In a notice sent to member firms on Tuesday, Liffe declared that RV Capital, a company founded in January 2006 by Jerome Roussel and Duncan Valentine to make markets in a range of exchange-traded options, was “a defaulter for the purposes of enabling action to be taken under Section 9 of Book II of the Rules (Default Rules)”.
It added: “The Exchange and LCH.Clearnet Ltd are in close contact with RV’s clearing member, who has confirmed that it will continue to manage the relevant open positions on the market.” I’m told that RV’s clearer was Fimat.
There was a modest flight of quality as the news filtered out; my sources in the futures market seemed unfazed, although I’m not so sure how sanguine they will have been around at Fimat. That will all depend on what positions they are left holding.
It could be argued that the lack of panic is further proof of how well the centrally cleared model works. However, taking the contrarian view, it could be perhaps claimed that only this model will allow such a small firm to play such a big role in the market.