Top Headlines

TCA is Dead…Long Live TCA – Profit & Loss

Transaction cost analysis (TCA) as we know it has already begun to go bad. Its origins in FX were really to allow asset managers to show their clients that their FX executions were in the right ballpark, but the new breed of buy-side FX traders (many of whom have moved from the sell-side) are looking for much deeper insights.

A Clue to Solving the Yen ‘Flash Crash’ Mystery Uncovered – Bloomberg

Retail investors in Japan slashed their net long positions in the Turkish lira on Thursday, according to data from a trading platform, offering a clue to the mystery behind the flash crash that had sent the yen soaring against every currency in the world.

In the FICC of It (podcast) – Profit & Loss

The podcasters tackle two big stories in the FX market: the recent flash crash in the Asia markets and the changes at Citi’s FX prime brokerage business. As the euro turns 20 this year, the editors have a go at predicting where the currency will be at the end 2019, secure in the knowledge that no one is likely to remember these predictions and make fun of them this time next year.

While Political Will Exists, the Euro Will Muddle Through – Profit & Loss

Let’s talk about the prospects for the destruction of the euro. I have read over the past two weeks about how the euro enters its 20th year on shaky ground, and while I don’t actually agree with the analysis or the fact that the euro may implode in the coming five years, one has to say there are issues bubbling away that may present challenges to the EU as it seeks to reach the drinking age in most US states in one piece.

Fund Managers Brace for Revenue Squeeze – Financial Times

Asset managers are braced for more downward pressure on revenues this year after a turbulent 2018 proved to be the most difficult 12 months for the investment industry since the global financial crisis.

Regulatory News

MPs Threaten Trump‑Style Shutdown over Brexit – The Times

An all-party group of senior MPs will launch an audacious attempt to derail a no-deal Brexit this week by starving the government of cash and creating a Donald Trump-style shutdown.

The EU’s Unbundling Directive is Reinforcing the Power of Scale – The Economist

By squeezing research budgets and brokers’ revenues, it has hastened market concentration.

‘It Could Go Either Way’: China and the United States Ready for Trade War Talks in Beijing – South China Morning Post

Officials from both sides expected to take stock of commitments, with at least one sign of an offer on the table, insiders say.

Maxine Waters Won’t Please Everyone, Even Some Fellow Democrats – Bloomberg

As Maxine Waters takes the gavel of the powerful House Financial Services Committee, it’s not clear whom she’ll end up disappointing more: business-friendly Democrats or progressive Democrats.

Seven Questions for Janet Yellen on Financial Stability – Brookings Institution

Former Federal Reserve Chair Janet Yellen, now a distinguished fellow in residence at the Hutchins Center on Fiscal & Monetary Policy at the Brookings Institution, has been watching recent developments in financial regulation with substantial concern.  

Crypto News

Opimas Research Debunks Crypto Myth – Global Investor (subscription)

Consultancy firm Opimas finds that the over-the-counter crypto market is not as big as estimated.

Bitcoin: After 10 Wild Years, What Next for Cryptocurrencies? – The Guardian

From next to no value in 2009, it rose to $20,000 and crashed back to $3,000 within a decade.

Institutional Money Flowing into Crypto: A Tsunami or a Steady Wave? – Tabb Forum

If large amounts of institutional money hit crypto all at once, there would be nowhere for all the money to go. The influx of institutional money will flow into crypto in cycles, as the evolution of the asset class progresses, gradually appealing to more and more institutional investor groups.

Crypto Exchange Takes on Behemoths With Physical Bitcoin Future – Bloomberg

While the owner of the New York Stock Exchange is expected to start offering such contracts shortly and Eris Exchange plans to follow, the firm that says it was first to market has spun off from its previous owners and will provide the derivatives on some of the largest digital coins to Asian retail investors beginning next month.

Mizuho Bank Prepares Roll Out of Proprietary Digital Currency – Finextra

Mizuho Bank isto launch its well-trailed proprietary digital currency in March, with the support of 60 regional domestic banks.

Market Synergy Opens Fix Link to Crypto Exchange Bitfinex – FX Week (subscription)

The low-latency institutional-grade connectivity is based at the heart of Switzerland’s Crypto Valley.

Company News

Nasdaq Default Came at Time of Mass Margin Breaches – (subscription)

The default at Nasdaq Commodities in September last year occurred during a period when many clearing members incurred margin breaches, public disclosures show.

Wall Street Bonus Season is Upon Us: Here’s When the Big Banks Will Tell Employees HowMuch They’ll Be Paid – Business Insider

Compensation can vary significantly across teams and business lines, but a closely watched industry report anticipates healthy bonus increases for most of Wall Street.

Isda to Digitise Full Suite of Legal Documentation – Global Investor (subscription)

The trade body plans to extend digitisation beyond initial margin documentation.

Market Savvy

Sterling Gains Ahead of Parliamentary Debate on Brexit Deal – Reuters

Sterling rose to a one-week high on Monday as traders prepared for the British parliament to reconvene this week and debate Prime Minister Theresa May’s Brexit withdrawal agreement.

Goldman Says to Bet on Weaker US Dollar After Powell Comments – Bloomberg

The US dollar may be poised to decline, according to Goldman Sachs. Comments from Federal Reserve Chairman Jerome Powell on Friday boosted the chances that the central bank will pause interest rate increases, strategists at Goldman wrote in a note Saturday.

Iran’s Central Bank Proposes Slashing Four Zeros from Falling Currency: IRNA – Reuters

Iran’s central bank has proposed slashing four zeros from the rial, state news agency IRNA reported on Sunday, after the currency plunged in a year marked by an economic crisis fuelled by US sanctions.