Banks are Poised to Profit from Forex Tumult

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Top Headlines

Banks are Poised to Profit from Forex Tumult – Wall Street Journal(subscription)
As US banks closed out the first quarter, analysts and investors said the turbulence in foreign exchange markets triggered by central bank actions should have boosted profits in the trading units of the country’s biggest financial firms.

Widespread Market Support for Global FX Committees’ Market Guidelines –Profit & Loss (free story)
Market participants have gotten behind the recently published high-level “global preamble” on best practice and market conduct for the FX industry.

The FX Disruptors: Why Russell Investment Built a Buy-Side FX Platform –Traders Magazine
After the foreign exchange rate manipulation scandal, Russell Investments envisions buy-side firms banding together to trade FX among themselves. Michael DuCharme and Joe Hoffman are leading the charge.

Dollar Falls Before Jobs Data as Currency Faces April Headwind – Bloomberg
The dollar fell versus all but two of its 16 major peers before nonfarm payrolls data due Friday amid signs growth in the world’s largest economy may have lost momentum.

A New Approach to Hedging EM Currencies – Profit & Loss (free story)
Emerging markets currencies are getting a lot of attention lately, as the market waits with bated breath for the US Federal Reserve to begin unwinding quantitative easing. Market volatility may be just around the corner, with EM currencies expected to be the ones hardest hit.

Bond Traders Find Answer to Broken Market: Switch to Currencies –Bloomberg
Just because it’s getting harder to trade bonds doesn’t mean that investors are sitting on their hands. Instead, they’re turning to currencies, which are largely bought and sold electronically rather than through dealers, according to Joyce Chang, the global head of research at JP Morgan Chase in New York.

Momentum Builds to Label Chinese Yuan a Reserve Currency – Wall Street Journal (subscription)
US opposition could still upend Beijing’s attempt to put yuan in same league as dollar. China is gaining support from key US allies in its push to gain reserve-currency status for the yuan, but opposition from the Obama administration threatens to upend Beijing’s bid to flex more muscle in the global economy.

Aussie Trails the Field in Currency Race – Financial Times (subscription)
Australians have a fondness for nicknames. Milko (for milkman), and umpie (for umpire) may lack imagination, but bluey (for a red-haired person) at least suggests an affinity for sarcasm. The latest target is the local currency, which has fallen so much that some are now calling it the Australian peso.

Polish Central Bank Says Proposal on FX Debt Swaps “Fatal” for Banks –Reuters
Poland’s central bank governor has criticised a regulator’s proposal to let holders of mortgages denominated in Swiss francs convert the debt into zlotys at an historical exchange rate, saying it would be “fatal” for lenders.

Rousseff Says Brazil Won’t Intervene in Currency as Real Tumbles –Bloomberg
Brazil will let the real fluctuate freely and doesn’t intend to intervene in the market to defend the currency, President Dilma Rousseff said.

Regulatory News

Effectiveness of UK Benchmark Legislation Change Unclear – Profit & Loss(free story)
The UK’s Financial Conduct Authority has begun regulating seven more FICC market benchmarks this week (1 April), but questions remain over how likely it will be to bring a successful conviction under the new rules.

Fed’s Lockhart Endorses Raising $50 Billion Level for Tougher Bank Rules –Wall Street Journal (subscription)
Federal Reserve Bank of Atlanta President Dennis Lockhart said he believes the provision in the 2010 Dodd-Frank law requiring stricter supervision of banks with more than $50 billion in assets should be changed.

LCH.Clearnet Proposes CCP Stress-Testing Framework – Profit & Loss (free story)
LCH.Clearnet has released a whitepaper proposing a stress-testing framework for central clearing counterparties (CCPs).

Volcker Rule is Next for Bank Stealth Attack, Hoenig Says – Bloomberg
A stealth attack targeting the Volcker Rule could bring back risky trading strategies by banks and expose taxpayers to losses again, according to Thomas Hoenig, vice chairman of the Federal Deposit Insurance Corp.

Company News

Former Icap e-Commerce Head Launches New Consultancy – Profit & Loss(free story)
Chris Ferreri, formerly a managing director and head of e-commerce at Icap, has launched his own consultancy service, Eight Point Strategies. Profit & Loss first reported in November 2014 that Ferreri was scheduled to depart Icap, after more than 30 years with the brokerage firm.

Fastmatch Begins Hiring Spree Ahead of FXCM Exit – Profit & Loss (free story)
Fastmatch has hired John Bogue and Thomas Koslowske and plans to significantly ramp up the size of its sales force as it separates from FXCM.

Market Savvy  

Greece: Last Chance Saloon
Olivier Desbarres
It has been two arduous months since the Syriza party won the Greek elections on a platform to renegotiate the country’s debt and terminate austerity measures imposed by the IMF/ECB/European Commission Troika. The negotiations between Greek Finance Minister Varoufakis and his eurozone counterparts have generated much noise but seemingly achieved little.

Press Releases

IBA Completes Transition to New ISDAFIX Calculation Methodology
ICE Benchmark Administration (IBA) has completed the transition to a new calculation methodology for ISDAFIX, the global benchmark for interest rate swaps, which has been renamed ICE Swap Rate, effective 1 April.

ESMA Launches Centralised Data Projects for MiFIR and EMIR
The European Securities and Markets Authority (ESMA) has launched two major projects at the request of a number of National Competent Authorities (NCAs) who have delegated the following tasks to ESMA: to provide a central facility in relation to instrument and trading data and the calculation of the MiFIR transparency and liquidity thresholds – Instrument Reference Data Project; and to provide a single access point to trade repositories data under EMIR – the Trade Repositories Project.

ASIC Suspends FX Company’s Licence
Following an investigation, ASIC has suspended the Australian financial services (AFS) licence of FX provider AGM Markets. The move is part of ASIC’s ongoing crackdown on the margin FX industry and work around retail investment in foreign exchange.

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