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The problems in the SIV sector are not only the result of funding and mark-to-market distress, but also because of sloppy structuring in the first place

The CME is going to make its American-style weekly FX options on euro, yen, sterling, Swiss franc, Canadian dollar and Australian dollar available on its Globex trading platform from Monday. “We see increasing demand from our global customer base to provide further trading efficiencies in these products so we will continue to serve the global FX market by expanding electronic access to our markets, adding new options trading functionality and developing innovative new products,” says Derek Sammann, managing director, CME Group FX products.

Word reaches me that my old mucker Kelvin Jouhar, head of FX trading at HBOS, is about to take part in a car rally from London to Rimini with his daughter Vicki as co-driver. Now Kelvin has always been a bit of a petrol head, so I called him to ask which exotic motor he’d be rolling out for the arduous trip, which will see him drive over legendary alpine roads such as Grimsel, Furka and Gottardo passes.

The latest quarterly review published this week by the Bank for International Settlements in Basle featured an examination of carry trades (http://www.bis.org/publ/qtrpdf/r_qt0709.htm). “Low exchange rate volatility and persistent interest rate differentials have underpinned significant cross-currency positioning in recent years. These positions have often taken the form of currency carry trades, or leveraged cross-currency trading strategies....The effect of carry trade activity on exchange rates is typically asymmetric, and can be significant. The build-up of these positions generally contributes to a steady strengthening of target currencies (associated with high interest rates) and a weakening of funding currencies....when changes in interest rate expectations or volatility lead to a sudden unwinding of carry trades, there is a tendency for target currencies to depreciate and funding currencies to appreciate sharply,” BIS writes.

The BIS report’s timing is nice, coming just after the volatility seen in August, much of which has stemmed from the unwinding of carry trades. My attention was drawn to one comment made by Patrick Bartle, global head of foreign exchange trading at ABN Amro in an article that appeared on Dow Jones Newswires.

While the Fed is focusing on solving the credit squeeze, any target rate cut this month will be to avoid a recession resulting from the bursting of the housing bubble.

Shanghai Daily

The credit crunch has one firm lesson for lawyers: investors need better advice on structured finance.

Publication: South China Morning Post - G-China

The emerging global asset class • Anatomy of a deal • Maturity brings sophistication • Start at the exit • Credit rules • New markets, proven approaches • Five years leading from the front

In a landmark decision, the Federal Court of Australia has held that the law will enable an investment bank to contract out of, or modify, any fiduciary obligations owed to a client.

For several months I’ve been receiving emails from contacts asking me to join their network on LinkedIn. Perhaps it’s a sign of age, but I really didn’t see the point.