Fed Keeps December Rate Hike in Play

Top Headlines

Fed Keeps December Rate Hike in Play – Wall Street Journal (subscription) Officials remove explicit mention of concern at overseas tumult, delivering warning to markets.

Bank of Japan Seen Holding Fire as Output Rebound Offers Some Relief – ReutersBoJ is expected to hold monetary policy steady on Friday even while diluting its rosy inflation forecasts.

Brazil’s Real not Affected by Revelations of FX Probe – Reuters The Brazilian real was not affected by revelations from an investigation of an alleged currency cartel formed by some of the world’s largest banks in the South American country, central bank director Aldo Mendes said on Wednesday.

High-Speed Traders Slow to Break Into Interest-Rate Swaps Market – Bloomberg Some of the biggest computerized-trading firms are facing obstacles as they try to move into interest-rate swaps, a $381 trillion market that has yet to be dominated by automated buying and selling.

Non-Traditional Market Makers Divide SEFs – Markets Media Since swap execution facilities introduced agency access, it has opened the door open for hedge funds and other market participants to access interest rate swap and credit default swap markets, and has concerned other about what it will do to market quality.

Fintech Competition Heats up – Markets Media Peter Randall, former chief executive and founder of Chi-X, believes his experience at the pan-European equities trading venue will help SETL win the battle to become the blockchain platform used for institutional payments and settlements.



Regulatory News

CFTC Divided Over Approach to Swaps Regulation – Profit & Loss Comments from Commodity Futures Trading Commission (CFTC) staff at the SefCon VI conference in New York on Monday highlighted divides within the Commission about how to most effectively amend swaps regulations.

Exchanges Band Together to Seek Softer Bank Capital Rules – FT.Com (subscription) A group that includes some of the world’s largest exchanges has written to the head of a leading international regulator in an attempt to soften bank capital rules.



Company News

Ex-Virtu Head Trader Returns to Lead Rival in Europe – Financial News (subscription) Jamal Tarazi has joined the London office of Global Trading Systems, a large computer-driven trading company based in New York that is preparing to ramp up its trading in European securities, as head of its business in Europe.

Deutsche Bank to Shrink Workforce by About 26,000 in Revamp – Bloomberg Deutsche Bank AG said it will shrink the lender’s workforce by about 26,000 people by 2018 as co-Chief Executive Officer John Cryan seeks to improve returns.

Is HSBC Too Big to Stay in the U.K.? – Wall Street Journal (subscription) Global lender’s balance sheet is nearly as big as Britain’s economy.

Barclays Says 1 Billion Pound UK Separation Costs to Hit Profit – Reuters British bank Barclays Plc said it will spend 1 billion pounds to shield its domestic retail customers from riskier parts of its operations, prompting it to raise its guidance on costs for next year and cut its returns target.



Market Savvy  

Parker FX Index Falls in September – Profit & Loss The Parker FX Index showed a -0.77% loss for the month of September, trimming the year-to-date return down to 1.44%.

EUR/USD Parity Still a Brave Call Says JPM – Profit & Loss Although the European Central Bank (ECB) did not commit to rate cuts, QE extension or QE upsizing at last week’s meeting, market participants have seen enough “burlesque winks” from ECB President Draghi and the Governing Council to expect something material in December, according to analysts at JP Morgan.

Ben Bernanke Identifies The Global Economy’s Largest Problem: Bankers’ Short Term Memories – Forbes I’m not sure that I actually agree with this identification of the global economy’s largest problem by Ben Bernanke. The pointing to it as “a” problem in the short to medium term, yes, that I’ll go along with.



Press Releases

Jazz Banquet in Aid of Futures for Kids – Profit & Loss Kite Consulting Group announced a Networking Jazz Banquet in aid of Futures for Kids, the children’s charity sponsored by FIA Europe.

Three More Banks Join R3 Distributed Ledger Initiative – Profit & Loss Three more banks have joined R3’s consortium to design and apply distributed ledger technologies to global financial markets.



Industry Events

There Are Going to Be Some Major Debates Inside the Fed This Week

Top Headlines

There Are Going to Be Some Major Debates Inside the Fed This Week – Bloomberg We probably won’t learn anything new at the conclusion of this week’s Federal Open Market Committee meeting, but that doesn’t mean policymakers at the central bank won’t have lots to debate among themselves.

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Deutsche Bank in USD6bn ‘Fat Finger’ Slip-Up

Top Headlines

Deutsche Bank in $6bn ‘Fat Finger’ Slip-Up – FT.Com (subscription) The bank mistakenly paid out $6 billion to a hedge fund client earlier this year as a result of a ‘fat finger’ error.

Fed’s Williams Sees Rate Rises Appropriate in ‘Near Future’ – Reuters Despite strong headwinds from overseas that are holding down U.S. inflation, the Federal Reserve should soon begin to raise interest rates to slow down economic growth before it becomes unsustainable, a top Fed official said

Trudeau Rides National Desire for Change to Majority Government – Globe & Mail In a stunning political comeback propelled by a national desire for change, Justin Trudeau and the Liberals won a decisive majority Monday night, bringing an end to the Stephen Harper era and a decade of Conservative rule.

Morgan Stanley Weakness in FX Trading Leads to Poor Q3 Results – Leap Rate Wall Street investment bank Morgan Stanley (NYSE:MS) reported Q3 results which disappointed investors, sending its shares diving about 6% in pre-market trading Monday.

Ex-Rabobank Trader Says `Libor Time’ Was Call to Fix Rates – Bloomberg “It’s Libor time.” That was the call ahead of Rabobank Grope’s daily morning submission on the London interbank offered rate as people gathered to rig the rate to make more money, a former trader testified at the U.S. trial of his colleagues.

London sees Influx of Chinese Banks – FT.Com (subscription) London’s status as a top trading hub for over-the-counter derivatives and foreign exchange is growing stronger as more Chinese financial institutions put down roots there.

Obama Administration Softens Criticism of China’s Currency Policy – Wall Street Journal (subscription) Treasury Department report cites shift in global economic winds.



Regulatory News

South Africa Finds Problems in FX Trading but no Misconduct by Major Banks – Reuters An investigation into the South African foreign exchange market found instances of confidential client information being shared by foreign exchange dealers but no evidence of misconduct by major banks, the country’s central bank said on Monday.

U.S. CFTC Charges Chicago Trader with “Spoofing” in Futures Markets – Reuters U.S. derivatives regulators charged a Chicago-based trader and his firm on Monday with using a manipulative trading tactic known as “spoofing” in the futures market across four different exchanges.

Massad: Harmonisation Easier Said Than Done – Profit & Loss As regulators on either of the Atlantic continue to disagree over swaps regulations, Timothy Massad, chairman of the Commodity Futures Trading Commission (CFTC), has warned that the harmonisation of these rules remains a challenging prospect.



Company News

Barclays Pays $325 mln to Settle US Mortgage Claims – Reuters British bank Barclays said it will pay $325 million in a settlement with the U.S. National Credit Union Association (NCUA) to resolve two civil lawsuits related to U.S. residential mortgages.

SmartStream Unveils Adaptor for Non-Cleared Derivatives – Profit & Loss SmartStream has launched the TLM Collateral Management adaptor to provide a full lifecycle of trading messages for the non-clearing OTC derivatives market.

Banks Jolted as HP Unplugs Popular Back-Office Software – eFinancialNews Hewlett-Packard is set to retire a piece of post-trade software used by several major banks, potentially leaving back-office operations with a serious problem ahead of a critical period in over-the-counter markets.

LSE Group Chief Operating Officer to Join State Street – eFinancialNews (subscription) The London Stock Exchange’s chief operating officer and chief information officer has resigned and is set to join State Street, in what would be the second departure from the UK exchange group’s senior executive team this year.



Market Savvy  

Challenging the Old Guard – Profit & Loss Profit & Loss Forex Network Chicago looked at the combination of growing regulatory requirements, customer disillusionment and the changing cost pressures on financial services firms that appears to be shifting the landscape of the foreign exchange market.

Asia Slips as Commodities Languish, Canada Vote Weighs on Loonie – Reuters Asian equities were mostly lower on Tuesday after commodity prices languished in the wake of China’s soft growth data and dampened risk sentiment.



Press Releases

CME Group and China Construction Bank Sign Memorandum of Understanding – CME Group CME Group, the world’s leading and most diverse derivatives marketplace, and China Construction Bank, a leading commercial bank in China, announced today that they have signed a Memorandum of Understanding (MOU) to support the further strengthening of their business relationship.



Industry Events

China Econony Grows 6.9 Percent in Third Quarter, Weakest Since 2009

Top Headlines

China Economy Grows 6.9 Percent in Third Quarter, Weakest Since 2009 –  Reuters China posted its weakest quarterly economic growth since the global financial crisis on Monday, raising pressure on policymakers to cut interest rates further and roll out other support measures to avert a sharper slowdown.

ECB Board’s Coeuré Urges Prioritization of Banking Integration – Wall Street Journal (subscription) Measure apparently sidelined at recent EU leaders’ meeting.

UK Banks May Face Stress Tests Tuned to Economic Boom and Bust – Bloomberg The Bank of England will lay out its approach to stress testing banks next week, bringing in its most recent thinking about the way the financial system interacts with the business cycle and how to smooth peaks and troughs in lending.

Iran Urges OPEC to Cut Oil Output to Lift Prices to $70-$80 – Bloomberg OPEC member states should cut crude output to boost prices to a range of $70 to $80 a barrel, Iran’s Oil Minister Bijan Namdar Zanganeh said.

Euro Steadies as Investors Eye ECB meeting – Reuters The euro traded near a 10-day low against the dollar on Monday, as investors eyed a ECB meeting later in the week at which further stimulus could be announced to boost inflation in the euro zone.



Regulatory News

SEC Chair Scolds Hedge Funds for ‘Cracks in Bulwark’ of Investor Protection – Wall Street Journal (subscription) Tighter registration and reporting requirements for hedge funds have given regulators better visibility on the potential risks such funds pose to the broader financial system.

FCA Formally Bans Adoboli – Profit & Loss The UK’s Financial Conduct Authority has formally banned Kweku Adoboli, the trader found guilty of rogue trading when at UBS, resulting in losses of $2.25 billion.

ESMA Delays EU Clearing of Nordic Currency Swaps – Risk.Net (subscription) European regulators have suspended plans to introduce mandatory clearing for interest rate derivatives in six Nordic currencies. Lawyers suggest the delay was prompted by fears that European Union banks would lose customers in non-EU member Norway.

Coming to Grips with Best Execution Under MiFID 2 – TABBForum (subscription) Unfortunately, what constitutes best execution, and when the rules apply, aren’t clear. As a result, there are 5 tasks investment firms must tackle before MiFID 2 becomes effective at the end of 2016.



Company News

LMAX Exchange Publishes Survey Results – Profit & Loss Following a survey it conducted, LMAX Exchange has issued the results, claiming they “highlight a worrying lack of awareness among market participants about FX trading practices open to abuse and confirms the need for greater transparency in the industry and makes recommendations for change.”

ITG Launches Market Compass – Profit & Loss The new application is based on predictive models that indicate market opening direction, model-based forecasts, and ten-day results history for key markets.

Deutsche Bank Restructures Business, Removes Top Executives – Reuters Deutsche Bank is restructuring its business, splitting its investment bank in two and parting ways with some of its top bankers as the new chief executive of Germany’s biggest bank sets out its most “fundamental” overhaul.

Credit Suisse Overhaul Could Mirror Local Rival, UBS – eFinancialNews (subscription) Clues about how Credit Suisse Chief Executive Tidjane Thiam plans to overhaul the bank may lie just down the road at its biggest rival, UBS.



Market Savvy  

Major Currencies May See Upheaval in 2016 – South China Morning Post If benign US inflationary pressures curtail the length of the Fed’s tightening cycle, next year might see the euro end up stronger against both the dollar and the yen.

Templeton’s Hasenstab Sees Diamonds in Emerging-Market Rough – Wall Street Journal (subscription) Perma-contrarian fund manager Michael Hasenstab says that recent “investor panic” is creating a rare for investors in some beleaguered emerging markets.

Goldman Fund Manager Bets on Pound as Market Too Dovish on Rates – Bloomberg Goldman Sachs Asset Management says the pound is set to strengthen against the dollar as the Bank of England is poised to raise interest rates sooner than the market predicts.



Press Releases

CME Group to Offer Physical London Delivery of CNH Futures – Profit & Loss CME Group is now able to offer offshore Chinese renminbi (CNH) futures contracts with physical delivery in London for the first time, via CME Europe, supported by China Construction Bank (CCB).



Industry Events

SEFCON VI, 26 October in New York, NY

Forex Magnates’ London Summit, 2-3 November in London, UK

FIA Expo 2015, 3-5 November, in Chicago, IL

Profit & Loss Shanghai, 12 November in Shanghai, China

Profit & Loss Singapore, 19 November in Singapore

11th Annual FIA Asia Derivatives Conference, 8-10 December in Singapore