Top Headlines

The FX Crisis: Dealing With Human Risk and Restoring Trust Within the FX Markets – Profit & Loss Webinar (free)
Profit & Loss invites readers to join a special free webinar today, Tuesday, 27 January, at 10am EST/3pm GMT. As the financial services industry looks to recover from the recent FX crisis and restore trust within the FX markets, banking executives are under pressure to fully understand the risks inherent within their organisation. Beyond market, credit and trading risk – human risk is quickly becoming the single largest exposure that financial institutions are facing today. Tune in to hear the views of Stephen Epstein, vice president of product marketing, Digital Reasoning; Rebecca Healey, senior analyst, Tabb Group; Matthew Kulkin, senior associate, Squire Patton Boggs; and Aaron Nelson, lead product evangelist, Digital Reasoning.

CLS to Add First Currency in Seven Years – Financial News (subscription)
CLS, a provider of settlement services for foreign exchange trades, is expected to add the Hungarian florint to its universe within the next year, marking its first new currency since 2008.

Swiss National Bank Stands Ready to Intervene in FX Market – Reuters
The Swiss National Bank is ready to intervene in the foreign currency market to ease monetary policy after ditching its cap on the Swiss franc earlier this month, its vice chairman said in an interview on Tuesday.

Saxo Faces Legal Battles With Clients After Franc Shock – Bloomberg
Saxo Bank is bracing itself for lawsuits from some clients who are unhappy with its efforts to have them cover losses on their Swiss franc accounts after the bank re-priced trades retroactively.

Euro Rises Against Dollar; Eyes are on Fed for Rate Hike Clues – Reuters
The euro rose for a second day against the dollar on Tuesday before a meeting of the US Federal Reserve that may push back expectations for when US interest rates will start to rise.

Analysts See Volatility But No Contagion After Greek Vote – FX Week (subscription)
The victory of anti-austerity party Syriza at the Greek parliamentary elections has raised the possibility of the country exiting the European monetary union. Party leader Alexis Tsipras has said he intends to renegotiate the terms of the €240 billion worth of international bailout, which could set the wheels of a Grexit in motion.

Dutch Gold Reserves Up for First Time in 16 Years, Russia Buys More – Reuters
The Netherlands raised its gold holdings for the first time in 16 years in December, while Russiaextended its buying spree of the precious metal to a ninth straight month, data from the International Monetary Fund showed on Tuesday.

Russia Rating Slips to Junk and the Ruble Takes a Beating – Wall Street Journal (subscription)
Russia’s fractured economy suffered another potential blow after credit-rating firm Standard & Poor’s cut the country’s credit rating to junk, sending it below investment grade for the first time in more than a decade. While the move had been largely anticipated by financial markets, the news helped drive the battered ruble even lower.

UBS Says Wealthy Asians Are Abandoning Australian Dollars – Bloomberg
Asia’s wealthy are falling out of love with the Aussie dollar as record-low yields and sustained declines persuade them to look elsewhere.

Yuan Gains as Steepest Two-Day Drop Since 2008 Seen Excessive – Bloomberg
China’s yuan rose by the most in four weeks as the central bank strengthened the reference rate after the currency’s biggest two-day slide since 2008.The People’s Bank of China raised the daily fixing 0.03 percent to 6.1364 a dollar after weakening it by 0.22 percent over the previous two days.

FXPA News: Join by 1 Feb to Qualify for Time-Limited Membership Category
The special founding member category of the Foreign Exchange Professionals Association (FXPA) will close on 1 February. Join today to be part of the first wave of founding members that enjoy the distinct benefits that this class offers. FXPA recently crossed the critical threshold of 15 members, triggering elections for the first permanent Board of Directors and Officers. FXPA’s Board will include 50% representation by Founding Members that join prior to the 1 February deadline.



Regulatory News

Solutions Needed for European “Kill Switch” – EuroCCP – The Trade
Central counterparties (CCPs) and clearing members need to work together to come up with solutions to the “kill switch” functionality demanded in MiFID II, EuroCCP’s Diana Chan has said.

New York Fed Announces Re-Elections to Board – FX Week (subscription)
Paul Mello and Terry Lundgren have been re-elected while Emily Rafferty has been reappointed to the institution’s board of directors.

UK MPs Question Thoroughness of FX Probe – Profit & Loss (subscription)
UK MPs have questioned the diligence of the probe into manipulation in the FX market conducted by Anthony Grabiner, the lawyer who was appointed by the Bank of England’s Oversight Committee to lead an independent investigation.

France and Austria Attempt to Push Forward on FTT – Profit & Loss (subscription)
France and Austria have joined forces to urge the other nine European countries committed to a Financial Transaction Tax (FTT) to overcome an ongoing impasse.



Company News

Boston Technologies Seeks to Sell Business amid Market Turmoil – Forex Magnates
The software provider is promptly looking for a buyer, following liquidity pricing issues. If a white knight does not emerge, BT may approach the FCA for guidance.

Dukascopy Enters Negotiations with View to Acquire Alpari Japan – LeapRate
Dukascopy Bank is currently evaluating the possibility of acquiring the business of FX companies which suffered losses as a result of the Swiss National Bank’s removal of the 1.20 floor on the EURCHF currency on January 15 this year. The company is showing a particular interest in Alpari’s Japanese operation.

Banks Report Rebound in FX Revenues – Profit & Loss (subscription)
BNY Mellon and State Street, the two largest custody banks, have reported a boost in Q4 profits due to an increase in volume and volatility in the foreign exchange markets.



Market Savvy  

Special Report – Swiss Miss: What Next?
Deutsche Bank
The SNB’s decision to discontinue the exchange rate floor this month led to turmoil and consternation in FX markets. As the dust settles, we provide a first assessment of the implications for CHF and wider financial markets. The Swiss franc now stands significantly overvalued on a wide range of valuation metrics. Based on our proprietary models as well as external fair value estimates, we think that CHF is ~30% overvalued against EUR and USD. The real effective exchange rate is similarly overvalued. Contrary to a popular belief, ‘safe haven’ capital inflows ceased two years ago. The franc has since been strengthened by the drying-up of Swiss outflows.



Press Releases

FastMatch Announces New Service AgencyFX
Financial technology company FastMatch has launched its buy-side focused AgencyFX service, which extends the company’s brand of transparency and cost savings to large institutional money managers.

Icap Information Services Partners with Wind Information to Provide Data to the Chinese Market
Icap Information Services has partnered with Wind Information Co., a provider of financial data, to provide offshore Chinese renminbi (CNH) and US Treasury data to the Chinese market.

Moscow Exchange to Increase Price Tick for Certain FX Market Instruments
Effective 2 February, Moscow Exchange will increase the price tick for USD/RUB, EUR/RUB and GBP/RUB FX spot instruments to RUB 0.001 from the current tick size of RUB 0.0005.

Thomson Reuters Survey Reveals Conduct Risk Regulatory Focus Expected to Increase Along with Personal Liability Concerns for Senior Managers
The findings of a Thomson Reuters study show that managing and mitigating conduct risk continues to be one of the highest regulatory priorities, yet financial services firms remain unclear about what conduct risk is and how to address it.

ICE Benchmark Administration Introduces New Calculation Methodology for ISDAFIX
Intercontinental Exchange, the global network of exchanges and clearing houses, says ICE Benchmark Administration will introduce a new calculation methodology for ISDAFIX from 16 February 2015.

ThinkForex Announces FCA Regulation and Strengthens Management Team
ThinkForex, a provider of foreign exchange, metals and contracts-for-difference trading, has just been approved by the UK Financial Conduct Authority and has hired a management team both in London and Australia.



Industry Events