​The Nuisance Trade: RV Funds Caught Between Exchanges And Regulators

Capital requirements, designed to make the market safer, have pushed a large share of trading volume on exchange as investors look for a safe haven from margin for uncleared swaps. But the exchanges and clearinghouse that service the listed markets are not without complexity and a certain level of tedium. For high volume options users, like relative value funds and some global macro funds, the tedium is no more apparent than when trying to delta hedge their S&P 500 options with futures. What you think should be simple is actually far from it. Daniel O’Leary reports on the growing expense of delta hedging listed products.