Let’s revisit single stock futures, says Finadium 14 May 2013Concord Reporter: Georgina Lavers
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Alternatives for financing positions are getting a more receptive hearing than ever before, declared Finadium in its May report.
In the report, the securities lending consultant makes the case for single stock futures (SSFs), and considers reasons for prime brokers and beneficial owners to evaluate these equity-linked derivatives as a revenue opportunity, as well as “the resistance that SSFs still produce in the prime brokerage market”.
The mechanics of SSFs to help determine the role of this product in the market for prime brokers and beneficial owners in securities lending were also discussed.
Though SSFs generally operate by regular rules of futures markets and are widely traded, especially in European markets, in the US these products have been the subject of much debate and wrangling over regulatory oversight between the SEC and CFTC, said Finadium.
“At the same time, centrally cleared SSFs fit a key requirement as banks move towards compliance with Basel III and other regulations. For the first time in many years, the future looks bright for the US's only exchange, OneChicago, and only very recently are we hearing major hedge funds and other asset managers seriously consider these listed derivatives as opposed to conducting a trade on equity markets.”
The report also looks at the fortunes and workings of OneChicago in light of new regulatory pressures on bank balance sheets.
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