Top Headlines

GFXC Updates on Working Group Progress – Profit & Loss

The Global Foreign Exchange Committee (GFXC) has released a new illustrative example on “cover and deal” trading activity to be included in the FX Global Code in a future update, which highlights so-called “under-filling” of client orders using the last look window. The negative example highlights that a participant accepting an order on the understanding that it is operating in “cover and deal” mode and therefore not assuming any market risk, cannot execute the full amount with its own liquidity provider and then under-fill the client because the market has moved. 

GFXC Names New Vice Chair; Details Review – Profit & Loss

The Global Foreign Exchange Committee (GFXC) has appointed Neill Penney, managing director and co-head of trading at Refinitiv, as co-vice chair for a two-year term. He will serve alongside Akira Hoshino for the next year. The GFXC has also released further detail from its 22-23 May meeting in Tokyo, during which the committee discussed its mandate to consider the case for a comprehensive review of the FX Global Code at least every three years.

Why the FX Industry Should Pay Attention to Deutsche Bank Saga (opinion) – Profit & Loss

Some of the problems at Deutsche Bank’s equities business were caused by market structure issues. Margins were thin, competition from non-bank firms meant volumes and customers were harder to hold on to, and the advance of technology meant that even those customers who were traditionally with the bank had the opportunity to go a different route. This should be food for thought in the FX industry, not because volatility is low, but because FX is flirting heavily with the broker model that has cost so many jobs at Deutsche.

Two Worlds Collide: Is the Buy-Side on a Path to the CLOB? – The Trade

Audrey Blater, senior analyst at Aite Group, examines the preliminary results of a recent survey of trends in the US Treasury market and finds that the buy-side attitudes towards a Central Limit Order Book are shifting.

Survey Highlights Treasurers’ Concerns Over Visibility of FX Exposures – Profit & Loss

A new survey from Citi, which includes responses from 400 corporates of varying sizes, industries and geographies, shows that the core priorities for corporate treasurers are gaining visibility of their FX exposures and improving cash forecasting.

Regulatory News

CFTC Clarifies Uncleared Swap Margin Rules – Profit & Loss

The Commodity Futures Trading Commission has issued an advisory noting that under its uncleared swap margin rules, the documentation of initial margin will not be required until the initial margin threshold amount exceeds $50 million.

US Financial Regulators Move to Exempt Community Banks from Volcker Rule – Reuters

US financial regulators have adopted a final rule that will exclude small, government-insured banks from regulations banning proprietary trading. The rule excludes community banks with up to $10 billion in total assets from having to comply with the so-called Volcker rule, which prevents banks from making speculative bets with customer deposits or their own funds, as well as holding ownership in hedge funds or private equity funds.

Why Investors Must Face up to Libor’s Demise – Financial Times (subscription)

By any measure, shifting the US market off Libor and over to Sofr – the secured overnight financing rate – is a tough task, broader in scope and complexity than the conversion to a single currency in Europe in 1998, preparation for Y2K or the adoption of post-crisis regulatory reforms such as the Dodd-Frank Act, or Basel regulations on bank capital, to name a few. Maybe it is regulatory fatigue, a resistance to change, or sheer apathy, but investors have been slow to embrace the new benchmark.

Crypto News

PBoC Gets Go-Ahead from China’s Cabinet to Develop Digital Currency – FX Week (subscription)

China’s cabinet, the State Council, has given the go-head for the next stage of the People’s Bank of China’s digital currency programme, according to Wang Xin, director of the central bank’s research bureau.

Jay Powell Says Facebook’s Libra ‘Raises Serious Concerns’ – Financial Times (subscription)

Federal Reserve chair Jay Powell warned on Wednesday that Facebook’s planned cryptocurrency, Libra, cannot move forward unless the social media group resolves “serious concerns” about the project.

SEC Clears Blockstack to Hold First Regulated Token Offering – The Wall Street Journal (subscription)

The Securities and Exchange Commission on Wednesday cleared blockchain startup Blockstack to sell bitcoin-like digital tokens, a first-of-its-kind offering that could give young cryptocurrency businesses a new fundraising template.

Company News

ACI UK, STA, Sign MOU – Profit & Loss

ACI UK, the UK chapter of ACI – The Financial Markets Association has signed a memorandum of understanding with the Society of Technical Analysts (STA), the not-for-profit organisation dedicated to the promotion and understanding of technical analysts to the global investment community. Under the MOU, ACI UK and STA will build on the synergy between their organisations to collaborate on developing and promoting events and other activities for the mutual benefit of their members.

Deutsche Bank Tells Fixed Income Traders They’ll Keep Job – Bloomberg (subscription)

Deutsche Bank fixed income head Ram Nayak assured staff they will keep their jobs at his business even as the lender cuts 18,000 positions in a sweeping overhaul.

FX Trading Chief Madar Leaves Barclays after One Year – Financial News (subscription)

The global head of foreign exchange trading and distribution at Barclays has left the UK group less than a year after joining from rival Deutsche Bank. Barclays recruited Fabio Madar as global head of G10 FX trading and distribution in July 2018, hailing his appointment at the time as an example of the kind of “senior talent” the bank was able to attract.

Market Savvy

Markets Misunderstand Brexit Chaos Lying Ahead – Financial Times (subscription)

Political risk is being ignored by zombie markets, but a reckoning awaits.

Sterling Stabilises after Tough Week, Economy Risks Loom – Reuters

The pound edged higher on Thursday thanks to broad-based dollar weakness, snapping a recent losing streak, though investors remained wary about the British currency’s outlook on growing economic headwinds and political fears.

Dollar Falls to Five-Day Lows after Powell’s Comments – Reuters

The dollar fell to a five-day low on Thursday after Federal Reserve Chair Jerome Powell kept the door open for US interest rate cuts, though investors were wary of selling dollars aggressively until a policy review later this month.