will of course be familiar with the complexity caused by the payment of sums by Argentina to the indenture trustee in June 2014. The argument that has ensued is what should be done with the money. Hedge fund managers with interests in English-law governed eurodenominated exchange bonds issued by Argentina have now obtained an interim declaration that the sum of €225m transferred by Argentina to the trustee are held subject to an English law trust (as would be any other funds paid to it in attempted satisfaction of the Republic’s payment obligations under the Euro debt securities). This provides helpful clarification to the Euro-debt market.