China’s Markets Close Down amid Widespread Market Volatility

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Top Headlines

China’s Markets Close Down amid Widespread Market Volatility – New York Times
Volatility continued to dominate global markets on Wednesday, with whipsaw trading across Asia. Shares in Shanghai swung between sharp gains and losses, showing no sign that China’s cut in interest rates late Tuesday would lead to a broader rally. The main index fell nearly 4%, rallied to gain more than 4%, then fizzled, ending the day down 1.3%.

The World Struggles to Adjust to China’s ‘New Normal’ – Wall Street Journal (subscription)
China’s leaders have warned their people they need to accommodate a “new normal” of economic growth far slower than the rate that propelled the economy into the world’s second-largest in the past two decades.

China Launches Probes into Top Brokerages – Financial Times (subscription)
Chinese authorities have launched a fresh crackdown on financial market malpractice, putting five of the country’s top brokerages under investigation amid the steepest slide in domestic stock markets in almost two decades.

Currency Storms Create Investment Opportunities – Financial Times (subscription)
The currency storm that has engulfed the emerging world has blown into other markets around the globe. It has put pressure on valuations, produced patches of illiquidity and, in some cases, is starting to spill over into the economic and policy spheres.

Survey: Corporates to Increase FX Hedging Activity in 2015 – Profit & Loss (subscription)
Corporate firms are expected to increase both their level of international trade and their FX hedging activity in 2015, according to a new study from payment and risk management firm, AFEX.

EU Probing ‘Anticompetitive Behaviour in Precious Metals Spot Trading’ – Wall Street Journal (subscription)
The European Union’s competition watchdog is investigating alleged “anticompetitive behaviour in precious metals spot trading,” a spokesman said.

Asian Markets Shake Off China Rout – Wall Street Journal (subscription)
The reach of China’s stock crash, and the global rout it sparked, started to recede from Asian markets Wednesday, though shares on the mainland remained volatile.

 

Regulatory News

BoE to Hold Open Forum on FICC Markets – FOW (subscription)  
The Bank of England has said that it will in November bring together stakeholders across the fixed income, currency and commodities (FICC) markets to discuss market functions, the development of the UK’s market and potential regulatory overlap. The central bank said that it will hold the open forum on 11 November.

Memo to Regulators: About That Early-Warning System – Bloomberg View
To judge which institutions are most exposed to defaults, regulators need up-to-the-moment data on derivatives outstanding all over the world. Over the past several years, national regulators have made progress in collecting this information. The European Union, the US, Japan, China and other countries have required that derivatives trades be reported to special repositories. Problem is, they’re using different rules, and data in incompatible formats. And they have no firm plan for sharing the findings.

Clearing Brokers Send Balance Sheet Allocations to Basel – Risk Magazine (subscription)
Data including the balance sheet allocated by several banks to their over-the-counter derivatives clearing brokers and the amount of margin being received by clearing brokers has in the past few weeks been sent to the Basel Committee on Banking Supervision for its consideration.

Harmonised Derivatives Rules Proposed across Many Canadian Provinces – Lexology
On 25 August, 2015, British Columbia, Ontario, Saskatchewan, New Brunswick, Prince Edward Island, Yukon (the CMR Jurisdictions) and Canada released draft legislation and regulations for the implementation of the Cooperative Capital Markets Regulatory System (the Cooperative System).

 

Company News

Record: Drops Steeply Due to Volatile Currency Markets Hit – Reuters
Specialist currency manager Record is down c.15% in heavy volumes and heading to its sharpest loss in just under 21 months after its mandate takes a hit due to volatile currency markets.

Pioneer Sees ‘Crazy Day’ Bringing Aftershocks to Currencies – Bloomberg
Pioneer, which manages about $242 billion, was positioned to benefit from an appreciating yen on 24 August, resulting in a “good day.”

Moscow Exchange Keeps Updating Derivatives Tech, Spectra Fast Next in Line – LeapRate
Moscow Exchange keeps working on improving its derivatives trading infrastructure. Next in line is an update to Spectra fast feeds.

Market Savvy  

Dollar Gains as Stocks Recover, Lessens Safe-Haven Bid for Yen – Reuters
The dollar rose on Wednesday as some calm returned to currency markets with Wall Street stock futures pointing to a firm start and European shares recouping some of their losses, all of which lessened the need to buy safe-haven currencies like the yen.

Signs, Long Unheeded, Now Point to Risks in US Economy – New York Times
As investors scramble to make sense of the wild market swings in recent days, a number of financial experts argue that, for more than a year now, signs pointing to an equity crisis were there for all to see.

Volatile Markets Seen to Challenge Central Banks’ Fiscal Policy Stance – Profit & Loss
The recent dramatic rise in volatility and sharp falls in the Chinese equity markets may not just be disturbing domestic and international stock investors, as central banks try and reconcile their anticipated fiscal policy tightening with the wild scenes in the financial arena.

China Turmoil Needn’t Rattle BOJ, Yen Rise Not a Worry – Abe Adviser – Reuters
Japan’s central bank needn’t rush into action in response to China’s recent market turmoil, and the way it made the yen jump is not a problem for the Japanese economy, a key economic adviser to Prime Minister Shinzo Abe said on Wednesday.

Investors Turn to Euro in Times of Stress – Wall Street Journal (subscription)
Just a few weeks ago, the Greek debt crisis put the future of the euro in doubt. Now, it has become a go-to currency for investors in times of stress.

With QE Barely Under Way, Pressure Mounts on European Central Bank to Do More – Wall Street Journal (subscription)
The European Central Bank is less than one-third of the way into a program to pump more than $1 trillion into the eurozone economy, but it already faces pressure to do more amid global growth concerns, volatile financial markets and the sharp decline in oil prices.

 

Press Releases

Renewal of the Short Term Liquidity Creation Scheme – CME Europe
The purpose of this Advisory Notice is to advise members of the extension of the CME Europe FX Short Term Liquidity Creation scheme previously set out in Advisory Notice 15-006. The scheme will now be extended for a further three months, from 1 September 2015 to 30 November 2015.

DGCX Waives Trade Fees for India Gold and Rupee Quanto futures contracts
Trade fee waiver for India Gold Quanto and Indian Rupee Quanto Futures contracts shall be extended until the year end, Thursday, 31 December 2015.

 

 

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