BNY Mellon Agrees $714 Million FX Fine – Profit & Loss

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BNY Mellon Agrees $714 Million FX Fine – Profit & Loss
Bank of New York Mellon says it has “resolved substantially” all of the foreign exchange-related legal actions currently pending against the company at a cost of $714 million.

Dovish Fed Hands Euro Best Weekly Gains in 18 Months – Reuters
The euro inched up against the dollar on Friday and was on track for its best weekly performance in 18 months, boosted by a sell-off in the greenback after the US Federal sounded a cautious tone on interest rates.

Forex Market Erupts on Central Bank Moves – Wall Street journal (subscription)
Central banks have lit a fuse under the foreign exchange market. In the latest episode, the euro surged more than 4% against the buck, its biggest jump in a single day in 15 years, according to Deutsche Bank. Early on Thursday, the European currency resumed its slide.

Beijing Helps to Drive the Yuan Higher – Market Watch
China’s yuan surged higher for a fourth day, on track for its best week since a revaluation a decade ago, as Beijing steps in to the markets to drive the currency higher and kick out speculators betting on losses as the economy deteriorates.

Russia’s Putin Calls for Regional Currency Union – Reuters
President Vladimir Putin proposed on Friday creating a regional currency union with Belarus and Kazakhstan, Russia’s partners in a political and economic union made up of former Soviet republics.

SNB Balance Sheet Could Not Have Coped with Peg Defence, Says Jordan – Central Banking (subscription)
The Swiss National Bank’s decision to abandon its exchange rate ceiling was essential to avoid imposing intolerable losses on the central bank, chairman Thomas Jordan said Thursday. Trying to defend the Swiss franc-euro peg would have caused an “uncontrollable expansion” of the SNB’s balance sheet, Jordan said during a press conference.

BOJ Kuroda Says No Sign of “Currency War” Brewing in World – Reuters
Bank of Japan Governor Haruhiko Kuroda on Friday dismissed views that the massive monetary stimulus programmes deployed by advanced economies were triggering a “currency war” of competitive exchange-rate devaluations.

Asia’s Conundrum: How to Balance Growth and Stability – Wall Street Journal (subscription)
Southeast Asian finance ministers meeting Friday grappled with how to counter spill-over effects from US monetary policy and volatile financial markets, while bolstering their faltering economies.

Investment Banks to Shrink by 10-15% More as Regulation Bites: Study – Reuters
Investment banks are likely to shrink by another 10 to 15% in the next two years as they cut back their trading desks due to the impact of tougher regulations. “More strategic selection is required, particularly in FICC (fixed income, currencies and commodities) and overseas markets,” a report says, adding banks also needed to shift to a more technology-driven model.

Circuit Breakers: Does FX Need a Kill Switch? – Euromoney
Foreign exchange broker FXCM’s CEO has called for a wider adoption of circuit breakers on FX platforms to prevent another Swiss franc shocker as seen on Black Thursday, but critics question whether it is the right solution and even suitable for an over-the-counter market such as FX.

 

 

Regulatory News

Regulators Must Remain Vigilant in Supervising Clearinghouses – Mark Wetjen, CFTC – Reuters
Approximately 16% of outstanding swap transactions, measured by notional value, were cleared in the US by CCPs at the end of 2007. By September 2014, 74% were cleared based on the CFTC’s data.  This means that under the new market structure, clearinghouses are connected to almost every major financial firm in the world. Consequently, the failure of a CCP could have vast repercussions for the global marketplace.

Unclear Incentives: Do Capital and Margin Rules Support CCPs? – Risk Magazine (subscription)
Five months after a regulatory study concluded capital and margin rules support mandatory swaps clearing, those findings are under fire. The analysis was plagued with data problems and ignored the impact of the leverage ratio – but that was not mentioned in a summary report to Group of 20 finance officials.

US Regulation Restricting Buy Side from Overseas Access – Global Capital (subscription)
US buy siders are struggling to access overseas liquidity as many dealers do not want to trade with US clients due to regulations such as Dodd-Frank, resulting in increased fragmentation and smaller liquidity pools.

FEMR Consultation Highlights Scale of Regulatory Challenge in FX – Euromoney
In its fair and effective markets review, the Bank of England has acknowledged end-users are largely ill-suited to the task of combating market misconduct in FICC markets. But opinion remains deeply divided over how best to strengthen oversight in wholesale markets, and which regulatory body should lead the charge.

UK to Apply AML Laws to Bitcoin Exchanges – Profit & Loss
The UK government plans to regulate digital currency exchanges by applying anti-money laundering regulation, in order to support innovation and prevent criminal use.

 

 

Company News

FXCM Makes Clients Responsible for Trading Losses Over $50,000 – Swissinfo.ch
FXCM, the largest US currency brokerage for retail clients, said it will start making traders liable for losses of more than $50,000.

Goldman Signs for ICE’s Gold Fix Process – FOW Magazine (subscription)
The Intercontinental Exchange said Goldman Sachs was a last minute sign­-up to the gold price fixing process that went live on Friday morning, marking the US exchange’s debut in metals pricing.

 

 

Market Savvy  

The Morning Track – Accidents
Bob Savage, Track Research
The Greek EUR exit is the headline worry for the weekend ahead. Sure there is March Madness and the NCAA brackets to make the US markets less worrisome. Sure there is yet another Northeast Snow Storm to encourage early departures. Sure there is no major news from the US economic calendar. When there is nothing absolutely in front of the market, beware, as that is when positions and accidents happen. The ability to ignore bad news and worse outcomes rests on safety precautions and that is precisely what the EU lacks when it comes to bailing out debt, whether it’s from banks or sovereigns.

 

 

Press Releases

Eze Software Group Enhances Portfolio Management System to Improve FX Coverage
Eze Software Group says its Tradar PMS now features increased asset class coverage, with greater focus on foreign exchange. Specifically, the provider has enhanced support for trading FX non-deliverable forwards.

 

 

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