Top Headlines

The Shift from Anonymous Venues to Disclosed Channels – Profit & Loss (subscription)

There are those in the FX world who believe that the narrative in certain circles of a return to bilateral, relationship-based trading was a group of liquidity providers talking their book and hoping to push the market away from what could sometimes be costly anonymous trading venues. Looking at the numbers in last week’s FX committee turnover surveys, specifically the spot e-trading statistics from the UK and US, I think it is fair to say that the cynicism is wrong, or the narrative is working, or both.

Barclays FX Trader Seeks to Dismiss US Charges over HP Deal – Financial Times (subscription)

The US head of foreign exchange trading at Barclays has asked a judge to dismiss criminal charges against him for allegedly defrauding Hewlett-Packard by front-running a £6bn currency deal linked to its takeover of UK software maker Autonomy. The case will provide a fresh test of whether investment banks have a responsibility to act in the interests of large corporate clients when providing them with complex financing products and services like foreign exchange swaps.

Banks Pick Old Tech over Blockchain for FX Service – Financial News (subscription)

CLS, a key settlement house in the $5tn-a-day foreign exchange markets, has been forced to water down a two-year blockchain project amid security concerns raised by the world’s main FX dealers. The decision is another example of how the financial services industry can struggle to adopt distributed ledger technology, despite it being much-vaunted for its cost-saving potential.

FMSB Publishes (Mis)Behaviour Cluster Analysis – Profit & Loss

The FICC Markets Standards Board (FMSB) has published its Behavioural Cluster Analysis (BCA) study, a piece of research that has reviewed the behavioural patterns in 390 cases of misconduct in financial markets over an extended period of time (225 years stretching back to 1792) and covering 26 countries and multiple asset classes. This review indicates that the behavioural patterns evident in misconduct events are not unique to each case but that the same 25 behavioural patterns are evident in market misconduct cases and these consistently repeat and recur over time.  

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

In this week’s In the FICC of It, Colin Lambert lifts the veil of secrecy around how this podcast is created and Galen Stops talks about democratising financial markets. They also engage on the latest FX volume surveys and ask ‘are they accurate?’ as well as talk about the impact of regulation on non-bank market makers. They also seek to explode the myth that people are leaving the banking industry in droves and briefly touch upon what Colin calls ‘the madness of regulation’.

Big Week for Currency Markets as Central Banks Meet – Reuters

Major currencies stuck to familiar ranges on Monday as investors shied away from taking out big positions ahead of a flurry of crucial economic data and central bank monetary policy meetings this week. 

Regulatory News 

Be a Whistleblower and Win a Fistful of Dollars – Financial Times (subscription)

The whistleblower programme, put in place by the 2010 Dodd-Frank act, has paid out more than $266m in 50 awards to 55 informants. The largest award for an individual was for more than $33m, given in March. Now the SEC wants to improve its incentives for the whistleblower programme. 

Cryptocurrency Rules Should Be Congress’s Focus, Key Lawmaker Says – Bloomberg

A key member of the House Financial Services Committee wants to see lawmakers focus next year on oversight of the “muddied and fairly opaque” markets for initial coin offerings and trading digital tokens. Representative Bill Huizenga, a Michigan Republican who could be a contender to lead the panel if his party keeps control of the House, said Congress needs to work with regulators to ensure cryptocurrency investors are protected. 

Crypto News 

Nasdaq Holds Closed-Door Event to Discuss Policing Crypto – Bloomberg

The road to shaking its history of shady transactions and fraud is proving long for cryptocurrencies, but Nasdaq thinks it can help get the industry on the path to legitimacy. It hosted a closed-door meeting earlier this week in Chicago with representatives from about half a dozen companies, including traditional exchanges as well as Gemini and other crypto markets.

SEC Commissioner: Bitcoin Is Regulated and Mature Enough to Have an ETF – Forbes

On July 26, the US Securities and Exchange Commission officially rejected the Bitcoin exchange-traded fund (ETF) application filed by the Winklevoss twins, citing lack of measures in the ETF to prevent price manipulation. Almost immediately after the release of the SEC’s statement, SEC commissioner Hester Peirce expressed her disappointment with the decision of the agency. 

Have a Cryptocurrency Company? Bermuda, Malta or Gibraltar Wants You – The New York Times

The race is on to become the go-to destination for cryptocurrency companies that are looking for shelter from regulatory uncertainty in the United States and Asia. 

Company News 

Thomson Reuters Financial & Risk Rebranded as Refinitiv – Profit & Loss

Following the closing of the strategic partnership transaction between Thomson Reuters and private equity funds managed by Blackstone, the Thomson Reuters Financial & Risk business will be known as Refinitiv.  

SGX Derivatives Drive Revenue Up 5% – FOW/Global Investor Group

SGX chief executive Loh Boon Chye said derivatives trading volumes hit a record high in 2018.

Deutsche Bank Moves “Large Part” of Euro Clearing to Frankfurt – FOW/Global Investor Group 

Frankfurt seeks to attract clearing business away from London-based rival LCH, aiming for 25% market share.

Market Savvy 

Emerging Currency Traders Are Being Kept on Their Toes – Bloomberg

Emerging market foreign exchange traders are being kept on their toes even as their counterparts dealing in developed currencies might be struggling to stay awake amid the lull of the northern summer. Implied volatility on emerging market currencies has surged and is close to its highest level in over a year, according to a JP Morgan Chase & Co. gauge based on three-month at-the-money forward options.

Sterling Subdued as Investors Look Ahead to Rate Hike Decision – Reuters

The pound rose on Monday but its modest gains reflected concern among investors about the currency’s prospects ahead of a widely anticipated Bank of England interest rate hike this week.

China’s Yuan Hits 13-Month Low on Weaker Fixing and Depreciation Bets – Reuters

China’s yuan fell to a fresh 13-month low against the dollar on Monday, weighed by a much weaker central bank fixing and expectations the Chinese currency has further to fall as US trade tensions worsen.

Krona Surges as Swedish GDP Growth Rises More Than Forecast – Bloomberg

The krona strengthened the most in four weeks against the euro after Sweden’s economic growth accelerated more than forecast in the second quarter of the year.