Biggest Day in Years for Currencies as Investors Flee Risk

globalFXsource0

Top Headlines

Biggest Day in Years for Currencies as Investors Flee Risk – Bloomberg
Traders in the foreign exchange market were busy Monday. New Zealand’s dollar plunged as much as 8.3%, the most in 30 years, pacing declines by currencies of resource-producing nations amid a global market selloff. On the flip side, haven currencies surged on concern China’s slowing economy will damp global growth, with the yen climbing the most since 2010.

Investors Bet on Currency Pegs Coming Under Strain – Wall Street Journal (subscription)
With global markets thrown into a twist, some investors are betting that long-standing currency pegs might come under strain. Traders and investors say the build-up in bets against currency pegs in Hong Kong and Saudi Arabia accelerated after China’s central bank devalued its currency earlier this month. These bets picked up further after Kazakhstan and Vietnam moved to free their exchange rates too.

Bank Litigation Costs Hit $260 Billion – with $65 Billion More to Come – Financial Times (subscription)
The wave of fines and lawsuits that has swept through the financial industry since the 2007-08 crisis has cost big banks $260 billion, new research from Morgan Stanley shows. The analysis, which covers the five largest banks in the US and the 20 biggest in Europe, predicts the group will incur another $60 billion of litigation costs in the next two years.

MP Asks BoE to Review Code of Conduct for Rate-Setters – Reuters
The Bank of England must review its code of conduct for monetary policymakers after a recent appointment raised questions about a possible conflict of interest, the chairman of an influential committee of British lawmakers said on Monday.

Singapore Rules to Beef Up Enforcement, Fines – FOW (subscription)
The Monetary of Authority of Singapore (MAS) has proposed new rules that will significantly strengthen the jurisdiction’s enforcement regime and vastly increase the penalties the regulator can levy against firms found to be guilty of misconduct. The regulator on Monday issued a consultation paper on the proposed amendments to the Securities and Futures Act and has requested comments by September 23.

 

Regulatory News

LCH.Clearnet Eyes Standardisation for Portfolio Margining – FOW (subscription)
LCH.Clearnet has called for more uniformity in regulatory standards over portfolio margining, as part of plans to boost debate amongst firms and regulators on how to deal with the issue.

Pension Funds in Limbo as EC Leaves Emir Exemption Gap – Risk Magazine (subscription)
Pension funds in Europe find themselves in a weird, legislative grey area, after the European Commission extended a key exemption too late. The safe harbour may take effect in days or in months, and in the meantime dealers may be expected to start applying a new capital charge to trades with pension fund customers.

 

Company News

Nasdaq Poised to Launch FX Trading Platform: Top Executive – Reuters
Nasdaq is poised to launch a platform for foreign exchange trading which it says would make the global market more transparent and would diversify its own business. The FX trading platform is ready to be tested with banks although a launch was more likely in 2016.

Markit Aims to Stitch Up Fragmented FX Market With DealHub Acquisition – Profit & Loss (subscription)
The trend for M&A activity continues apace in the FX industry, with the news that Markit is set to acquire DealHub for an undisclosed fee.

LCFX Rebrands as Spectra, Makes Four Hires – FX Week (subscription)
Louis Capital FX has rebranded as Spectra FX Solutions to distance itself from a broker-dealer model of pricing and reaffirm its commitment to agency foreign exchange options trading, seeking to capitalise on its position as one of the first agency desks set up in 2007.

Euronext Derivatives Market Hit By Data Issue – FOW (subscription)
A data issue hit Euronext’s derivatives market Monday afternoon, causing a number of trading strategies to be displayed incorrectly, just months after the exchange group was hit by outages earlier this year, including a four-­day trading glitch in April.

Historic Profits for High-Frequency Trading Firm – Wall Street Journal (subscription)
Virtu Financial,, one of the world’s largest high-frequency trading firms, was on track to have one of its biggest and most profitable days in history Monday amid a tumultuous 24 hours for world markets, according to its chief executive.

 

Market Savvy  

China Cuts Interest Rates after Days of Market Turmoil
BBC
China has cut its main interest rate by 0.25 percentage points to 4.6% after two days of stock market turmoil.

Monetary Policies to Sustain Multi-Speed World Economy
SEB
The world economy is hesitating. Looking back at developments this spring and summer, the lingering impression is that global growth is not really willing to take off.

Global Stocks, Dollar Rebound But China Slumps Again
Reuters
As investors dipped their toes back into still choppy waters, the dollar and beaten-down oil prices rose for the first time in five days, safe-haven bonds edged down and defensive positions in the yen and euro were cut.

Chinese Agencies Have Begun to Assume Yuan at 7 to Dollar in Research
Bloomberg
Some Chinese agencies involved in economic affairs have begun to assume in their research that the yuan will weaken to 7 to the dollar by the end of the year, said people familiar with the matter.

 

Press Releases

Swaps Info Second Quarter 2015 Review – ISDA
Approximately 67.4% of average daily IRD trade counts and 74.7% of average daily notional volume was cleared in the second quarter of 2015. More than half of average daily IRD trading activity – 51.2% by trade count and 56.4% by notional volume – was executed on a swap execution facility during the second quarter.

 

Industry Events