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Spring Cleaning

13 June 2014 by HCM

New rules regarding capital requirements are gradually sinking in with investment banks, and we have had a series of announcements made since the beginning of the year regarding institutions getting rid of activities and their associated positions in non-core areas. Derivatives have been a particular focus, and credit derivatives have seen such “cleaning” taking place as well. Most of these transactions are done in a secretive way and the general population generally does not see them. With transactions reporting rules, they are still retrospectively obvious for all to see, as this kind of portfolio operations involved big notional changing hands. If some spikes in volumes can be linked with market moves or technical activity (CDS roll in March), others have no other explanation. It looks as if a very comprehensive cleaning operation was successfully undertaken at the beginning of May.