Dealers turn to mid-cap and EM deal-contingent trades
Premiums of more than 25% are attractive to banks battling low vol and increasing competition
With falling foreign exchange volatility and increased competition eating into lucrative deal-contingent hedge revenues, dealers are increasingly looking at medium-sized and emerging market transactions.
The hedges give purchasers protection against FX movements between the announcement of an M&A deal and its completion. Increased competition in this space has seen the price of the hedges slide from 25% of the cost of an equivalent option in 2015 down to as low as 15%.
As a result, dealers are
Only users who have a paid subscription or are part of a corporate subscription are able to print or copy content.
To access these options, along with all other subscription benefits, please contact customer services - www.fx-markets.com/static/contact-us, or view our subscription options here: https://subscriptions.fx-markets.com/subscribe
You are currently unable to print this content. Please contact customer services - www.fx-markets.com/static/contact-us to find out more.
You are currently unable to copy this content. Please contact info@fx-markets.com to find out more.
Copyright Infopro Digital Limited. All rights reserved.
As outlined in our terms and conditions, https://www.infopro-digital.com/terms-and-conditions/subscriptions/ (point 2.4), printing is limited to a single copy.
If you would like to purchase additional rights please email info@fx-markets.com
Copyright Infopro Digital Limited. All rights reserved.
You may share this content using our article tools. As outlined in our terms and conditions, https://www.infopro-digital.com/terms-and-conditions/subscriptions/ (clause 2.4), an Authorised User may only make one copy of the materials for their own personal use. You must also comply with the restrictions in clause 2.5.
If you would like to purchase additional rights please email info@fx-markets.com
More on Trading
Corporates hamstrung in response to FX volatility
Restrictions around hedging programmes leave US firms struggling to adapt to dollar weakness
Hedge funds flock to hybrids to trade macro uncertainty
Firms repurpose structure made popular by Trump trades last year
FX traders revel in March Madness
Chaotic Trump policies finally bring diversity to flows – to the delight of market-makers
Former Nomura FX co-head joins JB Drax Honoré
Kevin Connors joins agency broker as head of business and client development
FX Spot+: connecting OTC traders to FX futures liquidity
CME Group’s new all-to-all spot FX marketplace translates futures liquidity into spot terms, expanding liquidity access to OTC traders
Asia hours surge complicates FX options market-making
Late tariff announcements in US trigger hedging headaches during less-liquid Asia sessions
Automated market-making tested by intraday FX vol
Price gaps in spot FX markets could be exacerbated by algos trading on headline risk
FX Spot+: expanding liquidity access to OTC traders
The rationale behind the launch of FX Spot+ and what the market can expect from CME Group in the future
