Competitiveness Concerns Limit Ambition in UK’s Fair Markets Review

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Top Headlines

Competitiveness Concerns Limit Ambition in UK’s Fair Markets Review – Reuters
To what extent can a $5 trillion a day market be fair and transparent when a third of the trading is done by just two banks?

UK Plans Global Fixed Income, Currencies and Commodities Rules – Financial Times
It is the morning after the night before. The night in question involved the port, pomp and pageantry that defines the annual Mansion House banquet, where City grandees exchange pleasantries with politicians and policy makers.

The Impact of FEMR: Industry Responds – Profit & Loss (free story)
Following yesterday’s swathe of responses from industry bodies to the UK’s Fair and Effective Markets Review (FEMR), vendors and market practitioners in the foreign exchange industry have started to voice their initial reactions to the recommendations.

Swiss Peg Debacle Leads to Cull in FX Prime Brokerage – Euromoney
A series of market disasters in recent years, culminating in the SNB’s decision to abandon its peg to the euro, have forced banks to reconsider their commitment to the prime brokerage business, leaving many smaller hedge funds and other clients in the cold – but a new generation of providers is taking their place, promising to revolutionise the business.

Asia Appeals for Exchanges as Regulators Get Bogged Down – Financial Times (subscription)
For delegates gathering at the annual International Derivatives Expo in London this week, there were two main items on the agenda; regulatory clarity and growth.

Gross Margin Move Unlikely, says EC’s Pearson – Risk Magazine (subscription)
A senior policy-maker has dismissed rumours the European Commission is considering moving to a two-day gross methodology for clearing house margin requirements. The US requires central counterparties to collect enough margin to cover potential losses over a one-day period for listed derivatives. The European rules call for CCPs to calculate margin over two days, but also allow clearing houses to net exposures.

Treasury Market Group Warns on High-Frequency Trading Dangers – Bloomberg
Wall Street executives finalised recommendations for guiding trading in the US Treasury market to ensure the safety and soundness of the world’s debt arena. The comments come amid a regulatory push to prevent cheating in financial markets, including the illegal bait-and-switch tactic known as spoofing.

 

Regulatory News

What’s Next for the BoE’s Markets Review? – Financial News (subscription)
Bankers and lawyers in the City will be dissecting the contents of the final report of the Bank of England’s Fair and Effective Markets Review. But while some might think the release of the final report means the work is coming to an end, it is not yet over. Financial News has compiled a guide to what’s next.

Bank of England Acts to Encourage Whistleblowers – Financial Times (subscription)
Whistleblowers who report dodgy dealing or criminal behaviour in a market or company have been around since at least 1610. Now the Bank of England has zeroed in on the practice and highlighted research showing that people are far less willing to blow the whistle in financial markets than in the rest of the economy.

UK Bank Rule Reformers Call End to Age of Big Stick – Financial Times (subscription)
The cycle of scandal and ever higher fines for banks should be over — provided institutions follow an ambitious suite of new regulatory measures, according to the trio of UK policy makers behind the reforms. “This is a really important inflection point; this is the start of a change,” Martin Wheatley, the head of the UK Financial Conduct Authority, told the Financial Times.

European Regulators Battle with Derivatives Reporting – Euromoney
A review of EMIR reporting is under way as the industry lobbies regulators to move to single-sided reporting for OTC derivatives and remove the reporting requirement for exchange-traded derivatives. What’s more, cross-border harmonisation of derivatives regulation is way off.

Regulation Makes Benchmarks a ‘Dirty Word’ for Banks – Financial News (subscription)
Heavy misconduct fines and enhanced oversight have meant that banks are reluctant to participate in setting key financial benchmarks, regulators and administrators have said.

Europe Consults on Uncleared Swap Margin – International Financing Review
European regulators have begun a second consultation on new rules requiring initial and variation margin to be exchanged for over-the-counter swap transactions not cleared through central counterparties.

 

Company News

Saxo Bank Appoints Global Head of FX – Profit & Loss (free story)
Saxo Bank has appointed Singapore-based Kurt vom Scheidt as global head of foreign exchange, reporting to Claus Nielsen, global head of markets.

 

Market Savvy  

Euro Tumbles Versus Dollar as Merkel Bemoans Currency’s Strength
Bloomberg
The euro tumbled against the dollar as German Chancellor Angela Merkel said the common currency’s strength was making reforms hard in the region’s most-indebted nations, the latest official to comment on exchange rates this week.

Asian Currencies Sag as Focus Shifts to Greek Woes
Reuters
Asian currencies were mostly steady to lower versus the dollar on Friday as uncertainty over the fate of Greece’s negotiations with international lenders hurt risk sentiment.

Zimbabwe Ditches its All But Worthless Currency
Financial Times (subscription)
The Reserve Bank of Zimbabwe said it will begin a process to “demonetise” its all-but-worthless currency on June 15. The move was planned by the Minister of Finance and Economic Development last year and the process is expected to be complete by September 30.

China to Boost Promotion of Yuan as International Currency
Reuters
China is to further broaden cross-border financing channels for both Chinese and foreign institutions, the central bank said on Thursday, as it seeks to accelerate opening up its domestic market and promote the yuan as an international currency

 

Press Releases

LMAX Exchange CEO Comments on the FEMR Report
On the use of ‘last look’, we have a long held view that this practice is no longer required given the advances in trading technology.

 

Industry Events