INTL FCStone Markets launches new OTC products
17 September 2018 Chicago
Image: Shutterstock
INTL FCStone Markets has expanded its over-the-counter (OTC) interest rates swap dealing capabilities to include cap and floor options on the London Interbank Offered Rate (Libor) with tenors out to 10 years.
The launch expands and enhances the company's existing OTC foreign exchange and interest rates trading and advisory offerings, creating a comprehensive interest rate hedging solution for corporate hedgers, real estate investors, and agribusinesses.
INTL FCStone added by way of further explanation that cap and floor options enable corporate hedgers, real estate investors, and agribusinesses to set rates while minimising and simplifying the impact they have on a balance sheet.
As with interest rate swaps, these long-term interest rate options can be purchased for any notional amount and will have multiple settlements based on Libor.
However, unlike swaps, which have exposure to both sides of the market, an interest rate option trades with a single premium and strike price. INTL FCStone said the new products mean it is able to offer strategies that can be used to protect against Libor volatility.
Eric Donovan, managing director of OTC FX and interest rates at INTL FCStone Markets, said: "The launch of these new products continues to demonstrate our leadership in the interest rates derivatives business, as providing straightforward solutions and transparent pricing directly to hedgers eliminates the need for potentially costly intermediaries."
"Non-bank lenders such as insurance companies and pension funds have increased the need for a direct third-party provider of interest rate hedging tools,” he continued.
“We have a view that rates will continue rising, but you have to be prepared for potential volatility.”
He concluded: “Options allow you to make smarter decisions on market risk, as well as in how you access capital. With more choices than ever when it comes to structuring debt, the ability to use swaps, caps and floors to your advantage can make a major difference in the total cost of funding."
The launch expands and enhances the company's existing OTC foreign exchange and interest rates trading and advisory offerings, creating a comprehensive interest rate hedging solution for corporate hedgers, real estate investors, and agribusinesses.
INTL FCStone added by way of further explanation that cap and floor options enable corporate hedgers, real estate investors, and agribusinesses to set rates while minimising and simplifying the impact they have on a balance sheet.
As with interest rate swaps, these long-term interest rate options can be purchased for any notional amount and will have multiple settlements based on Libor.
However, unlike swaps, which have exposure to both sides of the market, an interest rate option trades with a single premium and strike price. INTL FCStone said the new products mean it is able to offer strategies that can be used to protect against Libor volatility.
Eric Donovan, managing director of OTC FX and interest rates at INTL FCStone Markets, said: "The launch of these new products continues to demonstrate our leadership in the interest rates derivatives business, as providing straightforward solutions and transparent pricing directly to hedgers eliminates the need for potentially costly intermediaries."
"Non-bank lenders such as insurance companies and pension funds have increased the need for a direct third-party provider of interest rate hedging tools,” he continued.
“We have a view that rates will continue rising, but you have to be prepared for potential volatility.”
He concluded: “Options allow you to make smarter decisions on market risk, as well as in how you access capital. With more choices than ever when it comes to structuring debt, the ability to use swaps, caps and floors to your advantage can make a major difference in the total cost of funding."
NO FEE, NO RISK
100% ON RETURNS If you invest in only one securities finance news source this year, make sure it is your free subscription to Securities Finance Times
100% ON RETURNS If you invest in only one securities finance news source this year, make sure it is your free subscription to Securities Finance Times
