Article: “No evidence” bank CDS used as sovereign shorting proxy

Article - Media, Publications

“No evidence” bank CDS used as sovereign shorting proxy

Christopher Whittall, 30 April 2013

LONDON, April 30 (IFR) – The European Union’s ban on short selling government debt using credit default swaps is pushing hedging or speculative activity into the bank CDS market, according to some market participants, but analysis from JP Morgan has poured cold water on these claims.

Sovereign CDS trading volumes have fallen off a cliff since the EU’s ban on naked or outright short positions came into force last November, with some arguing that trading is migrating to financial CDS, which are not covered by the rules. Continue reading “Article: “No evidence” bank CDS used as sovereign shorting proxy”

Article: EU ban on naked CDS short worries Asian investors

Article - Media, Publications

EU ban on naked CDS short worries Asian investors

Christopher Langner, Christopher Whittall, IFR, 23 October 2012

Some Asian fixed-income investors are grappling with how to hedge high-beta portfolios on the eve of the implementation of a ban on naked shorting of European sovereign CDS.

Until March this year, using European CDS bets to offset potential losses from a drop in prices of Asian high-yield bonds had become a fairly popular strategy. However, since regulators in Europe said they were banning the practice from November 1, many of those bets were unwound. Continue reading “Article: EU ban on naked CDS short worries Asian investors”

Article: “Naked” ban deals further blow to CDS

Article - Media, Publications

“Naked” ban deals further blow to CDS

Christopher Whittall, 04 April 2012

A ban on “naked” sovereign credit defaults swaps trading will be stricter and more far-reaching than market participants had previously thought and could severely damage market liquidity, analysts have warned.

The European Union recently published the final version of new regulation prohibiting participants from using CDS to take outright short positions in sovereigns. The regulation developed in the aftermath of various European politicians blaming sovereign CDS for peripheral bond yields widening during the euro zone crisis, despite a lack of empirical evidence to support these claims.

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