Foreign Exchange Traders Sober Up as Market-Rigging Fines Loom

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Top Headlines

Foreign Exchange Traders Sober Up as Market-Rigging Fines Loom –Bloomberg
When global bond investors lost more than $400 billion in one week this month, Koon Chow, a Union Bancaire Privee currency strategist, asked sales contacts at banks about the impact on foreign exchange markets. He didn’t get much help.

Currency Traders Should Start Paying Attention to Headlines About Greece –MarketWatch
Greece’s doomsday clock is within five minutes of midnight, said Matthew Weller, senior technical analyst at Forex.com, citing a document that was leaked by the International Monetary Fund over the weekend.

Swiss Franc Regains Haven Role with Greek Crisis Stoking Bid for Safety –Bloomberg
The Swiss franc is back to being a haven from market turmoil. Once again, the currency is climbing when Greek bonds – the riskiest government debt in the developed world as measured by derivatives – fall and weakening as the securities rise. Switzerland upended the relationship in January when it unexpectedly ditched its policy of keeping the franc weaker than 1.2 per euro, compromising its reputation for stability.

Euro’s Surge Tramples Parity Predictions – Wall Street Journal (subscription)
Investors are scaling back bets against the euro just several weeks after the common currency seemed headed toward parity with the dollar. The euro has jumped in the past two months, touching a 10-week high during intraday trading on Friday.

HSBC to Charge Bank Clients for Some European Currency Accounts –Bloomberg
Europe’s biggest bank will impose negative interest rates on the Swiss franc, Danish krone, Swedish krona and euro accounts of banking institutions, Gareth Hewett, a Hong Kong-based spokesman, said in an email. The move will affect customers in Germany, Hong Kong and the UK.

Regulatory News

Democrats Said to Plan Alternative to Shelby’s Dodd-Frank Bill – Bloomberg
Democrats on the Senate Banking Committee are drafting financial legislation as an alternative to a Republican bill they see as an effort to dismantle the Dodd-Frank Act, a committee aide said Monday.

Banking Committee Set to Mark-Up Legislative Package of Financial Regulatory Reform – Capital Thinking Blog
As we highlighted last week, this Thursday, 21 May, the Senate Banking Committee is scheduled to hold a mark-up of Chairman Richard Shelby’s (R-AL) highly-anticipated legislative package of financial regulatory reform. Chairman Shelby last week released a draft of his legislation, which calls for broad reforms of financial regulation.

MiFID II Threatens End to ‘Mates’ Rates’ in OTC Market – Risk.net(subscription)
Transparency rules for bilateral trades will end relationship-based pricing, banks warn.

Company News

One Year On: EBS eFix Matching Sees “Significant Growth” – Profit & Loss(free story)
Icap’s eFix Matching has seen its average daily volume (ADV) increase by more than 160% over the past year, effectively “meeting the FX market’s need for auditable electronic fix execution”, according to the company.

Icap Full-Year Earnings Decrease, Hurt by Weaker Trading – Bloomberg
Icap, the world’s largest broker of transactions between banks, reported a drop in full-year earnings, hurt by lower trading volumes.

Deutsche Bank Fires Warning Shot Over UK Vote on EU Exit – Financial Times(subscription)
Deutsche Bank is reviewing whether to move chunks of its large British operations to Germany if the UK leaves the EU, underlining the potential fallout in the City of London in the event of “Brexit”.

Tradition to Launch Repo Matching Platform – Automated Trader
DBV-X, a new EU regulated marketplace for collateral and secured deposits, has announced it will go live in Europe later this year.

Market Savvy  

Euro Plunges Under $1.12 as ECB Officials Signal Further Action
Reuters
The euro dived back below $1.12 on Tuesday after European Central Bank officials said the bank could take further action to quash Eurozone bond yields and boost inflation, potentially flooding the market with yet more euros.

Euro Slides Against Dollar on Renewed Fears Over Greece
Wall Street Journal (subscription)
The euro fell against the dollar to its largest one-day drop in two months, reversing some of its gains from last week as renewed fears about Greece’s ability to pay creditors surfaced to rattle the common currency.

Slowing Inflation Could Deal the GBP a Setback
BNP Paribas
We see downside risks to the GBP today as our economists forecast a soft April UK CPI report. They expect headline inflation to turn negative in y/y terms, which would be psychologically significant since UK inflation never turned negative even at the height of the global recession in 2008-2009. Core inflation should slow to 0.8% y/y, although base effects would primarily drive that.

Press Releases

Standard Chartered Joins FXSpotStream as a Liquidity Provider as the 11th Liquidity Provider
FXSpotStream, a wholly owned subsidiary of LiquidityMatch, announced that Standard Chartered has joined as a new liquidity providing bank to FXSpotStream’s clients. Standard Chartered adds to the liquidity available from FXSpotStream’s existing liquidity providers, which include BofA Merrill Lynch, BNP Paribas, Citi, Commerzbank AG, Credit Suisse, Goldman Sachs, HSBC, J.P. Morgan, Morgan Stanley and UBS.

LSEG Launches New FTSE Russell Brand
London Stock Exchange Group has launched ‘FTSE Russell’, the new integrated name created for the combined businesses of FTSE Group and Russell Indexes. FTSE Russell will now operate as one joint global index business, with a combined sales and product team serving its global customer base.

Industry Events