China Opens Up Finance Sector to More Foreign Investment

China Opens Up Finance Sector to More Foreign Investment – Agence France-Presse
China lifted some restrictions on foreign investment in the financial sector Saturday, as the world’s second largest economy fights slowing growth at home and a damaging trade war with the United States.

UK Chancellor Hammond plans to quit if Johnson becomes PM – BBC

Philip Hammond has told the BBC he intends to resign as chancellor if Boris Johnson becomes the UK’s next PM.

Sink-or-Swim Showdown Beckons for Italy’s Fractious Coalition – Reuters

Italy’s fractious coalition partners are gearing up for a showdown this week that is likely to determine if the government will collapse, triggering autumn elections, or survive to the end of the year.

Federal Reserve Sets Sights on Quarter-Point Rate Cut – Financial Times

Chairman Jay Powell treads cautiously in supporting US economy.

Central Banks are in Sync on Need for Fresh Stimulus – Wall Street Journal

Central banks world-wide are poised to unleash some of the most aggressive monetary stimulus since the financial crisis a decade ago.

Abe’s Coalition Victorious, but Pro-Revision Forces Suffer Setback in Drive to Amend Constitution – Japan Times

Prime Minister Shinzo Abe’s ruling Liberal Democratic Party and allied forces fell short of a critical two-thirds majority of the 245-seat Upper House in Sunday’s election, according to final media tallies — a significant setback in their bid to revise the nation’s postwar Constitution.

Defining a True Measure of Liquidity in FX Markets (opinion) – Profit & Loss

Technology has been a huge enabler for the FX industry but it has brought challenges – one such being what can only be described as a false picture of liquidity in the market at any given time.

What Trump Got Wrong About China’s Economic Slowdown – South China Morning Post

China’s second-quarter GDP slowdown has more to do with the government’s debt crackdown than the US president’s efforts. Given China’s huge contribution to global GDP growth, any decline will adversely affect all economies.

Swiss Policymakers Caught in Crossfire over Franc – Financial Times

The adage in financial markets is ‘do not fight the central bank’. But can central banks fight the US president? The Swiss National Bank may be about to find out.

Regulatory News

In the FICC of It (podcast) – Profit & Loss

In this week’s podcast the Congressional hearings on Facebook’s cryptocurrency, FX turnover and unfair dismissals are firmly in focus.

Who Sees the Trade? The Effect of Information on Liquidity in Inter-Dealer Markets – FRBNY Staff Paper

Dealers, who strategically supply liquidity to traders, are subject to both liquidity and adverse selection costs. While liquidity costs can be mitigated through inter-dealer trading, individual dealers’ private motives to acquire information compromise inter-dealer market liquidity.

Federal Court Fines Over a Social Media-Based Forex Fraud Scheme – CFTC

The Commodity Futures Trading Commission has announced that US District Court for the Southern District of Texas entered judgment against defendant Kelvin Ramirez  in a CFTC enforcement action that found that he had fraudulently solicited and misappropriated funds from clients in a forex trading scheme.

The FCA and its Labyrinthine Rulebook Need a Serious Shake-Up (opinion) – Financial Times

Slow, inefficient and high-handed are all epithets flung at the UK financial watchdog.

SEC to Extend Mifid Exemption for US Brokers’ Research – Financial Times

The Securities and Exchange Commission is expected to extend an exemption that allows US brokers to sell research to European fund managers under the EU’s Mifid II regime that came into force last year.

Crypto News

St. Louis Fed Chief Pessimistic on Crypto as Non-Uniform Currency – Coin Telegraph

St. Louis Fed Chief James Bullard reportedly views cryptocurrencies as part of a global currency competition that is ultimately unhealthy. 

Could Cryptos Be the Next Fiat Currency? – ETF Trends

In an ongoing issue of cryptocurrency safety due to its lack of regulation, St. Louis Fed President James Bullard raised concerns Friday about the rise of cryptocurrencies, uniting with other key economic and political officials who have questioned the fledgling platforms as Facebook prepares to launch its “Libra” digital token.

European Central Bank Exec: Libra Won’t Launch Until Regulators Are Satisfied – Coin Telegraph

Benoit Coeure, a board member of the European Central Bank, said that Facebook’s Libra coin will not launch until global regulators are satisfied. 

MPs to Scrutinise Facebook’s New Cryptocurrency – Financial News

Chair of the House of Commons’ Digital, Culture, Media and Sport Committee is worried about the launch of Libra.

Company News

Caplin Adds Crypto to Trading Platform – Profit & Loss

Technology provider Caplin has announced the addition of cryptocurrencies to its range of technology components for multi-asset trading. 

Market Bounce Catches Bridgewater Fund Off-Guard – Financial Times

Bridgewater’s flagship fund suffered one of its worst first-half performances in two decades this year after being wrong-footed by rebounding markets.

Hyundai Motor Logs Biggest Profit Gain in Seven Years on Currency, New Models – Reuters

South Korea’s Hyundai Motor Co on Monday posted its steepest quarterly net profit gain in over seven years, as a weaker local currency helped lift US income, while new models boosted domestic sales.

Tradeweb: A Short-Term Gain, But Long-Term Pain for Wall Street? – Financial News

The bond trading platform’s April IPO lifted banks in Q2 — but its long-term success raises questions about their place in fixed income markets.

Market Savvy

Will the ECB Live Up to Investor Expectations? – Financial Times

When Mario Draghi speaks on Thursday, the market will be hanging on his every word.

Market Braces for Mexico’s Annual Oil Hedge, Trading Surges – Reuters

Trading in crude oil options and futures surged last week as market participants prepared for Mexico’s annual oil hedging program, in which the country buys as much as $1 billion in contracts to protect its oil revenues.

With Brexit, Iran Tensions and Likely Global Financial Instability, the Dollar is Far from Down and Out – South China Morning Post

While the trade war, political uncertainties in the US and lower interest rates have hit sentiment surrounding the US dollar, risks in Europe and the prospect of higher oil prices could trigger a flight to the US currency.

Sterling Weakens as Traders Protect Themselves Against More Falls – Reuters

The pound edged lower on Monday, with investors holding on to their hedges against further weakness ahead of the result of the Conservative party’s leadership election on Tuesday, which will decide Britain’s next prime minister.

Oil Jumps After US Navy Downs Iranian Drone

Oil Jumps After US Navy Downs Iranian Drone – Reuters

Oil prices rose nearly 2% on Friday as tensions brewed again in the Middle East after a US Navy ship destroyed an Iranian drone in the Strait of Hormuz, a major chokepoint for global crude.

Sleepwalking Toward a Currency War? (Opinion) – Inside Sources

Nobody can know with any degree of certainty whether we are headed soon to a destructive world currency war in which countries compete with to weaken their exchange rates to gain an unfair competitive advantage.

Chance of No-Deal Brexit Rises as Johnson Leads Hunt: Poll – Reuters

The chance that Britain will leave the European Union without a deal is the highest since October 2017, economists polled by Reuters say, as arch-Brexiteer Boris Johnson looks set to take over as prime minister next week.

Salvini Asks to See President Amid Doubts on Government’s Future –Bloomberg

Italian Deputy Premier Matteo Salvini has asked President Sergio Mattarella for a meeting which may take place Friday, according to an official who spoke amid speculation that the League leader could pull the plug on the populist government.

Merkel: Weaker Economy Gives Us Reason to Try to Stimulate Domestic Economy – Reuters

German Chancellor Angela Merkel said on Friday that Europe’s largest economy was in a “somewhat more difficult phase” after a decade of growth, adding that gave grounds to try to stimulate the domestic economy.

Japan, South Korea Diplomats Trade Words in Escalating Dispute Over Wartime Forced Labour – Reuters

Japanese Foreign Minister Taro Kono summoned South Korea’s ambassador on Friday in a deepening diplomatic dispute over compensation for Korean wartime forced labor that threatens global supply of memory chips and display screens.

New Thai Finance Minister says will not Interfere in Central Bank Policy – Reuters

Thailand’s new finance minister said he will not interfere in the central bank’s monetary policy decisions and will let it handle the strengthening baht currency.

Regulatory News

Hedge Fund Manager Fined for Mis-Valuing Swaps –Profit & Loss

The Commodity Futures Trading Commission has issued an Order filing and settling charges against Swapnil Rege, a former portfolio manager for Connecticut-based hedge fund Marinus Capital registered with the CFTC as a commodity pool operator, for fraudulently mismarking swap valuations to artificially inflate the profits of his employer’s trading book in order to obtain an increased performance bonus. 

Firms Should Explore the “Worst” in AI: FCA – FOW

UK financial markets regulator says boards should be asking themselves: ‘what is the worst thing that can go wrong’.

What Christine Lagarde Brings to the ECB: Flexibility – Wall Street Journal

The career of the next European Central Bank chief shows the institution is getting a diplomat and negotiator, not a technocrat or economist.

Chairman Tarbert Announces CFTC Executive Leadership Appointments – CFTC

US Commodity Futures Trading Commission chairman Heath Tarbert has announced appointments to key executive leadership positions at the CFTC.

Crypto News

G7 Crypto Opposition Masks Warmer Stance for Wholesale Markets – Financial Times

Regulatory fears over digital assets are narrow, focusing on consumer protection.

Bitcoin Bears ‘Poised’ After ‘Dr Doom’s’ Dire Crypto Exchange Warning – Forbes

Bitcoin and cryptocurrencies have divided the traditional financial industry and economists, with some arguing bitcoin and crypto is incompatible with the current system and others more open to the new technology.

Trump Tweets Crypto Rant — What Is the Bitcoin Reference Really About? – Coin Telegraph

The most newsworthy Trump rants almost invariably felt improvised, emotional and reactive. However, the historic series of tweets that constituted the first-ever public comment on cryptocurrencies by a sitting US president didn’t seem to fit the same mould.

BTC Price Reclaims $10K After US Lawmaker Says Bitcoin Can’t Be Killed – Coin Telegraph

Bitcoin has retaken $10,000 today following a moderately volatile month.

Company News

BNP Could Rise as Top Prime Broker in Asia on Deutsche Bank Deal –Bloomberg

As Deutsche Bank AG and BNP Paribas SA sort out a deal on servicing the German lender’s hedge-fund clients, one of the prizes at stake is the Asian business.

SocGen Begins Supporting Eurex FX Futures – Profit & Loss

Societe Generale is now supporting Eurex FX futures, from clearing to trading.

Hedge Funds Doubling Down on Algos – The Trade

The 2019 algorithmic trading survey finds that brokers are stepping up to the plate in the post-MIFID II landscape to provide consistent execution to hedge fund firms that are more knowledgeable and discerning than ever before.

JP Morgan Tells HFTs: You’re ‘All Finding Homes’ – FX Week

JP Morgan is confident that high-frequency traders will be able to stay in business and find new foreign exchange prime brokers following Citi’s decision to give 90 days’ notice to the largest electronic market-makers in currencies.

Market Savvy

Dollar Falls as Fed’s Williams’ Remarks Stoke Rate-Cut Bets – Reuters

The dollar extended its losses against the euro, yen and other major currencies as remarks from New York Federal Reserve President John Williams increased bets the central bank would lower interest rates at month-end.

The Strength of the Dollar is Not Born in the USA – Financial Times

US growth and bond yields have converged towards those of the rest of the world this year. But there has been no reversal of the US dollar’s 2018 strength, merely a slowing of its appreciation.

Pound Steadies in Asia After Overnight Rally – Financial Times

Sterling had gained 1% on vote to block no-deal Brexit and Barnier comments.

‘We Are in a Currency War, But Nobody Has Admitted It,’ Strategist Says

‘We Are in a Currency War, But Nobody Has Admitted It,’ Strategist Says – CNBC

Central banks are currently embroiled in a covert currency war which is causing stagnation in foreign exchange markets, according to Thanos Vamvakidis, the global head of G-10 FX strategy at Bank of America Merrill Lynch.

Britain is Bracing for an Economic Shock as No-Deal Brexit Draws Closer – Daily Telegraph

Get ready for a humdinger of an economic shock. That in any case is what policymakers at the Bank of England and the Treasury are doing.

As Fed Nears Rate Cut, Policymakers Debate How Deep, and Even If – Reuters

With the first U.S. interest rate reduction in a decade expected later this month, two Federal Reserve policymakers sketched out arguments on how deep the cut should be, even as a third said she needs more data before being ready to sign on at all.

Germany’s Von der Leyen Secures Powerful EU Executive Top Job – Reuters

Germany’s Ursula von der Leyen secured European parliamentary approval on Tuesday to become the first female European Commission president on a platform of a greener, fairer and rule-based Europe.

China’s Holdings of US Treasuries Dip for the Third Straight Month to a Two-Year Low – South China Morning Post

China’s holdings of US Treasuries including notes, bills and bonds fell by US$2.8 billion in May to US$1.11 trillion. The dip in May was the third consecutive month of declines, leaving China’s holdings at the smallest since May 2017.

US, Japan Eye Possible Small Trade Deal by September – Reuters

The United States and Japan are working on a trade deal involving agriculture and autos that could be agreed by President Donald Trump and Prime Minister Shinzo Abe when they meet in New York in September, three industry sources familiar with the discussions said.

Regulatory News

Reinvent International Monetary Order or Face Chinese Dominance: France – Reuters

France’s finance minister said the post-war international monetary order needed to be reinvented or become increasingly dominated by China.

Australia Bank Watchdog Faces Funding Challenge as it Gets New Powers – Reuters

Australia’s banking watchdog vowed to be tougher with the entities it oversees but needs more funds to carry out its work, its chairman said, after a government report recommended the regulator be more forceful and less discreet.

Lagarde Resigns as IMF Chief, Starting Race for Her Successor – Reuters

International Monetary Fund chief Christine Lagarde submitted her resignation from the global crisis lender on Tuesday, citing more clarity about her nomination to lead the European Central Bank as European legislators approved a new top bureaucrat.

HSBC Lifts Ban on Personal Mobile Phones for Traders – Financial News

Regulators have been pushing banks to ensure they have appropriate controls in place around the use of personal devices.

Participants Should “Avoid” Eonia – ECB Working Group – FOW

The euro risk-free-rates working group said participants should “avoid entering into new contracts referencing Eonia”.

Crypto News

Bitcoin Tumbles as US Senators Grill Facebook on Crypto Plans – Reuters

The cryptocurrency market took a beating on Tuesday with bitcoin losing over 10% in value after US lawmakers grilled Facebook on its cryptocurrency plans, as political and regulatory scrutiny of digital coins intensifies.

Donald Trump’s Bitcoin Takedown Signals Global Currency War – Yahoo Finance

US President Donald Trump’s tweet attacking bitcoin highlights his increasing interest in controlling global currency markets — an interest that could create a “new world order” in foreign exchange.

G-7 Finance Chiefs to Tackle Cryptocurrency Risks, Digital Tax at Paris Summit – Marketwatch

Finance officials from the Group of Seven rich democracies will weigh risks from new digital currencies and debate how to tax tech companies like Google and Amazon when they meet at a chateau north of Paris.

Tether’s $5 Billion Error Exposes Crypto Market’s Fragility – Wall Street Journal

Investors got a reminder that the market infrastructure for trading cryptocurrency is still under construction.

Are Hedge Funds Placing a Big Short in Booming Bitcoin? – Financial News

Hedge funds and other big traders are betting that bitcoin will fall, even as the digital currency has risen above $10,000 on a new wave of crypto-optimism.

Company News

CTAs Bounce Back in June – Profit & Loss

Commodity Trading Advisors posted a 1.59% return in June, according to the Barclay CTA Index compiled by BarclayHedge.

Global Headwinds Drive $23 Billion in Cumulative FX Losses for North American Companies – Yahoo Finance

Ongoing market volatility stemming from Brexit, trade wars, and other supply chain disruptions resulted in $23.39 billion in foreign exchange losses for publicly traded North American companies during the first quarter of 2019, according to the new Kyriba Currency Impact Report.

Global Macro Hedge Funds Struggle to Regain Top Form – Financial News

Global macro, the hedge-fund style that made George Soros and Alan Howard famous, is struggling to recover from a dire 2018 — with one investor lamenting that top funds are “just not there any more”.

The Lawyer Thrust into the Front Line of Deutsche Clean-Up – Financial Times

Stefan Simon advised the bank on Libor scandal — now he is its head of regulation.

Tech Giants Draw Fire in Congress – Wall Street Journal

Concerns about the power of the major technology companies echoed across the nation’s capital on Tuesday, with politicians in both parties demanding more regulatory scrutiny of the tech giants’ reach and plans for expansion.

Market Savvy

Time for ECB to Admit its Existing Policy Arsenal is Exhausted – Financial Times

Who does the European Central Bank work for? It sounds like an absurd question, but the market finds itself in an absurd situation. The soft patch in Europe has investors clamouring for the ECB to act — yet not one of those same investors believes interest rate cuts or quantitative easing will have a beneficial impact.

Thai Central Bank Says Cutting Policy Rate May Not Have Much Impact – Reuters

Thailand’s real interest rates are low compared with those of its regional peers, so cutting the benchmark rate may not have much impact, the central bank said.

Does Investing in Emerging Markets Still Make Sense? – Financial Times

Two controversial departures of high-ranking technocrats in the space of three days, one in Ankara, the other in Mexico City, have served as reminders of the high-risk nature of investing in emerging markets.

CFTC Agrees to Rein in Rules for Overseas Clearing Houses

Top Headlines

CFTC Agrees to Rein in Rules for Overseas Clearing Houses – Financial Times (subscription)

The main US derivatives markets regulator has agreed to rein in its rules for regulating overseas clearing houses, in a move Washington hopes will ease a stand-off with counterparts in Europe. A proposal was passed unanimously at a meeting of the Commodity Futures Trading Commission in Washington late on Thursday. By a narrow vote, the five commissioners also agreed to let overseas clearing houses that are exempt from US standards accept business from US citizens.

Read More

GFXC Updates on Working Group Progress

Top Headlines

GFXC Updates on Working Group Progress – Profit & Loss

The Global Foreign Exchange Committee (GFXC) has released a new illustrative example on “cover and deal” trading activity to be included in the FX Global Code in a future update, which highlights so-called “under-filling” of client orders using the last look window. The negative example highlights that a participant accepting an order on the understanding that it is operating in “cover and deal” mode and therefore not assuming any market risk, cannot execute the full amount with its own liquidity provider and then under-fill the client because the market has moved. 

Read More

trueEX to Shut Swaps Trading Platform

Top Headlines

trueEX to Shut Swaps Trading Platform – (subscription)

Interest rate swaps trading platform trueEX will close in less than a fortnight, reinventing itself as a cryptocurrency derivatives exchange. The platform’s exit leaves the swaps market in the hands of incumbents: broker-run platforms continue to dominate interdealer trading of interest rate swaps, while dealer-to-client trading will take place on Bloomberg and Tradeweb.

Read More