Capitalab Completes Second EURO STOXX 50 Equity Derivatives Compression Cycle Offsetting $6 Billion Notional
On December 14, 2021, Capitalab, a division of BGC Brokers, executed its second multilateral risk-constrained EURO STOXX 50 options compression cycle in collaboration with Eurex. This cycle accounted for about 120,000 listed options, representing 14% of daily volume, and unwound approximately $6 billion in notional value. The initiative aims to reduce capital costs and streamline derivatives positions. Notable financial institutions, including UBS and Credit Suisse, have expressed support for this service, emphasizing its potential to enhance capital efficiency and contribute to financial stability in the derivatives market.
- Executed a significant compression cycle of $6 billion notional value, enhancing operational efficiency.
- Support from major financial institutions like UBS and Credit Suisse indicates strong market validation.
- Potential to reduce costs and improve capital efficiency for participants in the equity derivatives market.
- None.
LONDON, Dec. 14, 2021 /PRNewswire/ -- Capitalab, a division of BGC Brokers LP, an entity within the BGC Partners, Inc. (NASDAQ: BGCP) group of companies, in collaboration with Eurex successfully executed its second multilateral risk-constrained EURO STOXX 50 options compression cycle. The cycle included approximately 120,000 listed options contracts traded or 14 percent of the daily volume and
"The execution of this compression cycle is another milestone in terms of volume of contracts closed and notional unwound. Capitalab, Eurex and participants are working on adding additional features like support for Weeklies and Futures to make cycles even more efficient," said Olivier Roguez, head of equity sales at Capitalab.
Dr. Nicholas Kassapakis, co-head of CCP trading risk management at UBS Investment Bank, commented; "We are very pleased that Capitalab have collaborated with UBS for over a year to enable us to participate in the pioneering work of offering compression services to the equity derivatives markets. An agile approach, with an intuitive interface and the right risk management tools, assured us we could safely manage our balance sheet constraints under the exacting risk standards of UBS Investment Bank. We look forward to working with Capitalab to expand the scope of this service which importantly contributes to the financial stability of our banking system."
Aldo van Audenaerde, head of trading at Optiver V.O.F., commented; "Compression frees up valuable capital that would otherwise be held unnecessarily against offsetting positions that can be compressed. The end goal of compression is a cleaner portfolio, with less complexity and enhanced capital efficiencies, allowing for healthier and safer derivatives markets. We're excited to see it taking off in EURO STOXX 50 options. A clear, streamlined process and good responsiveness from Capitalab made the experience a smooth one. We anticipate compression saving us substantial effort and costs going forward and would support the move to include more underlyings in the future."
Dan Cohen, managing director, head of EMEA index flow trading at Credit Suisse, commented; "Compression business started more than a decade ago in the fixed income world helping financial institutions to reduce their cost of balance sheet. It is clearly a gap for the equity derivatives market that we are looking to fill at the moment. We have been working very closely over the past months with Capitalab to design a tool that we believe is now the best in class to allow efficient compression trades. Credit Suisse participated in the first two cycles over the past few months: the compression experience has been successful so far at every stage of the execution process. We look forward to executing more cycles in the near future and are confident volumes are only going to increase in that space."
About Capitalab
Capitalab, a division of BGC Brokers LP, provides compression services that are designed to bring greater capital and operational efficiency to the global derivatives market. It assists clients in managing the growing cost of holding derivatives, while helping them to meet their regulatory mandates. Through the Swaptioniser® service for portfolio compression of Interest Rate Swaptions, Interest Rate Swaps, Caps and Floors, Equity options, FX and FX Options, as well as Initial Margin Optimisation service and fully automated trade processing, Capitalab looks to simplify the complexities of managing large quantities of derivatives to promote sustainable growth and lower systemic risk and to improve resiliency in the industry. The Capitalab brand is part of the Fenics fully electronic family of brands. BGC Brokers LP is authorised and regulated by the UK Financial Conduct Authority and is based in London. BGC Brokers LP is a subsidiary of BGC Partners, Inc. (NASDAQ: BGCP), a leading global brokerage and financial technology company.
About BGC Partners, Inc.
BGC Partners, Inc. ("BGC") is a leading global brokerage and financial technology company. BGC specializes in the brokerage of a broad range of products, including Fixed Income (Rates and Credit), Foreign Exchange, Equities, Energy and Commodities, Shipping, and Futures. BGC also provides a wide variety of services, including trade execution, brokerage, clearing, trade compression, post-trade, information, and other back-office services to a broad range of financial and non-financial institutions. Through its brands, including FMX™, Fenics®, Fenics Market Data™, Fenics GO™, BGC®, BGC Trader™, Capitalab®, and Lucera®, BGC offers financial technology solutions, market data, and analytics related to numerous financial instruments and markets. BGC, BGC Trader, GFI, Fenics, FMX, Fenics Market Data, Capitalab, and Lucera are trademarks/service marks and/or registered trademarks/service marks of BGC and/or its affiliates.
BGC's customers include many of the world's largest banks, broker-dealers, investment banks, trading firms, hedge funds, governments, corporations, and investment firms. BGC's Class A common stock trades on the Nasdaq Global Select Market under the ticker symbol "BGCP". BGC is led by Chairman of the Board and Chief Executive Officer Howard W. Lutnick. For more information, please visit http://www.bgcpartners.com. You can also follow BGC at https://twitter.com/bgcpartners, https://www.linkedin.com/company/bgc-partners and/or http://ir.bgcpartners.com/Investors/default.aspx.
Discussion of Forward-Looking Statements about BGC
Statements in this document regarding BGC that are not historical facts are "forward-looking statements" that involve risks and uncertainties, which could cause actual results to differ from those contained in the forward-looking statements. These include statements about the effects of the COVID-19 pandemic on the Company's business, results, financial position, liquidity and outlook, which may constitute forward-looking statements and are subject to the risk that the actual impact may differ, possibly materially, from what is currently expected. Except as required by law, BGC undertakes no obligation to update any forward-looking statements. For a discussion of additional risks and uncertainties, which could cause actual results to differ from those contained in the forward-looking statements, see BGC's Securities and Exchange Commission filings, including, but not limited to, the risk factors and Special Note on Forward-Looking Information set forth in these filings and any updates to such risk factors and Special Note on Forward-Looking Information contained in subsequent reports on Form 10-K, Form 10-Q or Form 8-K.
Media Contact:
Harjeet Singh
+44 207-894-8829
Investor Contact:
Jason Chryssicas
+1 212-610-2426
1 For additional information, please see press release titled "Capitalab and Eurex first in Europe to execute compression in equity index derivatives" dated July 28, 2021.
View original content to download multimedia:https://www.prnewswire.com/news-releases/capitalab-completes-second-euro-stoxx-50-equity-derivatives-compression-cycle-offsetting-6-billion-notional-301443606.html
SOURCE BGC Partners, Inc.
FAQ
What is the significance of BGC Partners' second compression cycle in December 2021?
How much notional value was unwound in the Capitalab compression cycle?
Which financial institutions supported the Capitalab compression cycle?
What percentage of daily volume did the compression cycle represent?
When was the first compression cycle executed by Capitalab and Eurex?
