Banks Expected to Settle FX Probes for Billions

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Top Headlines

Banks Expected to Settle FX Probes for Billions – Wall Street Journal(subscription)
Citigroup, Barclays, JP Morgan Chase and Royal Bank of Scotland Group are expected to plead guilty to rigging foreign currency exchange rates and pay billions in combined penalties.

First Global Code of Conduct for FX Trading May be Within Reach – Reuters
Central banks seeking to quell misconduct in the $5 trillion (£3.28 trillion) a day currency market are hopeful that for the first time they can unify the industry’s disparate codes of conduct into one central document within the next two to four years.

In Numbers…Q1 Comparison of FX Platforms – Profit & Loss (subscription)
Just about everyone you talk to in FX is talking about activity coming back to the market, about more people interested in FX and about how volatility provides opportunities for everyone. One segment that should benefit from this increased interest is the multi-dealer platform industry but, while accepting it is a relatively small snapshot, the data available suggests otherwise.

Greek Banks Are Having Trouble Trading Foreign Currencies – Bloomberg
Greek banks are increasingly being hampered from trading currencies, one of most liquid markets, as international dealers cut back credit lines and costs soar, according to people with knowledge of the trades.

Flash Crash Moves Loom in FX Markets – FX Week (subscription)
Participants are concerned by sharp, sudden moves in currency markets as traders struggle to explain extreme bouts of volatility.

Swiss Central Bank Forex Reserves Fall in April – Dow Jones Business News
The value of Switzerland’s foreign-currency reserves dropped by half a billion Swiss francs in April, data showed Thursday, largely because of the weakness of the dollar, said analysts.

Emerging Market Capital Outflows Eclipse Financial Crisis Levels – Financial Times (subscription)
Emerging markets (EMs) have suffered bigger net capital outflows over the latest three quarters than during the 2008-09 financial crisis, indicating fragile confidence in some of the largest developing economies.

Report: Risks More Entrenched in EU Financial System – Profit & Loss (free story)
While the risks affecting the EU financial system have not changed in substance during the past six months, they have further intensified, according to the European Supervisory Authorities (ESA).

Regulatory News

US, EU Officials Clash Over Derivatives Rules – Reuters
US and EU regulators clashed on Wednesday over how to provide solid financial backing for the world’s $630 trillion derivatives market and also avoid duplication of rules that would be costly for banks and other players.

IMF Says China FX Policy Should Continue to Allow More Flexibility – Reuters
China should allow greater flexibility in its exchange rate policy by reducing intervention, as part of its efforts to secure a gradual moderation in growth while pursuing economic reforms, the International Monetary Fund said on Thursday.

Australian Government Urged to Tighten FX Trading Rules – SBS
Four months since the Swiss franc shock, the federal government is accused of doing nothing to fix lax local rules for foreign exchange trading.

Dodd-Frank Rules Could Shave $895 Billion Off Economic Growth Over a Decade, Think Tank Says  – Wall Street Journal (subscription)
The 2010 Dodd-Frank law could reduce US economic output by nearly a trillion dollars over the next decade, according to a new analysis by American Action Forum.

Company News

Eight Liquidity Providers to Support FX Outrights and Swaps on EBS Direct –Profit & Loss (free story)
Eight major liquidity providers have agreed to support the beta launch of FX outrights and swaps on EBS Direct. Icap’s electronic FX business plans to add the products in Q4 2015, subject to regulatory approvals.

High-Speed Trader Virtu Financial Setting Sights on China – Bloomberg
Virtu Financial Inc., one of the world’s biggest high-speed trading firms, wants to set up shop in China. Virtu, which uses automated market-making strategies to buy and sell everything from stocks to currencies and commodities, is in the early stages of that project, CEO Doug Cifu said.

Tech Issues Cause Alpari RU’s Servers, Website to Go Down Temporarily –LeapRate
Clients of Alpari Russia experienced a moment of technical difficulties today, as the website of the retail Forex broker was not accessible and there was no connection to several trading servers for about an hour. The issues that were reported by traders occurred approximately between 13:30 (Moscow time) and 14:30 (Moscow time).

Market Savvy  

UK Election Day Arrives
BNP Paribas
Voting in the UK general election will end Thursday at 10pm BST, with the first exit polls released and the majority of official results available by 6am the next morning. While the exit polls will likely provide a good sense of the distribution of seats in the new parliament and indicate which party will get first shot at forming a coalition, there will remain uncertainty over how successful those efforts will be. We think the GBP remains vulnerable through the coalition negotiations process and would not rush to fade EURGBP gains. We remain exposed to EURGBP upside via a 0.72 call expiring in June.

Dollar Sell-Off Takes Euro to 10-Week High
Financial Times
The dollar came under sustained pressure across the currency board, taking the euro to a 10-week high against its transatlantic partner as the correction in the bull run resumed. The euro climbed above $1.13, a level last touched on 26 February, representing a gain of 1.5% on the day.

Press Releases

Societe Generale Prime Services Executes and Clears Non-Deliverable Forwards Through LCH.Clearnet
Societe Generale Prime Services’ futures commission merchant (FCM) has conducted its first customer non-deliverable forward (NDF) cleared trade with LCH.Clearnet’s ForexClear service acting as the clearing house.

Moscow Exchange Trading Volumes in April 2015
Moscow Exchange announced its trading volumes for April 2015. The derivatives market and FX market saw the highest levels of activity, with volumes increasing 48.7% and 38.1% year-on-year, respectively, while trading volumes on the precious metals market jumped by almost 10 times.

Industry Events