Top Headlines
Sterling Hits 7-Year Low as Brexit Concerns Intensify – Reuters
The British pound traded near $1.39 for the first time in seven years on Wednesday, while the cost of hedging against sharp swings jumped to their highest in more than four years as concerns that Britons could leave the European Union deepened.
Investors Fear Central Bank Policy Errors – Financial Times (subscription)
Bear markets thrive on fear and uncertainty. Until a few weeks ago, the list included a hard landing for China, plunging oil prices, problems for European banks and fears that even the US economy was rolling over. Now we worry that central bankers are not just behind the curve, to use that trite phrase, but have lost the plot. What is the current policy framework, let alone its efficacy?
London Stock Exchange is in Merger Talks with German Rival – Bloomberg
London Stock Exchange Group Plc said it was in merger talks with Deutsche Boerse AG, a deal that would create the dominant European exchange operator.
Banks Face $27bn Risk from Failed Derivatives Payments – Financial Times (subscription)
Investment banks may face an annual $27bn exposure if the counterparties to bespoke swaps trades fail to deliver the insurance payments on time, a new study has argued.
Volatility and Options Push Up FX Revenues in 2015 – FXWeek (subscription)
Significant outperformance in options, mostly driven by elevated levels of currency volatility in the first half of 2015, drove G10 foreign exchange revenues higher over the year, compared with 2014, according to the Coalition Index report published this week.
Regulatory News
MiFID II Derivatives Rules will Apply to Corporate Treasurers, with Some Exemptions – Bloomberg
A common assumption among corporate treasury practitioners is that the European directive MiFID II will only have to be implemented by financial institutions, and corporates will escape the regulatory burden. This is only partially correct.
Opening Statement of Chairman Timothy Massad before the CFTC Technology Advisory Committee Meeting
There are a number of important items we will consider today. First, we will discuss the Commission’s proposed rule to address the increased use of automated trading in our markets. As you know, automated trading has dramatically expanded in recent years and has brought many benefits to market participants – such as more efficient execution, lower spreads and greater transparency. But its extensive use also raises important policy and supervisory questions.
ISDA Publishes Principles for US/EU Trading Platform Recognition – BusinessWire
The International Swaps and Derivatives Association, Inc. (ISDA) today published a set of principles for achieving comparability determinations between US and European Union (EU) trading platforms.
Company News
DTCC-Euroclear Global Collateral Ltd, a joint venture (JV) of Euroclear and The Depository Trust & Clearing Corporation (DTCC), in cooperation with PricewaterhouseCoopers (PwC), have published the white paper, “Implications of Collateral Settlement Fails: An Industry Perspective on Bilateral OTC Derivatives.” The paper examines the market implications and costs of bilateral OTC derivatives collateral settlement fails. A collateral settlement fail occurs when cash or securities collateral is not delivered or received on the agreed date.
Market Savvy
If Sterling Goes Down on `Brexit,’ It’s Taking the Euro with It – Bloomberg Britain’s referendum on its membership in the European Union isn’t just a threat to the pound. It’s raising currency-market risks across the continent.
HSBC Says Brexit Could Knock 20 pct Off Sterling, 1.5pp Off UK GDP Growth – Reuters
Sterling could lose up to 15 percent of its value and UK economic growth could be up to 1.5 percentage points lower next year if Britons vote to leave the European Union in the June 23 referendum, HSBC said on Wednesday.
Russian rouble liquidity problem in 2016 won’t be as acute as last year’s – FinMin – Reuters
Problems linked to rouble liquidity in Russia will not be as acute this year as they were in 2015, Russian Finance Minister Anton Siluanov said on Wednesday.
Press Releases
Bats Receives SEC Approval for Client Suspension Rule
Bats Global Markets (Bats) received Securities and Exchange Commission approval of the Bats Client Suspension Rule, assisting the company in taking swifter action to prohibit manipulative behavior, such as spoofing and layering, on the Bats Exchanges.