Top Headlines

ECB Attacks EU Plans for Boosting Supervision of Clearing Houses – Financial Times

European Central Bank officials have strongly criticised EU plans for boosting supervision of clearing houses, saying they leave it without crucial powers to fend off crises in the €660tn market for euro-denominated derivatives and violate its independence.

Carry on – Central Bank Signals Leave ‘Carry’ Traders Chasing More – Reuters

Collapsing asset price volatility has turned ‘carry trading’ into one of investors’ top plays of 2019. Many reckon the run is far from over.

In the FICC of It (podcast) – Profit & Loss

The podcasters get into a debate over the value of speed bumps in futures markets, discuss the potential buyers of Refinitiv and take a look at a recent blog post on aggregation in FX. The podcast closes out by fulfilling its promise of the previous week through delivering “considered analysis” of a recent rival podcast which took a look at the events surrounding the death of crypto exchange Quadriga’s CEO.

Investors are Starting to Freak Out About the Amount of Their Activity Being Monitored and Monetized by Investment Banks – Business Insider (subscription)

Alternative data sets have already come under scrutiny for their questionable origins and potential legal issues. Now some executives are raising alarm bells about how investment banks package and sell supposedly anonymized data about buy-side behaviour.

Who Wants to See a Movie About High-Frequency Trading? High-Frequency Traders – The Wall Street Journal (subscription)

Doctors, lawyers, soldiers and even journalists have all seen movies made about their professions – then gone on to complain about how Hollywood got it wrong. Now high-frequency traders will have their turn. And they can’t wait.

Regulatory News

May Threatens and Pleads in Bid to Get Brexit Deal Over the Line – Bloomberg

Theresa May is threatening to give up trying to get Brexit done any time soon unless euroskeptics in her Conservative party back down and promise to vote for her deal this week.

CFTC Welcomes EU EMIR Agreement – Profit & Loss

The updated regulation will broaden the role of the European Securities and Markets Authority (ESMA) to include more supervisory tools and on-site inspections; introduce a tiered system of recognition for offshore CCPs depending on their product set and systemic importance to the EU; and introduces the requirement that systemically important non-EU CCPs establish themselves in the EU if they seek to access the single market.

Three CFTC Commissioners, Three Points of View on SEFs at DerivCon – Tabb Group

At the recent DerivCon conference, jointly hosted by ISDA and TABB, three CFTC commissioners expressed differing opinions about potential changes to current rules governing trading on Swap Execution Facilities.

FIA Files MiFID II Consultation Response with German Ministry of Finance – FIA

FIA has submitted jointly with ISDA and GFMA/GFXD the response to a consultation by the German Ministry of Finance. Germany had requested feedback from market participants regarding their experience with MiFID II during the first year of its application.

Sell Side Struggles with Rule 606 – Markets Media

With approximately eight weeks before the US Security and Exchange Commission’s update of Rule 606 goes into effect, sell-side firms still need much guidance to meet the 334-page mandate.

Crypto News

CME Flags Bitcoin Growth as Cboe Pulls the Plug – Profit & Loss

Cboe appears to have conceded defeat on bitcoin futures to cross town rival CME Group with an announcement that it will delist its contract this month.

SEC’s Crypto Czar: Stablecoins Might be Violating Securities Laws – DecryptMedia

More stablecoin projects might soon find themselves in the SEC’s crosshairs. The SEC’s Senior Advisor for Digital Assets, Valerie Szczepanik, told a crypto-curious crowd at Austin’s SXSW conference that certain types of stablecoins “could raise issues under securities laws.”

Pardon Our Dust: Crypto Markets Still Have Some Building To Do – JLN

The institutionalization of the crypto market is going to take some time – be patient. Panelists on the cryptocurrency panel at FIA Boca said there is still infrastructure building that needs to be done before the asset class becomes mainstream.  

Company News

EBS Launches API Streaming of Quant Analytics – Profit & Loss

EBS is launching a new API streaming service on its quant analytics platform. The new functionality is expected to launch in the second quarter of 2019 and will stream trade information, market impact and alpha calculations on a trade-by-trade basis to clients. 

CCP Risk Panels Aren’t Listening, Banks Say – (subscription)

Two big banks have insisted that risk committees at clearing houses take greater account of their voices when green-lighting newer, riskier products for clearing.

At banks, there has been quiet consternation over the clearing of products such as bitcoin futures, given that if any of these blew up, clearing members would be on the hook for the losses.

Deutsche Bank Is in Talks With Commerzbank After Turnaround Efforts Failed – Bloomberg

Deutsche Bank, Europe’s once-dominant financial institution, threw in the towel on years of failed turnaround efforts and agreed to begin government-backed merger talks with Commerzbank.

UBS Increases Guaranteed Bonuses for Bankers – Financial News (subscription)

UBS increased the amount it spent on guaranteed bonuses for senior bankers by nearly 30% in 2018, a year in which it bolstered the ranks of dealmakers at its investment bank.

Market Savvy

Sterling Falls as Lawmakers Cast Doubt on PM May’s Brexit Deal – Reuters

The pound fell towards $1.32 on Monday as Prime Minister Theresa May sought to salvage her Brexit deal by winning over doubtful lawmakers with threats and promises to avoid any move to oust her.

Aussie Leads Recovery as Hopes for Accommodative Fed Knock the Dollar – Reuters

The Australian dollar hit a two-week high and led a recovery against the US currency on Monday as caution about the US economy and expectations for an accommodative Federal Reserve meeting this week kept the greenback on the back foot.

What’s Driving the Unusual Calm in Currency Markets – The Wall Street Journal (subscription)

Things have gotten quiet in currency markets, and too quiet for some traders. The sense of calm is shown by remarkable stability in exchange rates and the cost of hedging against big swings in them. The worry is that volatility has gotten abnormally low, which could make any future market moves more disruptive.

JP Morgan Sees Less Need for Hedges in Volatility Bear Market – Bloomberg

Volatility is probably lower than it should be, but that doesn’t mean investors should turn defensive, according to JP Morgan.