EC to Launch Sweeping Review of Post-Crisis Regulation

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Top Headlines

EC to Launch Sweeping Review of Post-Crisis Regulation – Financial News (subscription)
The European Commission is to launch a fresh, all-encompassing review of regulatory changes made in response to the financial crisis, as part of its push towards a Capital Markets Union – a move that could ultimately see changes made to huge pieces of legislation, including Mifid II.

Wall Street Said to Win Lucrative Concession in Derivatives Rule – Bloomberg
Wall Street is close to cutting billions of dollars from the cost of a derivatives rule as a debate among regulators over how tough the provision should be shifts in banks’ favour. Firms such as JPMorgan and Morgan Stanley wouldn’t have to set aside as much money in trades between their own divisions in the final version of a rule US regulators may release as soon as next month, said two people familiar with the discussions.

Sarao Effect Has Driven “Need for Speed” – FOW (subscription)
The British futures trader dubbed the ‘Hound of Hounslow’ who was arrested in April over manipulative trading behaviour back in 2010 is due in court Friday for his extradition hearing. His case has sparked media and market interest, and has caused a shift in attitudes to market surveillance and the systems available to catch manipulative behaviour.

Central Limit Order Book Platforms Face Uphill Battle – Euromoney
Proponents of central limit order book (CLOB) point to its ability to deliver liquidity at times of extreme market stress, but they have yet to convince the majority of market participants that the price is worth paying.

Ex-Deutsche Bank Manager Cloete Slams German Libor Criticism – Bloomberg
A former global finance chief at Deutsche Bank said the German market regulator ruined his reputation after it claimed he and other managers may have turned a blind eye to Libor manipulation. Alan Cloete said in an August 10 letter to the agency, Bafin, that he has suffered “as a result of the inaccurate and reputationally damaging assessments” by it.

Currency Hedge Funds Post Gains in August as Safe Haven Shift Towards Yen and Euro – Opalesque (subscription)
Currency hedge funds reported gains last month as the US dollar fell with safe haven demand shifting toward the Japanese yen and euro due to China’s currency devaluation and the fall in commodity prices, along with continued speculation about a US rate increase this year. The Parker FX Index was up +0.40% in August.

Customers Consider Suing Banks in FX Manipulation – FX Week (subscription)
Institutional investors are approaching law firms about potential civil claims against banks implicated in the ongoing investigations into the manipulation of FX markets.

High-Frequency Firms Dominate Treasury Trading in Near Secret – Bloomberg
Trading in the $12.7 trillion US Treasuries market, once the domain of Wall Street’s biggest banks, is increasingly dominated by firms most people have never heard of.

Best Execution Woes Ongoing for Small Hedge Funds – Hedge Funds Review (subscription)
One year since the UK Financial Conduct Authority’s damning review into best execution practices, small hedge funds are still fixated over how to achieve the best price. In July 2014, the FCA issued its report on banks and asset managers’ best execution practices, blasting firms’ understanding of what they needed to do to justify and monitor whether they were achieving best prices – and costs and speed and safety – in execution.

 

Regulatory News

Giancarlo Calls for Reassessment of “Flawed” Swaps Rules – Profit & Loss
CFTC Commissioner Christopher Giancarlo has called for the Commodity Futures Trading Commission to revisit the Made Available to Trade (MAT) and swaps trading rules in a speech delivered at Forex Network Chicago.

Esma Chair Maijoor and Executive Director Ross Extended for Second Five-Year-Term
The Board of Supervisors of the European Securities and Markets Authority (Esma) has decided to extend the terms of office for both the chair, Steven Maijoor, and executive director, Verena Ross, for another five years.

Esma Appoints New Chairs to Standing Committees
The Board of Supervisors of the European Securities and Markets Authority (Esma) has appointed three members to serve as chairs of its standing committees.

Basel Rules Shut Out Clearing Brokers: LCH – FOW (subscription)
LCH.Clearnet has hit out at the Basel III bank capital rules, stating that clearing brokers are being pushed out of the market for failing to take into account the risk reducing effects of segregated margin.

Mifid II Delegated Acts Shelved Until November: FCA – Risk Magazine (subscription)
The UK’s Financial Conduct Authority has told banking and markets lobbyists that elements of Europe’s new trading and transparency rules will be delayed until November, including controversial requirements on the unbundling of fixed income research. Market participants believe the rules have been held up by opposition from some member states, including the UK.

 

Company News

CFTC Acts Against Bitcoin Trade Platform – Financial Times (subscription)
A bitcoin trading platform has been found by US regulators to have failed to prevent prohibited transactions, in a sign of the continuing crackdown on unlawful trading activity in virtual currencies. The enforcement action against TeraExchange is the third this year against bitcoin venues.

Saxo Unveils ‘Next-Generation White-Labelling Business’ – Euromoney
Saxo Bank has thrown open its doors to third-party institutions and developers to use its trading infrastructure with the launch of OpenAPI, bringing multi-asset trading capabilities to institutional and retail traders.

Australia’s ASX to Expand to Hong Kong to Boost Asia Ties – Reuters
Australian equities and derivatives exchange ASX on Friday said it will open an office in Hong Kong on October 1, helping traders get faster and cheaper access to Sydney markets.

 

Market Savvy  

Yellen Boosts Dollar to Five-Week High – Financial Times (subscription)
The dollar index, which tracks the greenback against a basket of other currencies, has pushed 0.65% higher so far on Friday, basking in the glow of the latest statements by Federal Reserve chair Janet Yellen. Speaking late on Thursday, Ms Yellen sent the message that though the Fed skipped on a rate hike this month, a move some time this year is a definite possibility.

Is Brazil for Real? – Saxo Bank
Let’s begin with Brazil where the central bank has threatened to use FX reserves to buy the real. Previously Brazil had used “sterilised” interventions (such as FX swaps and dollar repo), which thus far have failed to stem the currency declines. The possibility of outright real purchases (dollar sales) did the trick.

Emerging Markets Go from Bad to Worse – Wall Street Journal (subscription)
A gauge of emerging market currencies has fallen to its lowest level in six years. The Malaysian ringgit plumbed new lows Friday, on track for its largest weekly loss in nearly two decades, while Indonesia’s rupiah fell to a fresh 17-year low, following steep declines in other emerging market currencies earlier in the week.

Countries Looking to Devalue Their Way to Growth Have a Big Problem, HSBC Says – Bloomberg
Economists at HSBC have a message for monetary policymakers who are hoping their stimulus will help devalue their local currencies and spur exports: Good luck with that.

FX Option Volatility May Be Undervalued – GlobalCapital (subscription)
After an explosive month in August, implied volatilities for many currency pairs remained subdued in the wake of the last Thursday’s US Federal Open Market Committee decision to leave rates unchanged.

 

Press Releases

FastMatch Offers Fully Disclosed Trading for $1 Per USD Million Notional
FastMatch is to further cut costs for customers by introducing fully disclosed trading at a new low cost.

Joint Study by EBRD and Oliver Wyman Illustrates Benefits of Overcoming Fragmentation of Local Capital Markets 
The creation of a regional Central Counterparty (CCP) across central and eastern Europe (CEE) will drive the development of capital markets and economic growth in the region, a report by the European Bank for Reconstruction and Development (EBRD) and management consultancy Oliver Wyman, published today, has found.

 

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