Top Headlines

S&P Predicts £19 Billion Legal Cost for Top UK Banks – Profit & Loss (free story)
The UK’s four largest banks are likely to face further aggregated conduct and litigation charges amounting to £19 billion in the next two years, according to a report issued by Standard & Poor’s.

SNB’s Danthine Calls Franc Losers Narrow-Minded – FX Week (subscription)
Market participants are “narrow-minded” to suggest a dramatic surge in the value of the Swiss franc was impossible to predict, says Jean-Pierre Danthine, vice-chairman of the governing board of the Swiss National Bank.

Not Much Spring in Traders’ Steps – Wall Street Journal (subscription)
Wall Street’s trading tide can go out as quickly as it comes in. A surge in trading revenue that boosted big-bank earnings in the first quarter appears to be subsiding. While it is early days yet, this could weigh on second-quarter results.

Currency Risk a Growing Concern: CFO Signals Survey – Wall Street Journal (subscription)
The strength of the US dollar raised concerns among CFOs, according to Deloitte’s latest CFO Signals survey. Although a substantial proportion of surveyed CFOs said they do not have significant currency exposure, quite a few reported becoming more deliberate about their hedging strategies.

Greece Hopes Keep Euro Near Three-Week High Vs Stalling Dollar – Reuters
The euro hovered near a three-week peak on Tuesday, boosted by renewed hopes that cash-strapped Greece could secure extra funding and as the dollar remained weak ahead of a US Federal Reserve meeting that starts later in the day.

Russian Central Bank Opposes Restrictions on Using Foreign Currency – Reuters
Russia’s central bank said late on Monday that it opposed restrictions on using foreign currency in Russia. Russia’s Security Council earlier on Monday proposed measures aimed at reducing the use of foreign currency in Russia and boosting the use of the rouble in international settlements.

ISDA Research Shows Continued Derivatives Fragmentation – Profit & Loss (free story)
New research conducted by the International Swaps and Derivatives Association shows that global derivatives markets are continuing to fragment along jurisdictional and geographical lines.



Regulatory News

ESMA Adds Second-Level Reporting Validation – International Financing Review
The European Securities & Markets Authority has introduced an additional layer of validation requirements for registered trade repositories to ensure the completeness of data submitted on swap transactions under the European Markets Infrastructure Regulation.

CFTC Commissioners Get Behind SEF Reforms – The Trade
US regulatory Commissioners have backed new plans for swap execution facilities aiming to breathe life into the electronic trading platforms. In a bid to fine-tune the rules, Commodity Futures Trading Commission (CFTC) chairman Timothy Massad has announced steps to “improve the operational aspects of SEF trading”. Part of the change includes a no-action relief that will streamline the process for correcting erroneous trades, while the chairman also said the commission plans to eliminate the requirement to report confirmation data for intended-to-be cleared swaps.

Banks Struggle to Make Strategy Calls as Rules Pile Up – Risk Magazine (subscription)
Overlapping rules are making it difficult for banks to work out what businesses they want to be in, and how to price their products and services, dealers complained at last week’s annual meeting of the International Swaps and Derivatives Association. The new rules often interact, which can magnify or mitigate the impact of any action, they said.

Despite Doubters, Swaps Group ISDA Touts Central Role in Market Reform – Reuters
When Scott O’Malia, chief executive officer of the International Swaps and Derivatives Association, took the stage at the trade group’s 30th annual general meeting this week, he explained the strength of ISDA as “in a word, relevance.” To maintain relevance, however, the association needs to adapt to market reforms that in some ways may make ISDA less likely to hold sway.



Company News

Nomura Reviews Viability of Swaps Clearing Business – Risk Magazine (subscription)
Nomura is reviewing the viability of its over-the-counter client clearing business in the US and Europe, a spokesperson for the bank has confirmed. A final decision on whether to exit the business is expected within the next few weeks. The firm’s clearing services in Japan are not subject to the review.

FX Volatility Helps Push BNY Mellon to Q1 Profit – Profit & Loss (free story)
The Bank of New York Mellon (BNY Mellon) reported strong growth in FX revenues for Q1 2015, increasing 68% year-on-year due to higher trading volumes and volatility.

Hedin to Head Global FX Trading at SEB – Profit & Loss (free story)
Svante Hedin, who has been acting head of global FX trading at SEB, has been appointed to the position. SEB confirmed the promotion.

Euclidean Cuts Deal with Bloomberg for US Options – FOW (subscription)
Euclidean, which started life in early 2014, has reached a deal whereby Bloomberg is linking to the Euclidean algorithmic trading service that shows the prices of Eurodollar interest rate options trading on CME Group

Symphony Launches Beta Platform Version – Waters Technology
Symphony, the consortium-owned messaging platform, has announced a move to its beta iteration for enterprise users after launching last October. The venture, which was formed last year by Goldman Sachs and other major institutions to challenge Bloomberg’s hold on the messaging space, is leveraging a pair of technologies – Perzo and Goldman’s LiveCurrent messaging platforms – as well as former Markit Collaboration Services assets, which it bought in May of 2014 for $66 million.



Market Savvy  

US Rate Hike Fears Overdone in Emerging Markets
Standard Chartered
How worried should you be when the US Federal Reserve goes ahead with its first interest rate hike? After all, following years of close to zero policy rates and three rounds of quantitative easing, this will be a significant change in policy.
Financial markets do not appear too concerned. One could even say that they are being complacent. Nevertheless, the usual commentators are once again stating that Fed hikes will bring end of the world and emerging markets. So who is right?

Why Japan is Vulnerable
Financial Times (subscription)
As the eurozone’s great experiment with negative interest rates continues apace, the dynamic of global capital flows has changed dramatically, responding to big shifts in the relationships between the world’s main currencies. While the US dollar is in much the same place relative to the yen as it was at the start of the year, the euro has depreciated by more than a tenth against the Japanese currency. This has confounded an army of forecasters who expected more yen weakness in light of the failure of Abenomics to stoke up Japanese inflation.



Press Releases

INTL FCStone Expands Foreign Exchange Trading Capabilities
INTL FCStone Markets has introduced the ability to trade over-the-counter FX products to qualified users of CQG. This will allow any CQG client to access and trade FX with INTL FCStone Markets and trade futures and spot FX on the same platform.

Tradition Chooses Azul Zing to Increase Predictability and Lower Latency Across its Trading Platforms
Tradition’s investment in technologies continues as Azul Zing is integrated into all of Tradition’s trading platforms. Trading platform predictability and performance is key to Tradition purchasing Zing and collaboration with Azul Systems enables Tradition’s development teams to focus on new revenue streams and value added activity.



Industry Events