Written by Neil McKenzi and Naomi Rovnik
LONDON (Reuters) -Modernity funds occupied bets, including debts on the bonds of the UK government, which increased the possibility of instability in the Gilts market, a criterion for borrowing costs in Britain, including real estate loans, investors and hedge funds.
Andrew Billy, President of the Bank of England, said in February that non -banking institutions such as hedge funds “can spread liquidity stress in the basic financial markets in the United Kingdom, especially the sect market.”
This is partly due to their short -term lending activities, which have been described for more than ten sources – including governor managers, executives of the hedge fund and a former Central Bank – for Reuters.
Hedge boxes were borrowed to finance a variety of deals on the basis of 10 years. Data from the electronic trading platform show that Tradewebb represents 60 % of government bond trading volumes in January and February, up from about 53 % at the end of 2013 and at least five years.
“The markets of the UK market are trading sometimes, because the large hedge boxes are sometimes paid, and sometimes there are not many real money for hedge boxes,” said David Asibel, chief portfolio manager for $ 1.7 billion.
With about 2.5 trillion pounds ($ 3.2 trillion) of the debt due, the Gilts market is escalating from the 28 trillion dollar market for US Treasury bonds.
The volatility in the bond markets affects government borrowing costs and credit conditions for families and companies.
Main deals
The participation of the hedge fund in the European bond markets has grown in recent years, and while its situation was sometimes a source of concern, some officials said they were helping to provide liquidity.
But the UK organizers are looking for how to use the hedge funds for ribau markets to put them in Gilts. Funding – short of re -purchase agreements – is a source of funding that can be decisive during the market stress times.
The sources told Reuters that the hedge funds that are used and activated in the sect markets include Brevan Howard, Capula Investment Management, Millennium Management and Rokos Capital Management, which trades many different financial assets categories under one roof.
Capula, Brevan Howard, Millennium and Rokos, which oversees $ 150 billion, refused.
Seven of the sources said that the hedge funds are currently using ribo financing for three distinct bets against Gilts.
One benefits from doctrine for 10 years for its future derivatives. Breastfeeding backed contracts, which are currently trading with a bonus, and “short” cash bonds – that are often called the basis trade. When the investor lacks, they borrow securities for sale, hoping to buy them later at a cheap price.
https://media.zenfs.com/en/reuters-finance.com/be55973433b7c4d9f1836a195608b185
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