Global Bank Regulators Call for More Risk Controls Around Algo Trading

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Top Headlines

Global Bank Regulators Call for More Risk Controls Around Algo Trading – Reuters
Banks need to put in place more stringent standards around algorithmic trading to help reduce risks to the financial system as trading becomes more electronic and increasingly complex, a group made up of global regulators said on Thursday.

Sterling Set for Biggest Weekly fall vs Euro in Four Years – Reuters
Sterling fell to a three-week low against the euro on Friday after a gauge of UK manufacturing tumbled, leaving the pound on track for its biggest weekly losses against the single currency in almost four years.

ESMA Grants Equivalence to 10 CCPs – COO Connect
The European Securities and Markets Authority (ESMA) has granted equivalence to 10 Asia Pacific central counterparty clearing houses, thereby allowing third country CCPs to provide clearing services to EU clearing members and trading venues.

Cleared NDF Volumes Still ‘Tiny’, But Sef Share Grows – FX Week (subscription)
Global cleared non-deliverable forwards still make up less than 1% of traded volumes in the US and only a “tiny” proportion of the contracts are cleared in the case of the Brazilian real – the dominant currency against dollars in the NDF world – according to data from financial technology company Clarus Financial.

Q&A: SNB’s Danthine on the Swiss Franc and Market Risk – Risk Magazine (subscription)
A surprise for traders and investors, perhaps, but no black swan – this is how Jean-Pierre Danthine, vice-chair of the Swiss National Bank, views the decision to end the franc’s minimum exchange rate.

 

 

Regulatory News

Trade Body Backs Clearing Stress Test Standards – FOW (subscription)
The European Association of CCP Clearing Houses (Each) has called for greater standardisation of clearing house stress tests and has outlined a set of best practices in a white paper released on Thursday. The paper sets out four key principles covering the relevance, structure, governance, and transparency that should form the basis of a set of best practices for clearinghouse stress tests.

Are OTC Derivative Rules a Blessing or a Curse? – The Trade     
Asia’s OTC derivatives markets have been both blessed and cursed by the fact they have implemented the structural reforms demanded by the Group of 20 in the wake of the larger European and US markets.

CCPs Need ‘Skin in the Game’: BlackRock – Markets Media
Derivatives clearinghouses represent linchpins in the financial system, yet themselves are not taking adequate measures to protect themselves from failure, according to BlackRock. In an April 27 comment letter summarising the positions it took at a March 19 roundtable held by the US Commodity Futures Trading Commission, BlackRock said that “the best way to ensure that a failed or failing CCP does not have a systemic impact on the financial system is to strengthen its defences so that events, such as the default of one or more CMs, can be buffered by sufficient resources.”

How Prime Brokers & Custodians Are Addressing Regulatory Change – Tabb Forum
The dual pressures of ongoing operational cost reduction and clients’ regulatory compliance are changing the business of asset servicing for custodians and prime brokers alike. But armed with the right tools – including access to the right datasets – asset servicers can position themselves for future growth as they help clients meet the growing regulatory data challenge.

 

 

Company News

Concannon Ready to Create Price War in FX to Make Hotspot Leading ECN – Profit & Loss (free story)
Hotspot plans to increase competition in the FX markets by creating a price war, Chris Concannon, president and CEO of BATS, said of the recently acquired FX platform.

Hotspot Sees 10% Drop in ADV FX Volumes for April – Profit & Loss (free story)
Hotspot, recently acquired by BATS Global Markets, has seen a month-on-month drop in average daily notional FX volume of 10.3% for April, compared with a month-on-month increase of 17% in March.

Citi CEO’s Pay Cut by 10% Over FX Rigging – Profit & Loss (free story)
Citi has cut chief executive Michael Corbat’s 2014 compensation package due to his failure in stopping FX traders from participating in currency market manipulation, according to chairman Michael O’Neill.

Goldman Leads Investment Round in Bitcoin – Profit & Loss (free story)
Goldman Sachs and China-based IDG Capital Partners have co-led a $50 million investment round for Bitcoin payment firm, Circle Internet Financial.

CME Group Suspends Two Gold Futures Traders for Allegedly Spoofing – Reuters
CME Group on Thursday suspended two traders from its markets for allegedly colluding to enter orders repeatedly with no intention of trading, a strategy that has been fingered as a key contributor to the 2010 Wall Street flash crash.

Lift-off for ASX Aussie Dollar Swap Clearing Business – Asia Risk (subscription)
ASX has seen a sharp increase in the volume of its Australian dollar over-the-counter interest rate swap clearing business in the first three months of 2015 with monthly notionals in this period six times higher than before it introduced a revamped clearing incentive scheme, and sixty times larger than in August.

 

 

Market Savvy  

What Would Happen if Greece Defaulted?
Wall Street Journal (subscription)
Most analysts still believe the embattled Greek government will muddle through its negotiations with European creditors and pull back from the brink.

 

 

Press Releases

Bank for International Settlements (BIS) OTC Derivatives Statistics at End-December 2014
Foreign exchange derivatives make up the second largest segment of the global OTC derivatives market. At end-December 2014, the notional amount of outstanding FX contracts totalled $76 trillion, which represented 12% of OTC derivatives activity. Contracts against the US dollar represented 89% of the notional amount outstanding at end-December 2014. The gross market value of FX derivatives increased to its highest level for several years. It increased to $2.9 trillion at end-December 2014 from $1.7 trillion at end-June 2014.

Parker FX Index up 1.53% in March, 3.92% YTD
The Parker FX Index is reporting a +1.53% return for the month of March. A total 31 programs in the Index reported March results, of which 23 reported positive results and eight incurred losses.

ICE Benchmark Administration (IBA) Publishes Position Paper on the Evolution and Enhancement of ICE LIBOR
Intercontinental Exchange has published a feedback statement on the responses received to the ICE Benchmark Administration (IBA) position paper on the evolution and enhancement of ICE LIBOR.

 

 

Industry Events