The Swiss Futures and Options Association (SFOA) has kicked off its 28th Burgenstock Conference, this time from Montreux, on the southern tip of Lake Geneva, while the Burgenstock resort in the mountains above Lake Lucerne is renovated.
The focus so far has been pretty macro – a stream of folks from around the world touting the dynamism of the Emirate of Dubai, which is sponsoring many of the events this year. Former LME boss David King, who is now business development boss at HSBC’s Middle East operations, pointed out two interesting tidbits: first, that the bulk of the products being traded in Dubai are oriented to the retail sector; and second, that products based on Islamic finance are proliferating there.
Close to home, Eurex boss Andreas Preuss offered some interesting observations on how the liquidity debacle of the past month impacted Eurex.
“While most investors expected for some time rising risk premiums, the surprise came from the speed at which this happened and more importantly, the knock on effects it had through the financial system. For example who thought that at the time of sharply rising risk premiums that healthy blue chips would suffer at least as much as smaller caps? Or who thought that that at the same time gold would suffer significantly? The simple reason for these phenomena was that the market participants were in need for liquidity and this was much easier to get in blue chips, exchange-traded derivatives or gold than in illiquid and OTC traded instruments…”
He also touted the surge in repo activities as banks sought out secured money market transactions like those offered on Euro GC Pooling, which is a segment of Eurex Repo,
“Euro GC Pooling … saw a tremendous three-fold increase of daily trading volumes. Whereas at the beginning of July it was around 10 billion euro, it rose to almost 30 billion at the end of August.”“Not coincidentally, we just extended the Euro GC Pooling product to include international collateral baskets a few days ago. Together with Clearstream we created the first pan-European market for collateralized money market transactions as the international basket can be used as collateral for refinancing within the framework of ECB open market transactions.”
Hardly earth-shattering, but interesting nonetheless.