Is the FX Industry Set for a Period of Consolidation?

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Top Headlines

Is the FX Industry Set for a Period of Consolidation? – Profit & Loss (subscription)
With rumours swirling around about a number of multi-dealer platforms that could be up for sale, it may be that the FX industry is now set for a period of consolidation. A number of platforms launched in 2012 are nearing the end of their three-year funding plans and have reached a “sink or swim” moment. The regulatory landscape is beginning to change the market and therefore enticing new players into the industry and BATS Global Market’s acquisition of Hotspot has shaken things up in the platform space. All of which could cause a perfect storm that ends in consolidation. But which platforms could be up for sale and who are the potential buyers?

Greek Debt Crisis: ECB Forced to Intervene to Prevent Banking Collapse – The Telegraph
New Greek proposals will be assessed by eurozone leaders at today’s emergency summit, as emergency liquidity for banks is extended.

Banks ‘Deserve What They Get’, Says Regulator – Financial Times (subscription)
Banks “deserve what they get,” one of the world’s top regulators has said, in a salvo against the industry as it begins to push back against tough regulation and ever higher penalties. Greg Medcraft, the straight-talking head of Australia’s financial watchdog who also chairs the grouping of the world’s securities regulators, said fines that “hurt” banks – combined with personal accountability laws that jail wrongdoers – were two ways to tackle a culture that had “betrayed the trust of the world.”

Sefs Face Uncertain Future Amid Regulatory Delays – FX Week (subscription)
Swap execution facilities that cater for foreign exchange trading face an uncertain future, with the delays to mandatory non-deliverable forwards clearing in the US and Europe likely to hold off a meaningful migration of these contracts to Sefs until at least 2019.

Forex Platforms Seek New Ways to Curb Last Look Abuse – Risk Magazine (subscription)
Rules for last look liquidity providers are being tightened up by platforms that offer such liquidity streams, but the traditional way of limiting response time for market-makers may become outdated, as venues look to filter toxic liquidity from customer streams before flashing orders could appear on customers’ screens.

Hayes Tried to Influence Colleagues after Joining Citi, Libor Trial Hears – Reuters
Tom Hayes, the former star trader on trial for alleged Libor-rigging, tried to build up relationships at Citigroup soon after joining from UBS, hoping to influence the rate-setting process there, according to evidence presented in a London court on Friday.

China’s Renminbi Liberalisation Leaves Capital Controls Intact – Financial Times (subscription)
China is close to its goal of making the renminbi convertible for investment purposes, a senior Chinese central banker has said, highlighting Beijing’s view that strict controls on cross-border capital flows are consistent with convertibility.

 

Regulatory News

EU Agrees Rules to Curb Bank Trading Risks – Reuters
EU finance ministers agreed a draft law to rein in trading risks at banks on Friday, including an exemption for Britain’s lenders because they already face similar curbs. Currently “about 30 of the biggest banks in Europe would be within the overall scope,” the EU financial services commissioner, Jonathan Hill, told journalists after the meeting.

Rulemaking in an Uncertain Environment – Profit & Loss (free story)
The financial services industry has reached an “inflection point” in terms of regulations implemented following the global financial crisis, according to a panel of global regulators and market participants.

FT City Network – Transcript: Is This Start of New Era for City? – Financial Times (subscription)
Ten days ago, in his annual Mansion House address, George Osborne talked about a “new settlement” with the City. It seems that, eight years after the start of the financial crisis, the mood has changed. This was the subject of the latest monthly online debate among members of the FT City Network – a group of more than 50 top financiers and business people. Is a new era really dawning?

Kinetic Partners’ Simon Appleton on Big Fines, New Rules and Being Prepared – Finance Magnates
The recent release of Kinetic Partners’ annual Global Enforcement Review sheds light on a number of emerged regulatory trends: leaner and tougher market regulators; new rules of the game; and a greater onus on firms to monitor and report their behaviour. Simon Appleton, the advisory firm’s Director of Regulatory Consulting, delves into these topics.

 

Company News

Nomura Exec: Client Clearing Scale insufficient Outside Japan – Asia Risk (subscription)
Nomura’s recent decision to exit the non-Japan client clearing business was due to a lack of scale in Europe and the US, says the firm’s deputy chief risk officer Yuji Nakata who warns that regulators need to ensure this business sector can be viable for banks.

 

Market Savvy  

Resistance to Greek Drama Hints at Euro’s Strength
Reuters
As the big global banks and investment houses see it, almost every outcome of Greece’s stand-off with its creditors leads to a weaker euro. So why isn’t the single currency falling?

The Real Challenge This Week is to Save the Eurozone
Financial Times
Europe’s leaders will have the unique opportunity to commit two mistakes in a single week. On Monday, Europe’s leaders will decide on the future of Greece. On Thursday and Friday, they will meet again to discuss, among other things, the future governance of the eurozone. The latter is more important in the long run.

Time to Transform the World’s Currency System
Financial Times
The pending International Monetary Fund review of special drawing rights is much more than a rejigging of a currency basket, or a decision on whether or not the Chinese renminbi will be included. It is about whether the IMF is willing to take serious steps towards the transformation of the international monetary system. It will matter greatly for the interplay of currencies and for financial markets.

 

Press Releases

Rival Systems Formed to Deliver Derivatives Trading and Risk Management Platform
Rival Systems, a newly formed trading software company, will officially launch its low-latency derivatives trading and risk management platform later this year.

ICE Benchmark Administration Announces Two New Direct Participants to the Gold Auction
Morgan Stanley and Standard Chartered have been approved by ICE Benchmark Administration (IBA) to participate in the gold auction, which is used to determine the LBMA Gold Price.

FIA PTG Comments on FINRA’s Trading Activity Fee Proposal
The FIA Principal Traders Group sent a letter to the Financial Industry Regulatory Authority on June 19, 2015 expressing its support for the exemption from the Trading Activity Fee that FINRA has proposed for certain transactions executed by proprietary trading firms. The group offered several suggestions for modifying the scope of the proposal so that it is based on the nature of the transaction rather than the nature of the firm.

 

Industry Events