D-Day for Euro as Market Awaits ECB Quantitative Easing

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D-Day for Euro as Market Awaits ECB Quantitative Easing – Reuters
The euro held fast more than a cent above 11-year lows ahead of a European Central Bank policy meeting on Thursday widely expected to embark on the outright money-printing the bank has steadfastly avoided, in contrast to its peers.

FX Crisis Forcing Banking Surveillance Re-Think – Profit & Loss (free story)
Banks are being forced into a major reassessment of how they monitor and survey human communications following the recent regulatory investigations into FX market manipulation.

Experts Predict Change Amid $10 Billion FX Losses From CHF Moves – Profit & Loss (subscription)
The unexpected volatility in Swiss franc witnessed last week raises fundamental questions about liquidity and pricing in the FX market, while industry losses could total over $10 billion, said speakers in a special Profit & Loss webinar on Tuesday.

CLS: Swiss Franc Shock Drove FX Trade to Record High – Reuters
Foreign exchange markets saw their biggest ever day by number of deals after Switzerland’s shock removal of its cap on the Swiss franc last week, the chief executive of settlement company CLS told Reuters on Wednesday.

Firms are Revising Client Rules to Guard Against Next ‘Swiss Shock’ –Bloomberg
Financial firms stung by last week’s surge in the Swiss franc are changing client rules and trading practices to weather future currency swings.

UK Lawmakers Criticise Report on Central Bank Handling of Scandal – WallStreet Journal (subscription)
British parliamentarians clashed on Wednesday with the author of an independent report into the Bank of England’s handling of a foreign exchange scandal, saying the report watered down the role of a former senior BOE official.

Market Looks to EUR/CHF Parity in Short Term – Profit & Loss (subscription)
The market is targeting a wide band around parity for EUR/CHF, according to a recent survey by Societe Generale. However, a very large proportion of respondents refuse to reveal their trading strategy.

China’s Forex Regulator Watching Volatile Capital Flows – Reuters
China is closely monitoring its cross-border capital flows, the foreign exchange regulator said on Thursday, amid signs that money is leaving the world’s second-largest economy as it slows.

FXPA News: Join by 1 Feb to Qualify for Time-Limited Membership Category
The special founding member category of the Foreign Exchange Professionals Association (FXPA) will close on 1 February. Join today to be part of the first wave of founding members that enjoy the distinct benefits that this class offers. FXPA recently crossed the critical threshold of 15 members, triggering elections for the first permanent Board of Directors and Officers. FXPA’s Board will include 50% representation by Founding Members that join prior to the 1 February deadline.

Regulatory News

US Regulators Eyeing Retail FX Market – Profit & Loss (subscription)
The Commodity Futures Trading Commission (CFTC) should expand its regulation of retail FX products in the light of the financial difficulties caused by last week’s Swiss franc movements, says Commissioner Sharon Bowen.

Swiss Surge Prompts NFA to Boost Currency Trade Requirements –Bloomberg
The US derivatives industry’s front-line regulator increased the amount of money traders must put down to back certain currency transactions after a surge in the Swiss franc left a leading broker in need of a $300 million rescue.

New York Federal Court Imposes a $2 Million Penalty and Permanent Industry Bans Against FX Option Investment Swindlers – LeapRate
The investment scam perpetrators are serving time in prison after pleading guilty to related federal criminal charges.

Rule Forex With a Light Touch, Investigator Tells UK MPs – the Guardian
Lord Grabiner, the barrister who has led an investigation into the foreign exchange rate rigging scandal, said the $5.3 trillion-a-day forex market needs to be regulated – but not too much, or the City could lose business to Frankfurt or New York.

Company News

Administrators Receiving Interest in Alpari from Potential Buyers – Profit & Loss (subscription)
The administrators for Alpari UK, the retail foreign exchange broker that applied for insolvency on Monday, are hoping to sell the company in the next week after reportedly receiving more than 40 expressions of interest.

FXCM Shares Rise, Class Action Law Firms Circle the Wagons – LeapRate
A number of law firms specialising in securities class action lawsuits are “investigating FXCM” and searching for FXCM shareholders to hire them.

Credit Suisse: No ‘Material’ Trading Losses From Franc Swing – Wall Street Journal (subscription)
Credit Suisse Group AG reiterated a rough outline for a potential bite out of profit, thanks to the recent surge of the Swiss franc, a swing in value that is expected to throttle much of Switzerland’s financial sector.

Gain to Cover Clients’ FX Negative Balances From 15 January Franc Trades –Reuters
US-based currency broker Gain Capital Holdings said it will forgive all negative balances incurred by its retail clients on 15 January after the Swiss National Bank jolted markets by eliminating a three-year-old cap on the Swiss franc.

Interactive Brokers Uncertain How Much of Traders’ Losses It Can Recover –Wall Street Journal (subscription)
Interactive Brokers Group Inc. Chief Executive Thomas Peterffy said Tuesday it would be almost impossible to forecast how much of traders’ losses the broker could recover, in the wake of the Swiss National Bank’s surprise decision last week to remove a cap on the value of the franc.

Brevan Howard Cut Negative Bet on Franc Ahead of SNB Decision – Wall Street Journal (subscription)
Hedge fund Brevan Howard survived last week’s currency market turmoil unscathed after cutting back a negative bet on the Swiss franc shortly before it soared, said three people familiar with the matter.

Fortress Loses in Torrid Week for Macro Funds After Swiss Franc Move –Reuters
Fortress Investment Group’s macro hedge fund lost 7.64% last week, the latest in a series of funds to suffer after the Swiss National Bank (SNB) removed a cap on the franc, sending the currency soaring.

Market Savvy  

Draghi, Get to the Chopper
Olivier Desbarres
In the 1987 hit movie Predator, Major “Dutch” Schaefer, played by muscle man Arnold Schwarzenegger, orders his team-member to “get to the chopper” to escape the jungle creature. Markets now expect European Central Bank President Mario Draghi on 22 January to flex his monetary muscles and save the day by jumping into his metaphorical helicopter and throwing huge amounts of cash at the Eurozone’s problems.

Press Releases

FXCM Revises FX and Gold Margin Requirements
FXCM, an online provider of FX trading and related services, announced that starting Wednesday, 21 January the firm will increase margin requirements globally on forex instruments, as well as gold in its overseas jurisdictions.

Industry Events