Market Rally Loses Steam After Strong US Data, Commodities Rebound

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Top Headlines

Market Rally Loses Steam After Strong US Data, Commodities Rebound – Wall Street Journal (subscription)
Analysts warn worries about China’s economy may resurface.

Markets Mull RMB devaluation and Fed Policy Link – Euromoney
China’s shock RMB devaluation is unlikely to influence the Federal Reserve’s decision to hike, or otherwise, in September, but it could shape the path of subsequent increases, say analysts.

Neal Leaves Deutsche Bank – Profit & Loss
Michelle Neal is leaving Deutsche Bank where she oversees listed derivatives and clearing as well as fixed income and currencies (FIC) market structure, two people familiar with the situation tell Profit & Loss.

Majority of Buy-Side Firms Process Complex Swaps Manually – Profit & Loss
A new survey says that 44% of buy-side managers use completely manual or mostly manual processes to manage complex swaps.  In addition, the survey, carried out by SimCorp, says more than 50% still rely on manual intervention in a semi-automated process.

Overseas Bankers, Officials Urge Fed Not to Waver on Interest-Rate Rise – Wall Street Journal (subscription)
After months of forewarning by Federal Reserve officials that they are preparing to raise short-term interest rates, some international officials attending the Fed’s annual retreat here this week have a message: Get on with it already.

Brokers Defy BlackRock over Average Pricing on Sefs – Risk Magazine (subscription)
Broker-run swap trading platforms are resisting calls from the world’s largest asset manager to offer average pricing and direct allocation capabilities for buy-side trades. “We know what breed of animal we are – we’re lions, not zebras. We’re not going to become a zebra tomorrow because suddenly a new client comes along and says, ‘We like stripes’,” says Laurent Paulhac at Icap.

 

Regulatory News

CFTC Approves New Rules for Retail FX Dealers – Profit & Loss
The US Commodity Futures Trading Commission (CFTC) has approved a number of rule amendments filed by the National Futures Association (NFA) regarding retail FX trading. The rule amendments will impose additional capital requirements on Forex Dealing Members (FDMs) and require them to collect security deposits for off-exchange FX transactions from eligible contract participant counterparties in addition to retail counterparties.

Scott O’Malia Hits Out at Leverage Ratio Rules – FOW (subscription)
Scott O’Malia, chief executive of the International Swaps and Derivatives Association (Isda), has urged global regulators to review the leverage ratio rules to take into account the exposure reducing effects of segregated client margin. In a blog piece released on Thursday, O’Malia, said the Basel Committee on Banking Supervision’s leverage ratio rules failed to take into account the protections given to collateral put forward by clients for the purpose of clearing derivatives.

EU Review Could See Compromise in Clearing Equivalence Debate – FOW (subscription)
European regulators have begun a review of clearing house margin collection rules in a sign that the EU could be willing to compromise in the long-­running US clearing house equivalence dispute. The European Securities and Markets Authority (Esma) on Thursday, launched a public consultation on the clearing house margin collection and liquidation rules under European Market and Infrastructure Regime.

CFTC Issues Orders of Foreign Board of Trade Registration to Permit Direct Access for ICE Futures Canada and Montréal Exchange (press release)
The US Commodity Futures Trading Commission announced today that it has issued Orders of Registration to ICE Futures Canada and Montréal Exchange. Under their respective orders, ICEFC and MX are permitted to provide their identified members or other participants located in the US with direct access to their electronic order entry and trade matching system.

 

Company News

Hotspot FX Sees Second Best Day for FX Volumes on Black Monday – LeapRate
Given the rapid stock market recovery over the past two days, people will probably not be referring to this past Monday’s 4% drop in the equity markets as ‘Black Monday’ for very long. For Hotspot FX, Monday’s action provided the second-best trading day. Hotspot saw FX volumes crossed on its platform top $59 billion as volatility soared in the currencies market.

FIA, FIA Europe, and FIA Asia to Merge – Profit & Loss
The boards of FIA, FIA Europe, and FIA Asia, who each represent the interests of regional futures industry participants, have agreed to merge in the first quarter of 2016. The three associations have been affiliated with each other since 2013 through the structure of FIA Global.

JP Morgan is Hiring Senior Bankers and Traders as Other Firms Cut – eFinancial News
JP Morgan has made a series of senior hires for both its advisory and markets business in the past few weeks, capitalising on the exodus from Royal Bank of Scotland and expanding in an area where other banks are retreating.

Morgan Stanley Hit with $20 Million Whistle Blower Suit from ex-Brokers – Investment News
Two former Morgan Stanley brokers in the firm’s midtown Manhattan branch have sued the firm and a branch manager for $20 million in damages saying they were wrongfully terminated after blowing the whistle on alleged fraudulent activity and violations of securities laws at the branch.

 

Market Savvy  

Ruble Pain Threshold Seen Higher as Oil Slump Ravages Economy – Bloomberg
The Bank of Russia is becoming more comfortable with a weaker ruble as sinking oil prices take their toll on the world’s largest energy exporter, economists said in a Bloomberg survey.

China’s Turbulence Exposes Risks to Europe’s Growth – Wall Street Journal (subscription)
Turbulence in China and other emerging markets is exposing the risks in Europe’s strategy of relying heavily on global exports for growth.

 

Industry Events