Top Headlines

JGB 10-Year Yield Drops Into Negative For First Time as Nikkei Tanks –Reuters

The benchmark 10-year Japanese government bond yield dropped into negative territory for the first time on Tuesday, as Tokyo’s Nikkei tanked and fuelled demand for safe-haven debt.

Fed May Lack Legal Authority for Negative Rates: 2010 Memo – Bloomberg

The Federal Reserve may not have the legal authority to set negative interest rates in the U.S., according to a 2010 staff memo that was posted late last month on the central bank’s website.

SNB Hasn’t Yet Reached Rock Bottom on Deposit Rate, Jordan Says –Bloomberg

The Swiss National Bank could reduce its already negative deposit rate further, its President Thomas Jordan said.

As RMB Internationalises, Questions Arise Around Settlement – Profit & Loss (subscription)

A turning point year for the Chinese currency, 2015 foretold a new era for the RMB. As the currency gains in prominence, China faces decisions around settlement mechanisms, which will be crucial to its acceptance as a truly international currency.

ECB’s Coeure Sees G20 Coordination Emerging Market Currencies – Reuters

Weakness in emerging market economies risks triggering further depreciation of
their currencies and will be addressed in a coordinated manner, ECB Executive Board member Benoit Coeure said on Monday.

Bank of Russia Says Banks Will Need More Capital for FX Lending – Leaprate

In a bid to protect the banking sector from possible further ruble declines, The Bank of Russia officially suggested over the weekend setting increased risk ratios on FX loans and debt investments to ensure additional capital coverage of currency risks of the banking sector.

Currency Interventions Jumped Before Czechs Delayed Cap Exit – Bloomberg

The Czech central bank stepped up koruna sales in December, about a month before it announced the extension of its intervention regime and considered more measures to defend the Swiss-style currency cap.

Smart Beta Products Risk Misleading Investors – Financial Times(subscription)

Investors may be surprised by two fundamentally different approaches under one smart-beta label

Deutsche Bank: Banks Must Partner with Fintech and Digital Currency Businesses or Risk Disappearing Altogether – Bitcoin Magazine

The number of banks experimenting with blockchain technology and looking at their own digital currencies is growing by leaps and bounds, so it’s no surprise that Deutsche Bank is well on its way to having its own blockchain technology.

A Compliance Officer Will Go to Jail in 2016 – Software AG (blog)

In the property market there is a saying: “location is everything.”  In capital markets in 2016 the saying will be: “regulation is everything.”

Regulatory News

Australia Provides Feedback on Rate Setting Process – Profit & Loss

The Council of Financial Regulators (CFR), the coordinating body for Australia’s main financial regulatory agencies, has released a discussion paper on the evolution of the Bank Bill Swap Rate (BBSW), Australia’s rate setting mechanism.

How Six Brokers Walked Free After Unraveling of UK Libor Case – Bloomberg

The first signs of trouble for prosecutors came about three weeks into the trial. Their witness was a government investigator called to lay out details of the probe into the alleged rigging of a key interest rate by a group of brokers who faced up to 20 years in prison.

Mifid II: Wait for CPMI-IOSCO on Product Identifiers – ISDA

Later this week, an industry workshop will convene in Washington, DC to discuss efforts to develop global, harmonised data standards for derivatives. This is an important – and welcome – initiative. Existing regulatory reporting regimes have been hampered by differences in reporting rules between jurisdictions, variations in reporting formats and a lack of global standards, making it tough to aggregate data across trade repositories and across borders.

The Basel III Threat To Smaller Broker-Dealers – Traders Magazine Online

With portions of Basel III set to go live in within the coming year, smaller broker-dealers could be unaware that they are in the crosshairs of the new rule. In short, the clearing firms used by independent broker-dealers are facing increased liquidity requirements.

CFTC Can’t Give Whistleblower Money Away – Wall Street Journal(subscription)

The Commodity Futures Trading Commission has spent more on administrative costs of its Whistleblower Program than it has paid out in bounties

FX Fraudster Hit With $10m in Fines – Profit & Loss

4X Solutions (4X) and its principal, Whileon Chay, have been fined more than $10m in connection with an FX trading ponzi scheme.

ASIC Ready to Launch Rate-Rigging Case Against ANZ – Australian Financial Review  (subscription)

A massive regulatory investigation launched in 2013 into interest rate rigging inside the big four banks is heading for the courts.

Company News

Icap Revenues Fall in Q3 – Profit & Loss

Icap has released its third quarter (to December 2015) trading statement, revealing that group revenue from continuing businesses was 5% lower than the same period in 2014 on a constant currency and on a reported basis.

GM suspends Egypt operations due to currency crisis: company source –Reuters

General Motors has temporarily suspended its operations in Egypt due a currency crisis, a company source told Reuters on Monday.

Market Savvy 

The Euro Is Now Back Where It Was Before QE Began – Wall Street Journal(subscription)

When the European Central Bank announced its quantitative easing scheme last January, the euro plummeted to its lowest level in 13 years.

New Front in Currency Wars – Nikkei News

The recent move by the Bank of Japan to institute a negative deposit rate prompts the question as to its implications for other central banks, including the European Central Bank.

Hedge Funds Target a Weaker Renminbi – Financial Times (subscription)

Timing matters for investors betting against the currency and China’s central bank

China Debate: FX Reserves Vs. Economic Reform – Bloomberg

Adam Posen, president of Peterson Institute and Jamie Metzl of Atlantic Council discuss China’s foreign-exchange reserves falling by $99.5 billion in January and the need for economic and political reform.

Emerging Markets Hit by Commodities, Credit and Currencies – Reuters

The global economy is being hit by a slowdown in growth, large swings in exchange rates and tumbling commodity prices.

China Spotlight: How CFOs Can Monitor and Mitigate Directional Shift in China’s Currency – Wall Street Journal (subscription)

Changing dynamics in China’s currency policy and market dynamics continue to add to uncertainty in the direction of the renminbi (RMB), something CFOs of multinational companies (MNCs) operating in China should consider monitoring more closely, say Ken DeWoskin, independent senior advisor to the Chinese Services Group, Deloitte LLP, and George Warnock, Deloitte Advisory partner in Deloitte & Touche LLP, and Americas leader of the Deloitte Chinese Services Group.

Press Release

CFTC Issues an Exemption to the Korea Exchange Permitting Designated Korea Exchange Members to Deal Directly with U.S. Customers
The Commodity Futures Trading Commission (CFTC) today issued an Order to the Korea Exchange (KRX) permitting certain KRX Members to solicit and accept orders and in connection therewith, accept funds directly from U.S. customers for trading on KRX without having to register with the CFTC as futures commission merchants (FCMs).

AIMA Publishes New Guide to Operational Risk Management

The Alternative Investment Management Association (AIMA), the global representative body for alternative asset managers, has today released a new guide to operational risk management for asset management firms.

Industry Events