Top Headlines

Fed Raises Interest Rates, Citing Ongoing US Recovery – Reuters
The Federal Reserve hiked interest rates for the first time in nearly a decade on Wednesday, signaling faith that the U.S. economy had largely overcome the wounds of the 2007-2009 financial crisis

CFTC Passes Final Uncleared Swaps Margin Rule – With Reservations – Profit & Loss
The Commodity Futures Trading Commission has passed the final rule on margin requirements for uncleared swaps, however one commissioner has dissented over the move and another noted the rule “reflects a disingenuous reading of the Dodd-Frank Act to favour cleared derivatives over uncleared swaps”

FX Mispricing Costing Buy-Side Billions Each Year – The Trade
Mispriced Foreign Exchange transactions cost the European fund management industry and their underlying clients approximately €1.5 billion per year, according to a paper published by The New City Initiative, a think tank representing the interests of asset managers.

EU Regulator to Recommend Bonus-Cap Exemptions – E Financial News
EU regulators will next week recommend a series of exemptions to strict rules capping bonuses at financial companies, a move that could mean reprieve for small banks, brokerages and asset managers.

FX Monitoring Systems Remain in Infancy – Euromoney
One of the Financial Conduct Authority’s key observations when it announced the fines for banks found to have failed to control business practices in their G10 spot FX trading operations was that ‘monitoring was not designed to identify the behaviours’ found in its investigation.

FT Explainer: Currency Trading Algorithms – Financial Times
Algos are being designed to carry out ever more complex functions.

Regulatory News

FCA Moots MiFID Reporting Exemption for Some Funds – The Trade
The UK’s Financial Conduct Authority could exclude managers regulated under the Alternative Investment Fund Managers Directive and UCITS from transaction reporting obligations contained in the Markets in Financial Instruments Directive II.

FCA Clarifies Mifid II Stance – E Financial News
The UK’s markets regulator has released a weighty consultation document outlining how it expects to put the review of Europe’s trading rulebook into national law, as well as its approach to contentious issues such as trading systems registration, and buyside reporting requirements.

Swiss FINMA Issues Industry Bans Against Six Former UBS Forex Staff –Reuters
Swiss financial market supervisory authority FINMA said it issued industry bans of between one and five years against six managers and traders formerly employed in Swiss bank UBS’s foreign exchange and precious metals business.

Company News

Deutsche Börse Picks Ex-UBS Banker to Head Venture Effort – E Financial

Ankur Kamalia joined Deutsche Börse in November 2015 to take up the newly-created role of global head of venture portfolio management, reporting directly to the group’s chief executive Carsten Kengeter, according to a company spokesman.

Market Savvy  

Mispricing Derivatives a Danger for Real Assets – Financial Times
Growing dislocations between financial assets and derivatives are a symptom of increasing fragmentation in global financial markets. This poses a systemic risk which policymakers need to address.

Another 10 Percent China FX Slump Could Send Markets Spinning – Reuters
If you’re trying to identify next year’s big risk from global currency markets, look no further than a sharper-than-expected fall in China’s yuan.

Swap Spreads are Still a Worry: BoE – Profit & Loss
In its recent Q4 Quarterly Bulletin, the Bank of England (BoE) touches upon the recent trend of narrowing swap spreads – the difference between interest rate swap and government bond yields of equivalent maturity – and points to “short-term, temporary factors” as reasons behind the move.

Press Releases

Buy Side Commits to CDS Clearing – Profit & Loss
The International Swaps and Derivatives Association, (ISDA), Managed Funds Association (MFA) and SIFMA’s Asset Management Group have announced that several of the associations’ collective member firms have pledged to begin voluntarily clearing their single-name credit default swap (CDS) trades through central counterparties (CCPs)

Bloomberg to Acquire Barclays Risk Analytics and Index Solutions Business – Bloomberg
Bloomberg L.P. announced today that it has entered into an agreement to acquire Barclays Risk Analytics and Index Solutions Ltd. (“BRAIS”), a leading provider of benchmark and strategy indices, portfolio analytics, risk and attribution models, and portfolio construction tools. BRAIS’s benchmark indices span global markets covering multiple asset classes, most notably the Barclays Family of Aggregate Bond Indices.

Industry Events