Swiss Turmoil Shows Machines May Deepen Currency Shock, BOE Says

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Top Headlines

Swiss Turmoil Shows Machines May Deepen Currency Shock, BOE Says –Bloomberg
Extreme volatility in currency markets the day the Swiss National Bank stopped capping the franc shows how electronic trading may exacerbate price shocks.

Lawyers Slam Financial Conduct Authority’s ‘Rushed’ Forex Probe – Financial Times (subscription)
Lawyers have criticised the UK’s investigation into manipulation of the foreign exchange market as a “rushed job” that resulted in “arbitrary” fines, according to an international ranking of regulators’ methods.

Getting to the Root of Price Action Around RBA Announcement – Profit & Loss(subscription)
I continue to be bothered by the price action ahead of this month’s Reserve Bank of Australia monetary policy announcement, which is the subject of an investigation being led by ASIC, the Australian regulator.

Dollar Surge Poses Policy Dilemma for Fed – Financial Times (subscription)
The euro fell closer to parity with the dollar on Wednesday, as the US currency’s strength heightened the policy conundrum facing the US Federal Reserve as it prepares for its first interest rate increase in nearly a decade.

Investors Forced to Get Creative for ‘Carry’ Trade – Wall Street Journal(subscription)
Whipsawed by upheaval in the world’s foreign exchange market, investors are ripping up the rulebook on a popular trading strategy.

China Central Bank News Conference: Yuan Volatility Acceptable – Reuters
China has no need to change its prudent monetary policy, and is moving to introduce deposit insurance and remove ceilings on deposit rates in 2015, central bank governor Zhou Xiaochuan told reporters on Thursday.

Report: Best Practices in Conduct Risk 2015 – Profit & Loss (free story)
As global regulators increase scrutiny over company culture and employee behaviour, investment firms must begin implementing measures to offset the risk that they could be fined for employee misconduct, according to research from GreySpark Partners, a capital markets consulting firm.

Euro Sees Respite After Week of Heavy Falls – Wall Street Journal(subscription)
Some respite came for the beleaguered euro Thursday after a week of heavy falls, with the currency rebounding from a 12-year low against the dollar.

Regulatory News

CFTC Chief Sees Progress in Resolving Clearinghouse Dispute With Europe –Wall Street Journal (subscription)
US and European policymakers have made “great progress” in resolving a protracted cross-border dispute over derivatives regulation, CFTC chairman Timothy Massad said.

Global Watchdog to Review Resilience of Securities Clearinghouses – Reuters
The world’s main clearinghouses will be scrutinised by global markets regulators to ensure they can withstand extreme market shocks unaided by taxpayer money.

FCA Sets Framework for Benchmarks Regulation – Profit & Loss (free story)
The UK Financial Conduct Authority has laid out its framework for regulating and supervising seven currency, fixed income and commodity benchmarks, including the WM/Reuters (WMR) London 4pm closing spot rate, in the wake of scandals over the attempted manipulation of some of them.

ASIC Supervision Report: FX No Longer the Target of Scrutiny – LeapRate
ASIC has set its sights on execution, dark pool pinging activity and algorithmic trading, looking away from FX – for the time being.

Company News

Masters Appointed Head of Bitcoin-Related Start-Up – Profit & Loss (free story)
Blythe Masters, the former global head of commodities at JP Morgan, has been appointed chief executive officer of a Bitcoin-related start up, becoming one of the most high profile bankers to join the digital currency sector.

Moscow Exchange Reports Income From FX Market Increased 41.3% YoY –Forex Magnates
Trading volumes on the MOEX FX market totalled RUB 228.5 trillion, up 46.5% YoY. Thanks to elevated volatility, spot trading volumes rose 35.8% YoY, while swap trading volumes increased 52.7% YoY.

Market Savvy  

The Morning Track: Where’s Waldo?
Track Research
The game of looking for the hidden adolescent amidst the noise of a crowded picture seems particularly important today given the sharp divergence of policy prescriptions delivered and the new found doubts about leadership – both in politicians and in trends as the rapid USD run reverses.

Press Releases

Greenwich Associates: Citi and Deutsche Bank Deadlocked Atop Global FX Market
These two firms are deadlocked atop the global FX market, with market shares in trading of 11.6-11.7%, according to a report released today by Greenwich Associates. UBS and Barclays are next, tied with market shares of 10.0-10.2%.

FXCM Releases Detailed Data on the SNB Flash Crash
FXCM, an online provider of foreign exchange (FX) trading, has disclosed detailed information regarding its systems and the broader FX market during the 15 January EUR/CHF Flash Crash. FXCM has compiled data points, which demonstrate the unprecedented and extreme dysfunction of the FX market on 15 January.

Icap and CME Group Tap The Beast Apps Group to Deliver RapidRV Market Data and Analytics Tool
Icap Information Services (IIS), the information division of Icap, and CME Group have partnered with The Beast Apps Group to create and deliver RapidRV, a real-time market data and analytics tool designed to provide market participants with the capability to analyse relative value opportunities between the OTC and exchange-based futures markets.

LMAX Exchange Joins the Linux Foundation to Champion Open Source
LMAX Exchange, an FCA regulated MTF for global FX trading, today announced it has become a member of the Linux Foundation, the non-profit organisation dedicated to accelerating the growth of Linux and collaborative development.

Industry Events