Top Headlines

Future is Fixed Income for JP Morgan, Citi – Wall Street Journal (subscription)
The three US universal banking giants have largely stuck with their fixed income trading desks, despite poor returns and a constant flow of litigation. But according to research from Alliance Bernstein, the price of commitment will vary. Bernstein has taken a look at how fixed income, currency and commodities trading affects the revenue streams of Bank of America, Citi and JP Morgan.

Regulation Driving Capital from Europe to US: ICE – FOW (subscription)
Intercontinental Exchange (ICE) has warned that the EU’s regulatory reforms are creating uncertainty and resulting in a flight of capital to the US. Jeffery Sprecher, chief executive of ICE, said the company was seeing a shift in customers’ preferences “where they chose to manage risk in the swaps and futures market away from Europe and to the US, validating our investment decision to operate regional venues on common technology”.

JP Morgan Chase Details New Probes in Quarterly Filing – Wall Street Journal (subscription)
The largest US bank by assets said it is in “advanced stages” of discussions with the Justice Department and the Federal Reserve on an investigation into the bank’s foreign exchange sales and trading activities, according to the filing.

Banks and Clients Rebuild Relationships Post-SNB Move – (subscription)
The majority of disputes between banks and clients over pricing Swiss franc deals have been resolved since the Swiss central bank’s January 15 removal of the franc’s currency floor, with banks yielding to demands to stick to mispriced deals, leaving only a few unresolved cases and lingering bad feeling on both sides.

UK Election Drama Has BlackRock to Loomis Cutting Pound Wagers – Bloomberg
Currency investors managing trillions of dollars are sitting out the UK’s closest election since the 1970s. BlackRock, Citigroup’s private-banking unit and Loomis Sayles & Co. have all cut their exposure to the pound as the cost jumps for options to hedge against its declines.



Regulatory News

Watchdog Can’t Afford Routine Inspections, Massad Says – Bloomberg
The top US derivatives regulator said his agency lacks resources to conduct even routine inspections of the exchanges and other companies it polices. “We simply can’t get into these entities on a regular basis,” Commodity Futures Trading Commission Chairman Timothy Massad told lawmakers in Washington on Tuesday

After Seven Years, a Libor-Rigging Case Heads to Court in London – Bloomberg
When Thomas Hayes walks into a London courtroom next week, he will be the first person to face trial for allegedly rigging the benchmark interest rates used to value $350 trillion of loans and securities.

ESAs – Main Risks to EU Financial Market Stability Have Intensified (press release)
The Joint Committee of the European Supervisory Authorities (ESAs) published its fifth Report on Risks and Vulnerabilities in the EU Financial System. Overall, the report found that in the past six months, risks affecting the EU financial system have not changed in substance, but have further intensified.

Basell III and Derivatives Clearing – The Trade
Societe Generale’s Bill Stenning discusses the stricter rules requiring banks to hold more capital to cover their derivatives activities and the alarming concerns throughout the industry surrounding their effect on client clearing.

Treasury Penalises Ripple Labs, in First Action Against Virtual Currency Exchange – Wall Street Journal (subscription)
US authorities hit Ripple Labs Tuesday with a $700,000 penalty for failing to follow anti-money-laundering rules, marking a setback for one of the virtual currency world’s rising stars.

Two Traders Sued for ‘Spoofing’ on Gold and Silver Futures – Bloomberg
Two traders from the United Arab Emirates were sued by US regulators over claims they were “spoofing” gold and futures markets by placing bids and offers they intended to cancel before execution.

SEC Commissioner Blasts Dodd-Frank as Huge ‘Distraction’ – CNBC
On the fifth anniversary of the Flash Crash, SEC Commissioner Dan Gallagher talks about changes that have been made to the way trading has been conducted since then. The conversation quickly turns to Dodd-Frank. Why the sudden left turn? Because the SEC staff has been consumed by writing rules for Dodd-Frank for the past four years, practically to the detriment of everything else, and it’s not over, not by a long shot.



Company News

Virtu’s Currency Profit Doubles as HFT Firm Posts First Results – Bloomberg
Virtu Financial said its income from trading currencies has doubled, making foreign exchange the high-frequency trading firm’s fastest growing asset class.

Nixon Joins Virtu Financial’s Board of Directors – Profit & Loss (free story)
Virtu Financial, a global liquidity provider and market maker, has appointed John Nixon to its board of directors, effective immediately. Nixon has more than 30 years of international experience in the financial markets.

CME, SGX and ICE FX Activity Down in April, But Up Year-on-Year – Profit & Loss (free story)
Three exchanges have reported month-on-month reductions in average daily FX volume on their platforms in April, but continue to see a strong uptick in activity compared with last year. Last week, both Hotspot and FastMatch also reported declines in month-on-month FX volumes

FX Revenues Jump for HSBC, Considers UK Exit – Profit & Loss (free story)
HSBC Group CEO Stuart Gulliver has criticised the UK government and regulators, which he claims are making the group consider relocating its headquarters away from the country.

Symphony CEO: ‘We’re Onto Something Much Bigger Than We Thought’ – Financial News (subscription)
David Gurle, the chief executive of Symphony, discusses what is in store for the chat services provider created by banks and asset managers last year.



Market Savvy  

The Morning Track – Waning
When central banks cut rates, talk down their currency and warn on growth, they expect the FX and bonds markets to follow with a weaker currency and lower yields. This didn’t happen yesterday and it’s a warning shot as Australia becomes a poster child for waning central bank influence. When rates drop to levels where further action is in doubt then markets take over with supply and demand. Australia is near the bottom for more easing, same with the ECB – and fixed income markets are showing the way. China maybe in a similar situation even as the markets expect more easing from the PBOC, the stock market rally reverses with talk of stamp duties and higher margins. Waning influence is a scary prospect for some central bankers as they rely on their ability to talk as a tool to smooth over markets.



Press Releases

Icap Electronic Broking Volumes – April 2015
Icap’s EBS has reported that average daily volume in April 2015 was $96.9 billion, 41% higher than $68.5 billion in April 2014.



Industry Events