Banks Speed Up FX Reform

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Top Headlines

Banks Speed Up FX Reform – Euromoney
Banks are making steady progress in cleaning up their foreign exchange businesses in the wake of regulatory investigations into rigging currency markets, according to the chair of the Financial Stability Board’s FX benchmarks group Guy Debelle.

British Bankers’ Association Officials Received Warnings About Libor in 2007, Court Hears – Wall Street Journal (subscription)
The group responsible for running a key interest-rate benchmark was warned in 2007 that banks were manipulating the figure to benefit their trading positions, a London court heard Friday.

EU QE Effective as a Firewall Around Greece – Profit & Loss (free story)
There were no surprises in Brussels on 3 June as the European Central Bank’s Governing Council announced its decision to keep key interest rates unchanged for the seventh meeting in a row.

India Regulator Mulls Launch of Offshore Rupee Market – Asia Risk (subscription)
The Reserve Bank of India (RBI) has been consulting with banks about the possibility of setting up a fully convertible offshore foreign exchange market in a move analogous to China’s currency liberalisation but many are sceptical that this will get off the ground. Like most emerging Asian economies, India’s currency is not fully convertible.

EU Gives Banks, Pension Funds More Breathing Space Over Derivatives – Reuters
The European Commission will give banks in the EU another six-month exemption until December from having to hold extra capital to cover transactions at clearing houses that don’t meet the bloc’s standards.

Greece Vows Not to Leave the Euro after IMF Payment Defiance – The Guardian
Rolling coverage of Greece’s debt drama, as Prime Minister Alexis Tsipras prepares to address parliament tonight.

Time for Trading Technology to Grow Up: Comment – Financial Times (subscription)
Software can be tested and certified, yet there is no global standard for financial systems software quality. Despite being used by the industry for decades, financial software is going through a delayed, proprietary, “we know best” phase.

Hedge Fund Investor Bemoans Lack of Pure Currency Hedge Funds – Euromoney
Fund managers at FQS Capital Partners, a London-based fund of hedge funds, are among many that have bemoaned the current lack of quality pure currency hedge funds.

 

Regulatory News

DoL Under Pressure to Review Bank Waiver Requests in FX Probe – Profit & Loss (free story)
Twelve Democratic lawmakers have sent a letter calling on the Department of Labor to review whether it should grant waivers to the five banks that late last month pleaded guilty to conspiring to manipulate the FX market and paid a total of $5.8 billion.

Massad Eyes Tougher Rules for Automated Traders – FOW (subscription)
The Commodity Futures Trading Commission (CFTC) has said it is looking at the possibility of tougher rules for automated traders including CFTC registration and pre­-trade risk controls. CFTC chair Timothy Massad told Global Exchange and Brokerage Conference in New York on Wednesday the regulator is considering whether proprietary trading firms using direct electronic access should register with the US regulator.

Tarullo: Few Signs of Illiquidity in OTC Markets – Risk Magazine (subscription)
A top Federal Reserve official has dismissed claims that liquidity is evaporating in over-the-counter derivatives markets. Daniel Tarullo, a member of the Board of Governors of the Federal Reserve System, said he does not see a problem with illiquidity in swaps and fixed income markets. “You don’t see much evidence in spreads of big changes or illiquidity,” Tarullo said at an Institute of International Finance conference in New York earlier on 4 June.

Singapore Outlines New OTC Derivatives Rules – Global Investor
The Monetary Authority of Singapore (MAS) has launched a consultation paper outlining new rules aimed at intermediaries dealing in over-the-counter derivatives.

Meet the New Regulators at the FCA – The Trade
UK regulator, the Financial Conduct Authority, has appointed two new directors with responsibility for enforcement, market oversight and risk.

 

Company News

Jefferies Updates Plans for Continued Expansion of Foreign Exchange Brokerage Busines (press release)
Jefferies Group is continuing to implement plans for expansion of its foreign exchange business as the Faros Trading business it acquired from FXCM in April has now been fully integrated with Jefferies FX business.

ESMA Approves ICE Trade Vault as Repository for FX Derivatives – Profit & Loss (free story)
The European Securities and Markets Authority (ESMA) has given permission for ICE Trade Vault Europe to extend its trade repository registration for the reporting of FX derivatives trade data, including futures, options and forwards.

Sears to Join EBS? – Profit & Loss (free story)
Russell Sears will be joining EBS in London on 1 July, according to market sources familiar with the move. Sears was previously global head of Currenex sales and senior managing director at State Street Global Exchange.

Banks Prepare to Sell Down Stakes in Markit – Financial Times (subscription)
Many of the large banks that were early investors in Markit are using the end of a lock-up period following the UK data provider’s stock market listing to sell down large portions of their shareholdings.

IG Accused of Prioritising Own Trades During Swiss Franc Frenzy – Reuters
Clients of broker and betting firm IG say the company breached British rules by trading in its own interest several minutes before acting on their behalf during the Swiss franc surge in January.

 

Market Savvy  

The Renminbi and the SDR: Symbol and Substance
Financial Times
The International Monetary Fund delivered a valuable imprimatur of respectability to Beijing last week, when it declared that its exchange rate was probably no longer undervalued. The assessment was not a surprise: respected independent outfits such as the Peterson Institute and the consultancy Oxford Economics have been saying similar for a while.

Dollar Bulls Look to Payrolls to Stem Decline Cemented by Draghi
Bloomberg
Dollar bulls are looking to Friday’s US jobs report to boost a currency that’s set for its first weekly decline since mid-May.

 

Press Releases

FIA Releases SEF Tracker Report for March
FIA has published the latest issue of FIA SEF Tracker, a periodic report on trading activity taking place on swap execution facilities. This issue of FIA SEF Tracker presents the data in a new format and shows volume trends from January 2014 to March 2015 for foreign exchange, interest rate and credit default products.

 

Industry Events