Rand-Rigging Investigator Alleges Widespread Collusion

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Top Headlines

Rand-Rigging Investigator Alleges Widespread Collusion – Bloomberg
The head of the South African authority investigating banks for allegedly fixing the price of the rand said it will seek to prove “widespread” collusion and may probe more financial services companies with “stiff” fines expected.

Libor trial: Tom Hayes Claims Interest Rate Rigging Was ‘Industry-Wide Practice’ – The Guardian
A trader accused of trying to rig a key interest rate which is behind trillions of dollars in financial deals told investigators he was taking part in an “industry-wide” practice.

DTCC Warns Against Burdensome CCP “Skin in the Game” – Profit & Loss (free story)
The Depository Trust and Clearing Corporation (DTCC) has become the latest firm to issue a whitepaper regarding CCP risk, arguing that although it supports “meaningful” first-layer CCP contributions to their default waterfalls, if these contributions are overly burdensome it could increase the risk of member losses.

Parker FX Index Down 0.80% in April – Profit & Loss (free story)
The Parker FX Index, a performance-based benchmark that measures the returns of global currency managers, moved into negative territory in April as managers were wrong-footed by weaker than expected data in the US.

Traders’ Losses Mount as Divining Dollar’s Moves Proves Elusive – Bloomberg
Foreign exchange traders just can’t seem to figure out the dollar and it’s costing them lots of money. An index tracking returns of 14 top currency funds just posted its first back-to-back monthly decline in more than a year.

Project Colin: Why Goldman-Led Margin Hub Fell Apart – Risk Magazine (subscription)
The world’s big dealers quietly started work on a new swaps market utility last year, dubbed Project Colin. The aim was to control the vast collateral flows arising from incoming bilateral margining rules, but the consortium has since fallen apart, and a coalition of middleware and back-office firms have stepped into the breach.

Bernanke Says Yuan Approaching Fair Value After Lew Urges Gains – Bloomberg
Former Federal Reserve Chairman Ben S. Bernanke said the yuan is heading toward fair value, lending weight to China’s claim that its exchange rate is largely determined by market forces.

In Memoriam: Robert Entenman – Profit & Loss
Robert Entenman, global head e-commerce at UniCredit and a member of ACI – The Financial Markets Association’s Committee for Professionalism, died last week at the age of 57.

 

Regulatory News

Giancarlo Puts FCMs on the Endangered Species List – Profit & Loss (free story)
Christopher Giancarlo, a Commissioner at the US Commodity Futures Trading Commission, warns that government policies are forcing Futures Commission Merchants out of business ahead of the Market Risk Advisory Committee meeting today.

European Commission Sets Out Swaps Clearing Timeline – The Trade
Jonathan Hill, Europe’s chief financial Commissioner, believes mandatory clearing of interest rate derivatives will likely begin from April 2016.

Debating Trust and Confidence in Banking – Speech by Martin Wheatley, Chief Executive of the UK Financial Conduct Authority 
As we saw in last week’s global FX fines, the debate around trust and confidence in banking has not been diminished by any sense of the familiar. In fact, for leaders today, it’s arguably a more challenging priority now than it was in 2008 – with each passing crisis making it harder for industry to credibly talk of lessons being learnt.

Stanley Fischer Pushes for Harsher Banker Penalties – Financial Times (subscription)
A top Federal Reserve official has called for bankers guilty of wrongdoing to be punished individually as he warned that the banking industry was making headway in its fight against tougher regulation.

 

Company News

Deutsche Boerse to Open Asia Derivatives Exchange – Reuters
Deutsche Boerse plans to open a derivatives exchange alongside its planned clearing house in Singapore as part of the German exchange operator’s effort to expand business in Asia, it said on Tuesday.

HSBC Poised To Unveil Thousands More Job Cuts – Sky News
HSBC will next week set out plans to cut thousands more jobs across its global workforce as it tries to reassure shareholders that its focus on costs remains undiminished after a series of reputational crises.

FxPro Group May Hold London IPO as Soon as Next Year, CEO Says – Bloomberg
FxPro Group may hold an initial public offering in the UK as soon as next year as the online currency broker considers making acquisitions and expanding into new markets.

 

Market Savvy  

Markets Face Pivotal Week Amid Greek Deadlock, US Data Glut
Bloomberg
Pivotal is proving Wall Street’s word for the week. That’s how Barclays and Credit Agricole describe the next five days: Greece faces a payment deadline to the International Monetary Fund; the US releases a glut of data that could influence the Federal Reserve’s next move; central banks in Brazil and India may further widen a gap in emerging market monetary policies.

Long EURCHF Favoured Way to Trade Better Greek News Flow
BNP Paribas
Greek negotiations are continuing with Draghi, Merkel and Hollande holding a meeting Monday evening in Berlin to discuss a proposal for Greece. In our view the Greek news flow is likely to improve in the coming weeks and we think that the best way to position for an eventual Greek resolution in G10 FX is long EUR/CHF rather than long EUR/USD.

Dollar Hits Fresh 12-Year High Against Yen
Wall Street Journal (subscription)
The dollar hit a fresh high of more than 12 years against the yen in Asia trade Tuesday, briefly breaking above ¥125 before weakening on profit-taking and adjusting of positions.

Aussie Jumps After Central Bank Takes Neutral Rates Stance
Reuters
The Australian dollar surged more than 1% on Tuesday after the country’s central bank shied away from pointing to more cuts in interest rates.

 

Press Releases

Moscow Exchange to Reduce Margin Rates for the FX, Equity, Bond and Derivatives Markets
On the FX market, initial margin rates will be reduced from 11% to 9%, effective 8 June 2015.

CME Group FX Volume Rose 49% Year-on-Year
CME Group foreign exchange volume averaged 880,000 contracts per day, up 49% from May 2014. The average daily notional value of FX contracts traded in May was $93 billion.

 

Industry Events