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The end of the world, or an artificial crisis?
Bimodal tariff threat leaves investors grappling with uncertainty
Trump tariffs turn swap spreads into ‘pain trade’
Hedge funds bet big on Treasuries to outperform swaps. The opposite happened.
Deutsche’s Americas CRO on risk-taking in choppy markets
Risk managers must stay alive to sudden market moves – in either direction. But volatility can bring opportunity, says Americas CRO, Jonathan Hummel
Risk data
OCC’s equity-based IM hit record 91% heading into 2025
CCP’s margin base leant further into equities ahead of market turmoil
Tariff turbulence piles pressure on banks’ VAR models
Backtesting breaches start to mount, but too early to tell if regulatory intervention needed
Here’s what investors said about trade wars in January
A global trade war ranked third and a stock market crash fourth in Risk.net’s list of top investment risks, earlier this year. Some described how US tariffs would lead to “bimodal” outcomes – slowing growth on one hand, but with the chance of positive effects if targeted countries capitulated. Participants also worried about stock market panic in the face of new risks. “Investor confidence is going to evaporate,” predicted one.
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Market turmoil
Hedging playbook goes ‘out the window’ as Trump tariffs slam markets
Dispersion, put spreads and VKOs paid off as stocks plunged, but outlook remains wildly uncertain
Tariffs volatility prompts rush to re-hedge EUR/USD options books
Banks left scrambling to buy vol as spot surged beyond expectations
Credit markets brace for Trump tariffs fallout
Traders have largely shrugged off the threat of global trade wars, but worries remain about economic weakness
Hedge funds flock to hybrids to trade macro uncertainty
Firms repurpose structure made popular by Trump trades last year
Risk Quantum
Data insights, delivered daily
Risk Quantum tracks thousands of data points across hundreds of metrics from organisations that represent a cross-section of the financial system. Published daily, articles are short and broken into chunks – the facts, the context and a brief commentary – and use data visualisations to get each story across.
OCC’s equity-based IM hit record 91% heading into 2025
CCP’s margin base leant further into equities ahead of market turmoil
Counterparty Radar
Matchmaking and benchmarking for OTC derivatives
Counterparty Radar is based on position data from around 20,000 US mutual funds and ETFs, rolled up to the manager level – it shows the OTC derivatives they have on their books, and who they traded them with, providing unique insights into an important market segment. More info
BlackRock bucks trend in shrinking IRS market for Ucits
Counterparty Radar: Pimco boosts pay-fixed book by $27.5 billion in H1 2024
Bank regulation
Can Europe’s FRTB refurb bring banks back to Club IMA?
Softening the NMRF regime permanently might have the most impact, but the output floor still hurts
Trading desks want regulators to face down the NMRF monster
Rule-makers in Australia and the European Union are open to changes to the unpopular FRTB test
FRTB may bite harder for Europe’s CVA modellers
Farther reach of advanced approach and lighter load on total requirements mean limited takeaways from Canada and Japan’s implementation
UBS takes standardised approach for FRTB – for now
Swiss bank is one of the largest to drop internal models; sources say it could switch later
For US Treasury algos, dealers get with the program
Four banks now offer execution algos on Bloomberg, with plans to go further, faster
Clearing
No need for repo clearing ‘cannon’ in Europe, says industry
Observers question rationale for a clearing mandate, calling for clearer incentives
NSCC liquidity shortfalls raise T+1 concerns
Lagging FX settlement processes could become a problem for clearing houses
Basis traders mull UST self-clearing as response to SEC mandate
Inter-affiliate exemption requested by hedge funds could ease shortage of clearing capacity
CCP models vulnerable to Trump risk
Volatility of ‘will he, won’t he’ tariff strategy could confound clearing house risk models
Op risk benchmarking
Our new research service compares op risk practices at financial institutions – from staffing to AI safeguards, key controls to board reporting packs.
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