11/10/15: Equity Derivatives: Shadow Banks are Clawing Back

Remember them, ‘financial weapons of mass destruction’? No, not the CDS, and other debt derivatives, but rather the equity derivatives? Here’s a reminder.

Well, the are baaack… baby… with a vengeance on the short term side:

So look at who’s printing the stuff in truck loads? U.S. – carry trade of the past, Europe – carry trades of the present…

And when you look at maturity profile – short-termism is in vogue:

But what not to like? Key counterparties are, again, ‘other financial institutions’ – aka shadow banks:

Smelly stuff, courtesy of cheap credit for the select few from the Central Banks…

Note: Source for the above charts: BIS Quarterly Review, September 2015