Top Headlines

IMF: US Dollar Increases Share of Central Bank FX Reserves – Reuters
The US dollar increased its share of allocated international reserves to 62.9% among global central banks in the fourth quarter, data from the International Monetary Fund showed on Tuesday.

Goldman Franc Shock Reaction Shows Risk of Models, Swiss Say –Bloomberg
The market turmoil unleashed by the Swiss National Bank’s abrupt decision to abandon its cap on the franc shows the danger of relying on financial models to evaluate the riskiness of investments, the country’s financial regulator said.

Euro is Finishing the Quarter as it Started it – Financial Times (subscription)
The euro is finishing the quarter as it began it, when the single currency notched a 0.8% decline against the dollar on the first trading day of the year.

Lew Signals Yuan Not Ready for IMF Blessing as Reserve Currency –Bloomberg
US Treasury Secretary Jacob Lew said China needs to loosen its financial controls before the yuan can qualify to be included in the IMF’s basket of reserve currencies.

Effects of High Frequency Trading in the Multi-dealer Spot Foreign Exchange – Journal of Trading (subscription)
Contributions of various trading styles to the liquidity of the multi-dealer foreign exchange (FX) spot market are described. Particular attention is given to the effects of high frequency trading (HFT). It is argued that the HFT orders occupy the top of the limit order book most of the time and, as a result, HFT determines the market volatility. Possible solutions to maintaining market liquidity in the presence of HFT are addressed.

Regulatory News

EU Benchmark Law Moves Forward With Econ Backing – Profit & Loss (free story)
The European Union’s economic and monetary affairs committee (Econ) has backed a draft EU law that aims to “clean-up” the benchmark-setting process, including FX rates, by curbing conflicts of interest.

India Central Bank Relaxes Foreign Investment Norms for Exchange-Traded FX Derivatives – Reuters
India’s central bank relaxed rules for foreign investors in exchange-traded currency derivatives by increasing the trading limits allowed without an underlying exposure for the USD/INR pair to $15 million per exchange from $10 million earlier.

ECB and BoE Reach CCP Liquidity Agreement After UK Court Victory – Profit & Loss (free story)
The European Central Bank (ECB) and the Bank of England (BoE) have agreed a joint arrangement to end the UK’s legal action against the ECB regarding euro-denominated business handled by UK-based CCPs.

EU Presidency Wants to Ditch Ban on Proprietary Trading at Banks – Reuters
European Union plans to ban banks taking market bets with their own money should be scrapped to avoid crimping the flow of funds needed for economic recovery, an EU document showed on Tuesday.

Company News

Hotspot FX Reports 19.2% Gain in ADV in March – LeapRate
Average daily volumes at newly acquired institutional ECN Hotspot FX totalled $31.5 billion compared to $26.4 billion in February, whilst total trading volume was up from $528.5 billion to $694.9 billion.

Broker Pulls Out of CWM FX Deal After Arrests – The Times (subscription)
A London foreign exchange broker that was preparing to be taken over has pulled out of the deal after a police raid on its suitor led to the arrest of 13 of its staff.

Market Savvy  

Dollar Dips, Market Struggles for Direction Before US Jobs Data 
The dollar fell back on Wednesday as a soft reading on Japanese business sentiment dented Tokyo shares but helped bolster the yen, while some improvement in Chinese data offered support to the Australian and New Zealand dollars.

Press Releases

ISDA Outlines Path Forward for Centralised Execution of Swaps
The International Swaps and Derivatives Association (ISDA) has published a set of principles aimed at promoting regulatory consistency in the development and application of centralised trading rules for derivatives.

Icap, LCH.Clearnet, LSE and Nasdaq Send Joint Letter to ESMA Regarding MiFID II Open Access
A letter has been sent to Steven Maijoor, Chair of the European Securities and Markets Authority, regarding open access provisions within the MiFID II Regulatory Technical Standards, co-signed by: Michael Spencer, chief executive of Icap; Suneel Bakhshi, CEO, LCH.Clearnet Group; Xavier Rolet, CEO of the London Stock Exchange Group; and Hans-Ole Jochumsen, president of Nasdaq.

GAIN Capital Completes Acquisition of City Index
GAIN Capital has completed the acquisition of City Index, an online trading firm specialising in contracts for difference (CFDs), forex and UK spread betting.

Industry Events