Top Headlines

Fed Raises Capital Requirements for Banks – Wall Street Journal (subscription)
The Federal Reserve sent a message to the largest US financial firms: staying big is going to cost you. The Fed’s warning, articulated in a pair of rules it finalised Monday, is among the central bank’s starkest post-crisis regulatory moves pressing Wall Street banks to reconsider their size and appetite for risk.

Exotic FX Option Losses in 2008 Still Haunt Market – Asia Risk (subscription)
In 2008, as financial markets buckled in the wake of the Lehman Brothers bankruptcy, Chinese steel-maker Citic Pacific lost an astonishing $2.4 billion on derivatives it had purchased to hedge the Australian dollar. The company had used target redemption forwards to take a long position of A$9.44 to protect its investment in a mining project in Western Australia.

Singapore Regulator Says Reviewing SGX’s Role Overseeing Markets – Bloomberg
The Monetary Authority of Singapore said it’s reviewing the regulatory role of Singapore Exchange as global bourses expand in the city-state.

Yanis Varoufakis: Greece ‘Made Mistakes, There’s No Doubt’ – CNN
Greece’s divisive former finance minister, Yanis Varoufakis, admitted on Monday that Greece made mistakes over its bailout negotiations, but he continued to lay the preponderance of blame for the Greek woes on the country’s creditors.


Regulatory News

Lawmakers Call for Easing Rules for Banks’ Internal Swap Trades – Bloomberg
US regulators should consider freeing large banks from having to hold collateral against derivatives used to manage internal risks, top Republican and Democratic lawmakers on a key House panel said in a letter.

ISDA Review of Dodd-Frank Calls for Regulatory Harmonisation – Profit & Loss (free story)
Regulators in the US and other jurisdictions need to harmonise derivatives rules in order to prevent liquidity fragmentation, says the International Swaps and Derivatives Association (ISDA) in its review of the Dodd-Frank Act published this week.

Banks Slam Clearing For Some European Currencies – FOW (subscription) Deutsche Bank and Barclays have criticised plans to extend clearing obligations for interest rate swaps to the six currencies of the European Economic Area (EEA). The European Securities and Markets Authority (Esma) released late on Friday the banks’ responses to a recent consultation on the proposed extension of the IRS clearing obligations to Czech koruna, Danish krone, Hungarian forint, Swedish krona and Polish zloty.

Smaller Banks in Volcker Rule Exemption Letter ‘Stand-Off’ – Asia Risk (subscription)
While larger foreign banks caught by the Volcker rule have detailed compliance plans at the ready, smaller institutions are relying on the “totally outside the US” (Totus) exemption but counterpart international banks are refusing to sign representation letters causing a stand-off just before the deadline for implementation. The Volcker rule prohibits banks from conducting proprietary trading.

Dodd-Frank’s Job Isn’t Done – Bloomberg View
On July 21, 2010, President Barack Obama signed into law the Dodd-Frank Wall Street Reform and Consumer Protection Act, aimed at ensuring the financial system would never again bring the US to the brink of economic disaster. Five years later, the job remains far from done.

RBA Minutes: China Turmoil and Currency Complaints – Financial Times (subscription)
Imminent easing from the RBA doesn’t appear likely. Minutes of its July 7 meeting indicate the Reserve Bank of Australia sees an economy with below-trend growth but stable unemployment.

Regulation a Hurdle for Blockchain – FOW (subscription)
The deadline for responses to the European Securities and Markets Authority’s (Esma) call for evidence on virtual currencies and distributed ledgers passes this Tuesday, in the first move by the regulator to increase scrutiny of the technology.


Company News

Morgan Stanley Profit Tops Expectations, Buoyed by Strong Trading Revenue – Wall Street Journal (subscription)
Trading revenue, which includes fixed income, currency and commodities trading, jumped 21% in the first half of 2015 to $3.38 billion, the fastest start for the division since 2011. The results, coupled with strong gains in its stock trading business, helped boost Morgan Stanley’s second-quarter profit above analysts’ estimates.

Barclays Cuts Global Trading Deal with Fidessa – FOW (subscription)
Barclays has signed with Fidessa to take its futures and options trading platform and install it across its global operations this year.

Symphony is Just the Latest Attack on Bloomberg’s Fortress – Financial Times (subscription)
Symphony’s plan to push into the trader chat rooms long dominated by Bloomberg is just the latest attack on one of the most impregnable fortresses of financial services. Two summers ago Markit, the UK data provider, was putting the final touches to a venture with Thomson Reuters to link together the messaging systems of many of the world’s biggest banks.


Market Savvy  

Sterling Bulls Ride BoE Rate Debate
Financial Times
Sterling is being tipped to strengthen over the summer as currency strategists gear up for a split in Bank of England ranks over how soon the UK should raise interest rates.

Explainer: Renminbi’s Flexible Rate – 10 Years On
Financial Times
For China-watchers, the renminbi’s gradual moves towards full convertibility with long pauses along the way have become the classic example of China’s general gradualist approach to economic reform. In other words, while the overall direction of travel is clear, the timing never is.

Dollar Inches Higher
The dollar built further on a week of gains due to resurgent expectations for rises in US interest rates on Tuesday, reaching a five-week high against the yen and a three-month peak against a basket of currencies.


Press Releases

CME Group and Multi Commodity Exchange of India sign Memorandum of Understanding
CME Group and Multi Commodity Exchange of India (MCX), today signed a Memorandum of Understanding on various cooperation activities and potential business opportunities, including a joint viability study of setting up operations in an International Finance Service Center in India.

Bright Smart Joins SGX as Derivatives Member
Singapore Exchange (SGX) has welcomed Hong Kong-based Bright Smart Futures and Commodities Company to its derivatives market as a trading member.


Industry Events