Top Headlines

LCH Boss Says No Big Shift in Euro Clearing Ahead of Brexit – Reuters

There has been no big shift in euro clearing activity from London to the European Union ahead of Brexit, the chief executive of the London Stock Exchange’s clearing unit said on Wednesday.

Japan’s Margin Traders: Why They Matter for Currency Markets – Bloomberg

The yen’s surge versus all its 146 peers in early January put the spotlight on Japan’s margin traders, who have been growing in influence as the nation’s ultra-low bond yields spur them to bet on overseas currencies.

Goldman CEO Sees Reason for Trading Optimism after Weak Year-End – Bloomberg

David Solomon, Goldman Sachs Group Inc.’s new chief executive officer, said the trading environment has “meaningfully improved” after Wall Street banks faced a difficult end to 2018 amid a bout of heightened market volatility.

Honesty is Key to Machine Learning’s Future: Roberts – (subscription)

As director of the Oxford-Man Institute of Quantitative Finance, Stephen Roberts’ research focuses on machine learning algorithms that discern patterns in markets. The trouble is that algorithms, he says, are even more capable than humans of finding “weird and wonderful things” in the numbers.

Regulatory News

US CFTC Official Warns of ‘Cliff Edge’ Effect in ‘No-Deal’ Brexit; Encouraged by Clearing Deal – Reuters

The lack of a negotiated exit of the UK from the European Union could lead to a so-called “cliff edge” effect in over-the-counter derivatives markets, given the legal uncertainty that would emerge over contractual obligations between counterparties, a regulator warned. 

LCH Plans 2020 Switch to SOFR Discounting – (subscription)

In just over a year’s time, the US dollar swap market will undergo a planetary realignment, when LCH changes the interest rate it uses to value cleared trades and pays on cash collateral – affecting $133 trillion of swaps. 

A Rush on Libor Fallbacks to Head off Holdouts – (subscription)

The International Swaps and Derivatives Association is giving itself till the end of this year to implement a framework to wean swaps off Libor. Why the timetable? Observers say the schedule is meant to head off fears that some will refuse to move if it becomes clear they will lose out.

China, US Seek Broad Outline of a Trade Pact This Week – The Wall Street Journal (subscription)

Differences are still substantial between what Beijing is willing to offer and what US will accept.

Billionaire Investor Ray Dalio Sat Down With His Idol, Paul Volcker, Who Laid Out the 3 Principles That Have Guided His Legendary Career – Business Insider (subscription)

In an exclusive interview conducted by Bridgewater Associates and seen by Business Insider, Ray Dalio chatted with the legendary economist and former Federal Reserve Chair Paul Volcker.

IFRS 9 Drives Appetite for Long-Dated Hedges in Asia – FX Week (subscription)

New accounting rules are driving the uptake of long-dated FX hedges among Asian corporates, as growing geopolitical concerns heighten currency volatility.

Crypto News

Crypto Survivors Find a Rare Lifeline – Bloomberg

Miners and investors are selling derivatives to squeeze something from their depreciating assets.

The Libertarian Fantasies of Cryptocurrencies – Financial Times

Digital money needs tough regulation rather than bleating in favour of ‘innovation’

Quadriga Fuels Race Among Lawyers For Slice of Lost Millions – Bloomberg

Canada’s top law firms are set to converge this Valentine’s Day on a Halifax courtroom, competing for a piece of the C$260 million ($196 million) mystery behind the Quadriga CXX cryptocurrency exchange.

CEO Chat: Dimitris Hatzis, IronX – Markets Media

IronX operates as a global collaboration with Hong Kong-based blockchain accelerator, EmurgoHK, and IronFX, the multi-asset broker. It provides the best of both trading roles, with traditional trading (IronFX) and cryptocurrency trading (courtesy of EmurgoHK) and has a full range of both crypto and fiat wallet funding options available.

Company News

JP Morgan Makes Algo Central Available Via Bloomberg – Profit & Loss

JP Morgan has made its execution services tool for FX algos, called Algo Central, available on the Bloomberg App Portal.

Brokers, Buy Side Embrace 2-Yr Treasury Futures Tick: CME – Global Investor (subscription)

CME analysis shows the cost to trade in ticks was reduced by up to 36% after halving the tick size.

TFS-ICAP Senior Managers Respond to CFTC Allegations – FinanceFeeds

Several months after TFS-ICAP LLC and TFS-ICAP Ltd opposed the Commodity Futures Trading Commission allegations of fraud and supervision failures, Jeremy Woolfenden and Ian Dibb, who are also defendants in the case, seek to respond to the CFTC claims.

Market Savvy

Brexit Concerns, Inflation Keep Pound Below $1.29 – Reuters

Sterling held below the $1.29 line on Wednesday as inflation, which fell to a two-year low in January, failed to shake the currency out of its recent trading ranges with markets firmly focused on the progress of Brexit negotiations.

Swedish Crown, New Zealand Dollar Up as Central Banks Disappoint Doves – Reuters

The New Zealand dollar and Sweden’s crown rose after their central banks broke with the growing caution of the world’s major monetary-policy makers, surprising traders who expected more dovish signals.

Dollar Takes Breather as US-China Trade Hopes Spur Risk-Taking – Reuters

The dollar’s recent rally paused on Wednesday as hopes for a United States and China trade deal spurred demand for riskier currencies.

Emerging Markets Beware: A Recent History of BAML’s Most-Crowded Trades – Bloomberg

A quick glance at the recent history of the “most-crowded” trades section in Bank of America Merrill Lynch’s surveyy of global fund managers shows an asset’s popularity can often peak just before a fall in price. Here’s a look at the last four instances of such trades in reverse chronological order.