Top Headlines

The Changing Face of FX Quants – Euromoney
The role of quantitative traders in the FX market is becoming ever more significant, as the amount of business executed via algorithms continues to increase.

Chinese Markets Enjoy a Rare Surge after Trump-Xi Meeting – The Wall Street Journal (subscription)

China’s stocks and currency rallied on the trade truce between Washington and Beijing, led by shares in companies expected to benefit from an easing of tensions. But analysts cautioned that the strong performance could soon run out of steam given the lingering uncertainties in trade relations between the world’s two largest economies, as well as concerns about the health of China’s economy.

• Euro, Yuan Lead Surge after US-China Trade War Truce – Reuters
• Currencies Markets in Risk-On Mode as Dollar Sells Off – Financial Times (subscription)
• US-China Trade War Truce: What’s Happened and What’s Next – Bloomberg
• Currency Swing Gauges Drop after US-China Broker Trade War Truce – Reuters

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

The podcasters highlight growing concerns in the industry that it may be harder to spread the word about the FX Global Code than previously thought, thanks to the realities of life on the buy side and vendor side. On the subject of transparency and ethics, they talk about the new phenomena of “full amount” trading in FX markets and the proposed Code of Conduct for cryptocurrency markets.

Deep Learning: The Evolution is Here – WatersTechnology (subscription)

Advancements in AI have led to new ways for firms to generate alpha and better serve clients. The next great evolution in the space could come in the form of deep learning. Data scientists at banks, asset managers and vendors explain how they are experimenting with this form of machine learning, and where challenges still exist.

Do We Really Need Decentralised Systems? – Profit & Loss

For all the hype and excitement around distributed ledger technology, speakers at the Forex Network Chicago conference debated the real value of decentralised systems such as blockchain.

The Start of the Personal Awards Season (opinion) – Profit & Loss

It’s the 2018 version of The Irrationals – my favourite themes and stories for the year, presented with tongue very much in cheek, although occasionally lapsing into seriousness. I thought we could kick off with the “Disaster Averted Irrational”.

Regulatory News

Banks Warned Not to Move Business from UK Because of Brexit – Financial News

The City’s financial watchdog has issued a stern warning to banks not to needlessly shift business out of the UK ahead of the country’s exit from the European Union.

• Two Banks Begin Moving Swaps out of London, Pre-Brexit – Risk.net (subscription)
• Now We Know Which Sorts of Jobs UBS is Moving to Frankfurt for Brexit – eFinancialCareers
• Barclays’ Struggle to Fill its Frankfurt Trading Jobs is a Warning to Banks on Brexit – eFinancialCareers

Britain’s EU Divorce Settlement Preferable to No-Deal Brexit: FCA – Reuters

Britain’s draft divorce settlement with the European Union is preferable to a no-deal Brexit even though this would leave it without a say over EU financial rules, its finance industry watchdog said.

GFXC to Publish Disclosures, Cover-and-Deal Findings – FX Week (subscription)

The Global Foreign Exchange Committee is set to publish the findings of two working groups next year, shedding more light on practices surrounding cover-and-deal and the body’s thinking around disclosures on anonymous trading platforms.

Switzerland Shields Financial Centre Amid Stand-Off with EU – Financial Times (subscription)

Switzerland has stepped up preparations to defend the country’s financial centre against possible reprisals from Brussels if its government fails to agree soon a new framework agreement on relations with the EU.

Hedge Fund Giants Lead Fourth Wave of IM Candidates – Risk.net (subscription)

As many as 20 buy-side firms could become subject to the derivatives market’s new margining regime next year, in the next phase of its roll-out. Five of the largest hedge funds – BlueCrest Capital Management, Capula Investment Management, Citadel, Millennium Capital Partners and RokosCapital Management – are expected to be among them.

Libor Use on the Rise Despite Push for Benchmark Reform – Financial Times (subscription)

Regulators and banks always knew investors’ dependence on the Libor interest rate benchmark was going to be difficult.

McHenry to Take Top GOP Spot on House Financial Services Panel – Bloomberg Law (subscription)

Rep. Patrick McHenry’s priorities of cryptocurrency and financial technology regulation could be one area for potential bipartisanship on panel.

Crypto News

Bitcoin ETF Seekers Met With SEC in Latest Pitch for Approval – CoinDesk

Members of VanEck, SolidX and the Cboe BZX Exchange met with US Securities and Exchange Commission staff to present a new argument on why the bitcoin market is ready for an exchange-traded fund.

State Street Is Waiting on Client Demand for Crypto Custody – CoinDesk

State Street said there is no sense of urgency – at the moment, at least – from clients for the firm to move into safeguarding crypto assets.

Behind Coinbase’s Quiet Roll-Out of OTC Crypto Trading This Month – CNBC

Coinbase rolled out an over-the-counter cryptocurrency trading desk earlier this month, but until now has been hesitant to openly discuss its ambitions.

Company News

CME Abandons Buy-side Direct Clearing Initiative – Risk.net

The Chicago Mercantile Exchange has withdrawn an official request to US authorities, which would have allowed buy-side firms to clear trades for their own account rather than relying on a clearing broker.

Bloomberg Adds Indian Derivatives Datafeeds – WatersTechnology

Subsidiaries of NSE and BSE expect an increase in liquidity for Indian derivatives products.

Prop Traders Unhappy about Eurex Trading Hour Extension – Global Investor (subscription)

Traders fear extending trading hours into the Asian time zone will dilute traditionally volatile periods.

What Marko Kolanovic Is Looking at Now – Bloomberg

The head of macro quant research at JP Morgan Chase says that computerized liquidity, algo trading and passive investing could go wrong someday.

For Deutsche Bonus, Raid Is ‘Nightmare With Eyes Wide Open’ – Bloomberg

It’s that time of year again when Wall Street bankers turn their attention to bonuses. And at Deutsche Bank, they’re facing the prospect, again, that part of their payouts could be swept away by scandal.

Market Savvy

Relief Rally Lifts Sterling Though Brexit Nerves Weigh – Reuters

A broad rally across global stocks and risky currencies lifted the British pound on Monday, although growing concerns about whether domestic political opposition will scupper a Brexit deal at a parliament vote next week capped heavy gains.

Sell-off Shunts Some Emerging Markets into Bargain Territory – Financial Times (subscription)

Successive bouts of pessimism and optimism have characterised emerging markets over the years and the past few months have not deviated from this pattern.

Mexican Peso Up after Airport Bond-Holder Report, US-China trade truce – Reuters

Mexico’s peso currency gained around 1.3 percent on Sunday in international trading, mostly in Asia, after local media reported there may be a solution for bond-holders tied to the financing of a scrapped airport in the capital.

How To Analyze The Currency Markets And Understand The Future Of The Dollar – Bloomberg

On this week’s episode of the Odd Lots podcast, Marc Chandler of Bannockburn Global Forex talks about how he approaches the foreign exchange market, and what the future of the US dollar may hold.