Top Headlines

Reasons to Fear a ‘Triple Taper Tantrum’ – Financial Times (subscription)
Why are we worried not just about a taper tantrum but a “triple taper tantrum”? Because central banks do not have a contingency plan for success. Even partial success – stabilisation of growth rather than an outright revival – could be enough to derail their best-laid plans for a smooth exit from excessive monetary accommodation.

How the Next Financial Crisis Will Happen – Wall Street Journal (subscription)
After the financial crisis, a focus on safety and soundness was good medicine for the financial system. New bank liquidity and capital policies, among other initiatives, strengthened a debilitated patient. The banking system is now stronger, with more liquid assets and better underwriting standards.

EU-US Equivalence – We Will Get There, Massad Says – Profit & Loss (free story)
The US and European Union are making “good progress” in resolving differences between their respective derivatives rules that threaten to foster market fragmentation, said Timothy Massad, chairman of the Commodity Futures Trading Commission.

Russian Reversal on Ruble Fooling No One as Dollar Buying Paused –Bloomberg
Six months after announcing a free-floating exchange rate, Russia halted this year’s biggest currency rally by buying dollars every day from 13 May. As the ruble then depreciated to levels that risked accelerating inflation last week, analysts from Citigroup, Rabobank and Renaissance Capital said the bank would halt its purchases. On Friday, it did just that.

Western Stock Exchanges Look to China for Market Growth – Reuters
China offers better growth prospects for stock and derivatives exchanges as making money in mature western markets becomes tougher due to overcapacity, top bourse officials said on Tuesday.

Yuan Gets Early Warning on IMF Ambition as MSCI Defers on Stocks –Bloomberg
China’s efforts to obtain reserve status for the yuan received an early warning, with a compiler of equity indexes saying the nation needs more policy changes before its shares can be added to an emerging-market benchmark.

Regulatory News

European Clearing Obligation for IRS Coming Soon – Profit & Loss (free story)
Europe is expected to implement a clearing obligation for certain interest rate derivatives in the coming months, according to a senior official at the European Securities and Markets Authority.

FCA: No Appetite for More Exchange Trading in FICC Markets – Euromoney
As the Bank of England (BoE) prepares to publish its final report on fair and effective FICC markets on Wednesday, a senior official acknowledges there is little support to extend exchange trading beyond what is mandated by the G20.

ESAs Consult on Margin Requirements for Non-Centrally Cleared Derivatives (press release)
The European Supervisory Authorities (ESAs) has launched a second consultation on draft Regulatory Technical Standards (RTS) outlining the framework of the European Market Infrastructure Regulation (EMIR). The consultation focuses only on a narrow set of topics as most of the decisions have already been agreed following the first consultation held in April 2014. The consultation runs until 10 July 2015.

Company News

FIA Launches CCP Risk Tool – Profit & Loss (free story)
The Futures Industry Association (FIA) Global has launched an interactive tool designed to help firms to compare and assess the rules of central counterparties within the CCP Risk Review that it currently offers.

ICE Chief Hits Out at Exchanges, Banks and Brokers – the Trade
Intercontinental Exchange chief executive Jeffrey Sprecher has called out exchanges, brokers and banks for fragmenting liquidity which has ultimately hit institutional investors.

Surge in Interest Rate, FX, Energy Derivative Trading for CME – Forbes
CME has witnessed a sustained period of high FX trading through 2015 thus far. The company averaged 954,000 trades per day in Q1, which was 17% higher on a y-o-y basis. The ADV for FX derivatives through April and May stood at about 860,000 trades per day, which is about 50% higher compared to the prior year period.

Market Savvy  

Yen Soars After BoJ’s Kuroda Says Currency Already ‘Very Weak’
The yen surged to a two-week high against the dollar on Wednesday, after the head of the Bank of Japan said the currency was unlikely to fall further because it was already “very weak”, prompting investors to trim huge bets against the yen.

Currency Traders Stuck in Norway as Volatility Whipsaws Market
Just because a currency is from a Group of 10 nation doesn’t mean it will be easy to sell when markets become volatile. Norway’s krone saw the biggest jump in anticipated price swings of any of its major peers over the past month, exceeding emerging-market currencies such as Turkey’s lira and Brazil’s real.

Hardy’s Horizon: A Hot Summer Beckons for Global Currencies
Saxo Bank
Summer ought to be a time of calm for global currency markets, as much of Europe and the world’s most important currency trading hub, London, is on holiday from the market action in July and especially in August. But the historic record suggests there is no really strong seasonal pattern for currency market volatility. And the summer of 2015 looks like one that is hardly set to show any calming of the currency market waters.

Press Releases

FXCM Sees Month-on-Month Institutional FX Volume Drop in May
FXCM saw institutional customer trading volume of $206 billion in May 2015, which is 6% lower than April 2015 and 11% higher than May 2014.

Study: Success of Shanghai-Hong Kong Stock Connect Hinges on Removing Barriers to Participation
Celent’s whitepaper, commissioned by the Depository Trust & Clearing Corporation (DTCC), reveals that the long-term success of the Shanghai-Hong Kong Stock Connect (SHSC) hinges on removing the many barriers to participation, including features of the programme that restrict trading strategies, introduce risk and create operational complexity.

Industry Events