Banks Face US Court Challenge Over FX Futures Manipulation

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Top Headlines

Banks Face US Court Challenge Over FX Futures Manipulation – Profit & Loss(free story)
A number of major banks are now under fire in a US court for allegedly manipulating the FX markets on futures exchanges, including CME and the Intercontinental Exchange (ICE) Futures US.

Goldman Said to be Ready to Settle Currency Manipulation Lawsuit –Bloomberg
Goldman Sachs has reached a preliminary agreement to settle a lawsuit over currency rate manipulation for $129.5 million, a person familiar with the matter said.

For Leucadia National, a Big Bet Pays Off – Wall Street Journal (subscription)
A big bet, made quickly amid crisis, is proving a big winner. Leucadia National, parent company of investment bank Jefferies, has so far tripled the money it invested in an 11th-hour rescue of troubled retail currency brokerage FXCM earlier this year, the company reported on Friday.

Pension Fund Sues FXCM for Fraud Over Drop in Stock on Swiss Franc –Reuters
A pension fund has sued US currency broker FXCM for allegedly misleading investors about its financial prospects and concealing weaknesses in its core business before its stock dropped 90% in January.

Are Liquidity Levels Better in the Age of Electronic Market Making? – Profit & Loss (subscription)
There is a school of opinion that liquidity in foreign exchange markets is not what it was. A fairly significant proportion of people I speak to and several reports I read mention this issue as though it is a fact, but I am not sure it is.

Currencies’ Wild Ride to Get Wilder as US Rate Rise Beckons – Bloomberg
If you thought the past week in the foreign exchange market was wild, you haven’t seen anything yet. That’s the outlook from investors and strategists ranging from State Street Global Advisors to Cambridge Global Payments after price swings in the euro versus the dollar approached the highest level in more than three years.

Euro Slips on Unease Over Greek Talks – Reuters
The euro slipped against the dollar on Monday, as many investors took a pessimistic view of the latest round of euro zone talks on a cash-for-reform deal for Greece.

China Swaps, Yuan Decline After Third Rate Cut in Six Months – Bloomberg
China’s interest rate swaps fell to the lowest level in almost three years and the offshore yuan declined after the central bank reduced benchmark borrowing costs for the third time in six months.

A Bitcoin Technology Gets Nasdaq Test – Wall Street Journal (subscription)
Nasdaq OMX Group is testing a new use of the technology that underpins the digital currency Bitcoin, in a bid to transform the trading of shares in private companies.

Regulatory News

Europe and US Pledge to Agree on Derivatives Rules by the Summer – Profit & Loss (free story)
Talks in Brussels between Jonathan Hill, the European Commissioner for financial stability, financial services and capital markets union, and Timothy Massad, chairman of the US Commodity Futures Trading Commission (CFTC), concluded on Thursday last week with both saying that recognition of each region’s rules could be on the horizon.

CFTC to Hold GMAC Meeting, Aims to Harmonise Cross-Border Derivatives Rules by Summer – Capital Thinking Blog
On Thursday, 14 May, the Commodity Futures Trading Commission (CFTC) will hold a meeting of its Global Markets Advisory Committee (GMAC), which is sponsored by Commissioner Mark Wetjen. The meeting will consist of two panels, which will discuss: clearinghouse capital contributions, as well as clearinghouse stress testing; and the CFTC’s proposal regarding cross-border application of its margin requirements for uncleared swaps.

Company News

Societe Generale Begins Clearing NDFs – Profit & Loss (free story)
Societe Generale Prime Services’ futures commission merchant (FCM) has conducted its first customer non-deliverable forward (NDF) cleared by LCH.Clearnet’s ForexClear.

Thomson Reuters Applies for Randomisation Patent – FX Week (subscription)
Thomson Reuters has applied for a patent under US law to secure the rights to what it calls “ideal randomisation” of orders, but despite a longer than one-year wait for the implementation of a latency floor, the platform has yet to give a date for launching its randomisation project.

LMAX’s Mercer Breaks World Record at North Pole – Profit & Loss (free story)
David Mercer, LMAX Exchange CEO, and a team including several UK ex‐professional national rugby players, have broken a Guinness world record by playing the northernmost game of rugby at the North Pole.

Schroders Sells 3.4 Million Icap Shares, Takes Holding Slightly Down to 14.9% – LeapRate
Asset management giant Schroders has made a slight reduction in its shareholding of Icap, whilst shares in the British inter-dealer broker increased by 2.74% on Friday after a Conservative win in the general election quells the notion that the firm would relocate if the result had swung toward Labour.

Market Savvy  

FX Positioning Analysis
BNP Paribas 
GBP short positions have started to unwind; although positioning still remains short. There is scope for market to re-establish GBP longs.

Fears for Election Euphoria Over Brexit Challenge
Financial Times 
A euphoric market reaction to the Conservative party’s unexpected general election victory could soon prove fleeting as investors focus on looming challenges, a referendum on the UK’s role in Europe and Scotland’s presence in the union.

China’s Currency Trap
Bloomberg
China faces a currency conundrum. Exports are slumping and competitiveness is waning after its currency’s more than 10% rise in real trade-weighted terms in the past year.

Press Releases

First Derivatives Names Investec Bank as Nominated Adviser and Broker
First Derivatives has appointed Investec Bank as its nominated adviser and broker with immediate effect.

Industry Events