High-Frequency Trader Warns of Potential Market ‘Catastrophe’

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Top Headlines

High-Frequency Trader Warns of Potential Market ‘Catastrophe’ – Financial Times

The head of one of the biggest high-frequency trading companies has warned that there are several faultlines in the structure of increasingly electronic, automated financial markets that could lead to a “catastrophe” in the long run.

Fed’s Mester Unmoved, Says U.S. to Overcome ‘Soft Patch’ – Reuters

The U.S. economy remains sound and will overcome recent market turbulence, allowing the Federal Reserve to continue tightening its monetary policy as planned, a top Fed official said on Thursday.

Why the Fed Can’t Save Markets Right Now – Wall Street Journal (subscription)

Taking a March rate increase off the table is easier said than done.

Dollar Nurses Losses as Payrolls Report Looms – Reuters

The dollar steadied in Asian trading on Friday but remained on track for weekly losses, as investors braced for U.S. employment figures later in the session for the latest clues on the outlook for the Federal Reserve’s monetary tightening path.

BOJ Not Engaging in Currency War With Negative Rates – Kuroda – Reuters

Bank of Japan Governor Haruhiko Kuroda said the central bank was not engaging in a currency war by adopting negative interest rates, stressing that the move was aimed at stimulating the economy through lower borrowing costs.

Bank of England Cuts Growth Outlook, Rate Hike a Distant Prospect – Reuters

The Bank of England cut its growth forecasts on Thursday and the only policymaker who had been pushing for a rate hike reversed his position, suggesting rates will stay on hold for the foreseeable future.

Bank of England Policymakers Speak After Inflation Report – Reuters

BoE Revamps FX Joint Standing Committee Membership – Euromoney

The Bank of England (BoE) has recast the terms of reference and membership of a key foreign-exchange industry committee to take account of the growing diversity of the forex market in the UK and the central role that will be played by the new global code of conduct.

Goldman Sees Pound Tumbling by as Much as 20% on `Brexit’ – Bloomberg

The pound could fall as much as 20 percent if Britain quits the European Union, according to Goldman Sachs Group Inc.

China’s Foreign Reserves Poised for Record Drop on Yuan Defense – Bloomberg

China’s foreign-exchange reserves, already at a three-year low, are poised to post a second consecutive record monthly drop as policy makers intervene to support the yuan.

SNB’s FX Reserves Increase to Record Amid Depreciating Franc – Bloomberg

Switzerland’s foreign currency reserves increased 3 percent to an all-time high in January, boosted by the franc dropping against the euro and the dollar.

Hamstrung Central Banks Struggle With Currency Temptation – Reuters

The world’s top central banks have all but given up hope of returning to conventional monetary policy soon with many touting rate cuts, raising the risk of competitive currency devaluations and doubts they can meet their mandates.

Regulatory News

Risky Derivatives Trades Face Higher Costs – Financial Times (subscription)

Reform of derivatives enters its final phase this year and tougher rules for banks have aroused fears that other financial institutions will need billions of dollars to remain in the market.

FCA Extends Accountability Regime to Algos, Client Dealing – Profit & Loss

The UK’s Financial Conduct Authority (FCA) has published the final rules confirming its approach to improving individual accountability for those carrying out wholesale activities, such as algorithmic and high frequency trading, in banks, building societies, and Prudential Regulation Authority (PRA) designated investment firms.

Commissioner J. Christopher Giancarlo Releases Podcast About 6 Mega-Trends Facing 21st Century Financial Markets

Today, Commissioner J. Christopher Giancarlo released a Podcast about 6 “mega-trends” facing 21st century financial markets. The podcast released today closely follows the guest lecture he provided on December 1, 2015, at Harvard Law School as part of the Fidelity Guest Lecture Series on International Finance.

ICE Boss Sprecher Blasts Regulators Over Mifid II – The Trade

 Jeff Sprecher, the chief executive officer of Intercontinental Exchange (ICE), took aim at European regulators today, blasting them for “fracturing” financial markets.

Company News

Lenovo CFO Says Forex Hurt the PC-Makers Q3 Earnings – CNBC

Foreign exchange fluctuations were Lenovo’s biggest headache in the third-quarter, Wong Wai Ming, chief financial officer at the world’s biggest PC maker, told CNBC.

Icap Volumes for January Mixed – Profit & Loss

Icap foreign exchange volumes for January 2016 show a strong pick-up from the prior month but a 20% drop against January 2015 numbers.

CMC Markets Sets IPO Price at 240p per Share, Giving Market Capitalisation of £691m – Leaprate

Major online trading services provider CMC Markets plc, which is getting closer to an initial public offering on the London Stock Exchange, has just provided an update regarding the pricing of the offer.

Market Savvy  

Who’s Winning the Global Currency War? Not the ECB – Bloomberg

The euro is now at its highest level in over a year, and this has to be more bad news for Mario Draghi.

Citi: ‘We Should All Fear Oilmageddon’ – Bloomberg

Markets are currently in a well-oiled “death spiral,” according to Citigroup Inc. analysts led by Jonathan Stubbs.

What’s Next for Sweden a Year After Adopting Negative Rates? – Wall Street Journal (subscription)

Central bank meets Feb. 11 and is considering new bold moves to stimulate the economy.

US Panel Says Yuan Will Erode, Not Challenge, Dollar Dominance – Bloomberg

China’s yuan, which earned reserve status from the International Monetary Fund last year, enjoys growing prominence as an international currency that will diminish the dollar’s role in trade and transactions over time, according to a U.S. congressional panel.

Press Releases

CME Group Announces Record Open Interest

CME Group, the world’s leading and most diverse derivatives marketplace, today announced it set a total open interest record of 110.1 million on February 3.  The new record surpassed the previous open interest record of 108.9 million contracts set on November 13, 2014.

Thomson Reuters SEF Captures 55 Percent of Dealer-Client FX Flows in Q4 2015

Data from analytics and research firm Clarus Financial Technology shows that Thomson Reuters SEF (Swap Execution Facility) leads trading volumes in the FX dealer-to-client market segment in Q4 2015, with 55 percent of trading flow. This comes as non-deliverable forwards (NDF) volumes on the Thomson Reuters SEF have grown by 322 percent and FX options volumes by over 2000 percent in the 24 months to year-end 2015.

Federal Court in Florida Orders Restitution, a Civil Monetary Penalty, and Permanent Injunction against Robert Tripode for Engaging in Fraud in Connection with Forex

The U.S. Commodity Futures Trading Commission (CFTC) today announced that a federal court in Fort Lauderdale, Florida, issued a Consent Order against Defendant Robert Tripode of Boynton Beach, Florida, in connection with his fraudulent activities as an employee and agent of Forex Monthly Income Fund, a commodity pool based in Miami, Florida.

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