Top Headlines

Barclays Boosts Expected Bill for Foreign Exchange Fines to More Than $3 Billion – Wall Street Journal (subscription)
Barclays boosted its expected bill for foreign exchange fines to more than £2 billion on Wednesday and said it is working hard to settle investigations with global regulators.

Citigroup Cut Corbat’s Pay Over Currency Rigging, Chairman Says – Bloomberg
Citigroup cut chief executive officer Michael Corbat’s 2014 compensation in part because he failed to stop traders from rigging the foreign exchange markets, chairman Michael O’Neill said.

Centralised Risk Raises Systemic Worries Over Derivatives – Financial Times (subscription)
Six years after the financial crisis exposed the systemic dangers of derivatives, the industry faces questions as to whether risk management systems will contain the next major bout of market turmoil. FIA Global, the futures industry trade association, will add its voice to a growing debate about the role of clearing houses.

Cost and Tight Regulation Slow CNY Derivatives Growth, Says CFFEX – Asia Risk (subscription)
A combination of high trading costs in Shanghai and a conservative regulatory climate that fears the destabilising effects of a potential speculative bubble are slowing down a much-needed expansion of the onshore (CNY) currency derivative market, according to a senior official of the China Financial Futures Exchange (CFFEX).

Hedge Funds Lead Shift In Dollar Sentiment – Wall Street Journal (subscription)
Betting that the dollar will keep pushing higher against major currencies has lost its allure. Up until a few weeks ago positioning for a further climb of the dollar against the euro and the yen was the only game in town, but investors and traders’ are scaling back on the trade, according to the latest positioning data from the Commodities Futures Trading Commission, which measures a portion of the market that serves as a good proxy for the whole.

Central Banks Choose Pythonesque Approach as New Tool – Financial Times (subscription)
As Michael Palin pointed out in Monty Python’s Spanish Inquisition sketch, “our chief weapon is surprise”. That sentiment could just as easily be applied to central banks, as they struggle to stimulate their economies and rouse inflation.

Euro Rises Above $1.10 as Dollar Under Pressure Before Fed, US Data – Reuters
The euro rose above $1.10 for the first time in three weeks on Wednesday, buoyed by data that showed a eurozone recovery was gathering pace and as investors cut long dollar bets ahead of US growth data and a Federal Reserve statement.



Regulatory News

Banks Scale Back on Clearing Ambitions – Financial News (subscription)
We want you to do this. But we don’t want you to do this. That’s the confusing message being sent by regulators to banks that have set up units to clear derivatives transactions.

SEC Takes Different Harmony Approach – Reuters
While the CFTC remains embroiled in tense negotiations with European regulators regarding the reach of Dodd-Frank derivatives rules outside the US, the SEC has remained above the fray by taking a starkly different approach to derivatives rulemaking.

AFME and ISDA Respond to EBA’s Basel CVA Framework Report – Profit & Loss (free story)
Two industry associations have responded jointly to the European Banking Authority’s policy recommendations to the European Commission on credit valuation adjustment (CVA) risk in relation to the Basel framework.



Company News

Integral Launches New OTC Exchange Platform – Profit & Loss (free story)
Integral has launched the Open Currency Exchange (OCX), a new OTC exchange platform for trading foreign exchange

CME Europe CEO Vermaas Eyes Growth One Year In – FOW (subscription)
CME Europe’s chief executive has said the exchange has made good progress in its first year and is now focused on ramping up volumes in its existing contracts as well as forging ahead with its plan to build a “truly multi­-asset derivatives exchange in the region”. CME Europe launched with FX contracts and biofuels on April 28 2014, marking the US futures giant’s first exchange outside of the US. One year on, Cees Vermaas, the chief executive of CME Europe since the start of January, says the firm is pleased with its first year performance.

Deutsche Bank Libor Fines Hits Q1 Profits Despite FX Revenues Jump – Profit & Loss (free story)
Deutsche Bank has reported significantly higher trading revenues from FX in Q1 year-on-year, helping push the corporate banking and securities corporate division to its strongest debt sales and trading revenue for two years.

State Street Prepares for Material FX Settlement Impact – Profit & Loss (free story)
State Street has increased its Q1 FX trading revenues by over half compared to the same period in 2014, but warns that future FX-related legal costs may still have material adverse effects.



Market Savvy  

Greece Update – A Ray of Sunshine, Referendum the Baseline
Deutsche Bank
A few more weeks have passed since our last update on Greece with little change to the status quo: stalled negotiations, an ongoing drain to the Greek government’s cash position, and persistent pressure on the Greek banking system. Last Friday’s Eurogroup publicly confirmed this lack of progress, attributed to both procedural difficulties and more importantly large gaps on substance. Despite this, we consider three recent developments in domestic Greek politics as finally turning a little more positive.

How the Yuan Could Win Reserve Currency Status Even if the US Objects – Wall Street Journal (subscription)
Will the U.S. back China’s latest bid to make the yuan a global currency? It may not really matter. Washington’s veto-power at the International Monetary Fund may not apply when the executive board decides later this year whether to include the yuan in the elite basket of currencies that comprise the IMF’s emergency lending reserves.



Press Releases

LMAX Exchange Widens Distribution of its TY3 Liquidity By Adding Access Via PrimeXM
LMAX Exchange, the FCA regulated MTF for global FX, announced that it will widen the distribution of liquidity from its Tokyo-based matching engine via PrimeXM.

GMEX IRS Constant Maturity Future Backed by Asset Management Firms
Global Markets Exchange Group Limited (GMEX) has announced that a number of European asset management firms have declared their intention to trade the euro-denominated interest rate swap constant maturity futures (CMF) contracts on GMEX Exchange via their prime brokers. These include Lyxor Asset Management and Old Mutual Global Investors.



Industry Events