Corporate bond market and  equity market is interlinked , for when there is a bad news about the company the share prices goes down and the corporate bond prices goes down. The corporate bond market is also deeply linked to the government bonds market if the interest rate goes up bond prices of both the market goes down. Currency spot and derivative market of the world are also connected with the India bond market.

In India it’s been treated differently and had failed. In order to achieve progress critical requirement is to make perspective of the Bond Continue reading “BOND CURRENCY DERIVATIVES: (Back to School)”

How to brighten dark side of negotiated dealing system (Back to School)

THE negotiated dealing system (NDS) for government securities does not have customers but hostages. It uses a monopoly on gilt clearing and settlement to deny competitors like NSE straight-through-processing. Competing bilateral electronic platforms have not been allowed. Its deals are exempt from stamp duty. It has a waiver for the 5% volume cap for voice intermediaries. Banks received a not-so-subtle regulatory nudge for usage. Most importantly, the NDS uses the clearing and settlement toll gate (a monopoly that gives it a 55% net margin) to cross subsidise Continue reading “How to brighten dark side of negotiated dealing system (Back to School)”

FOMC MEET ( Federal Open Market Committee )

The FOMCwas one of the biggest event that I use to trace continuously while trading commodities futures. The event

held yesterday and the minutes released Wednesday cover the July 31-Aug. 1 policy meeting. The Fed releases the minutes of its private discussions three weeks after each meeting. The policy committee will next meet Sept. 12-13.

Early reaction in the stock and bond markets was positive but muted. The price of gold, Continue reading “FOMC MEET ( Federal Open Market Committee )”

CDS and Exotic Options

Ever heard of exotic options, like barrier, knock-out, and knock-in options. Lets try to distinguish them.

In finance, a barrier option is an exotic derivative typically an option on the underlying asset whose price breaching the pre-set barrier level either springs the option into existence or extinguishes an already existing option.

Where the option springs into existence on the price of the underlying Continue reading “CDS and Exotic Options”