Top Headlines

UBS Granted Immunity; Settles US FX, Libor Cases – Profit & Loss (free story)
UBS has been granted “conditional immunity” after it entered into resolutions with the US Department of Justice (DoJ), the Board of Governors of the Federal Reserve System and the Connecticut Department of Banking in their investigations of the global foreign exchange markets.

Five Big Banks Face Criminal Charges and $5 Billion Bill Over FX Rigging –Reuters
Five of the world’s biggest banks are expected to be hit with a combined bill of more than $5 billion and criminal charges on Wednesday in a settlement with US and British authorities over rigging of currency markets.

Banks Face Scrutiny in First Rand-Rigging Probe Since 2002 – Bloomberg
South African regulators are investigating alleged foreign currency market rigging for the first time in 13 years in a probe that will examine practices at banks including JP Morgan Chase and Citigroup.

EBS on Track to Test New Mechanism for Forex Fixings – Reuters
Currency platform EBS is to start testing a computerised system this year that regulators see as one way of preventing manipulation of foreign currency benchmarks, a senior manager at the company said on Tuesday.

Opinion: Views on ‘Black Thursday’ from Wayne Roworth, Co-Head of e-FX at Sucden Financial – LeapRate
“Most bank liquidity providers are talking about a move away from market share and towards profitability; this is a real trend reversal. First and foremost many banks looked to widen spreads and discourage less profitable flow,” says Wayne Roworth, co-head of e-FX at Sucden Financial.

Morning Coffee: Mixed Messages From JP Morgan and Barclays; Young Bankers Find Jobs Changed for Worse – eFinancial Careers
Spot FX sales and trading might seem a good area to go into if you’re a young markets professional today. After all, most of the old guard was wiped out by the FX-fixing scandal. Unfortunately, however, Bloomberg suggests spot FX sales and trading isn’t what it used to be.

Swedish Currency War Looking Like Lost Cause, Ex-Riksbanker Says –Bloomberg
As Sweden’s Riksbank looks for new ways to fight deflation, a banker who once worked there says the likelihood it will succeed is looking increasingly remote.

Regulatory News

EU Benchmark Law Approved by MEPs, Moves to National Negotiations –Profit & Loss (free story)
Members of the European Parliament (MEPs) approved a draft EU law aimed at improving the benchmark-setting process for critical rate fixes this week.

Regulators Point to Risks From Rapid-Fire Trading, Clearing – Wall Street Journal (subscription)
The rise of computerised trading and the changing roles of big banks are reshaping financial markets and potentially raising new vulnerabilities, US regulators said in their annual report on financial-system threats.

CFTC’s Market Risk Advisory Committee Announces Agenda for Upcoming Public Meeting (press release)
The US Commodity Futures Trading Commission (CFTC) has announced the agenda for the upcoming Market Risk Advisory Committee (MRAC) public meeting that will be held on 2 June 2015 at CFTC’s headquarters in Washington, DC.

Buy Side ‘Can’t Justify’ Clearing OTC Derivatives in Europe Yet – the Trade
Buy siders at this year’s Euroclear Collateral Conference have said they are not clearing OTC derivatives in Europe until regulators make it mandatory.

Company News

Helping Clearing Houses Avoid a Crash – Financial News (subscription)
Lehman Brothers wasn’t the first bank to fail overnight but when, in 2008, it did, the world’s economy teetered on the brink of collapse. One of the unsung heroes of that harrowing period was clearing house LCH.Clearnet, which was thrust into the heart of the volcano through its role as the middleman in most of the bank’s derivatives trades.

Deutsche Börse to Set Up Europe’s First Multi-Asset RMB Platform –
German exchange group signs joint venture deal with CFFEX and Shanghai Stock Exchange to bring trading venue to Frankfurt.

Market Savvy  

Most Prescient Ruble Bull Sells as Russia Ends World’s Top Rally
When Russia’s currency depreciation bottomed on 30 January, one investor announced it was loading up on rubles to the tune of $7.9 billion. Now, after the world’s biggest rally, that same investor is selling. The investor? Russia. Deputy Finance Minister Alexey Moiseev said on Tuesday the ruble is “very strong” and the ministry has started buying foreign currencies.

Market Roiled in Controversy, BOE, Fed Minutes Ahead
LMAX Exchange
We’re coming off a controversial Tuesday session of trade, which saw the US dollar extend gains across the board in reaction to Monday news of the ECB front-loading QE in May and June. Meanwhile, more talk and no action on Greece. Looking ahead, the BOE and Fed minutes are the key standouts.

Take Profit on Long EURSEK, Enter Long GBPSEK
BNP Paribas
We are taking profit on our long EURSEK recommendation, booking a gain of 1.1% (FX Strategy Flash). We rotate into a long GBPSEK recommendation at 12.9750 with a 13.40 target and 12.76 stop loss. The key point is that we think markets continue to under-price scope for Bank of England (BoE) rate hikes, while in contrast we look for further easing from the Riksbank.

Press Releases

Icap’s EBS and BrokerTec Combine Business Operations; Launch New Brand
EBS BrokerTec, Icap’s electronic foreign exchange and fixed income business, announces that six months since EBS and BrokerTec merged divisions under a new management structure, it has made significant progress in combining its business operations.

Daiwa Goes Live with Torstone Technology’s Inferno in Hong Kong
Torstone Technology, a provider of securities and derivatives processing software to the global financial markets, and Daiwa Capital Markets Hong Kong (Daiwa HK), the investment banking arm of Daiwa Securities Group, has announced that Daiwa’s multi-asset Hong Kong Agency business has successfully transferred onto Torstone’s post-trade processing platform, Inferno.

BofA Merrill Lynch Fund Manager Survey Finds Investors Selectively Lowering Risk After Bond Sell-off
Global investors have less appetite for higher risk exposures, particularly in the US, according to the BofA Merrill Lynch Fund Manager Survey for May.

Industry Events