Top Headlines 

UK Competition Watchdog Clears CME Group’s Buy of NEX Group – Reuters

Britain’s competition watchdog cleared CME Group’s 3.9 billion pounds deal to buy Michael Spencer’s NEX Group, paving the way for a cross-border trading powerhouse.

Non-Bank Firms Continue to Go Mainstream – Profit & Loss

FX market structure changes are behind a change in approach on the part of several non-bank market makers, and the direction of travel is very much the mainstream.

After Nasdaq, Cracks Appear in Foundation of Clearing –

Risk sharing is the foundation of central clearing. If it all goes wrong, and a defaulter can’t pay for its own losses, then everyone else chips in via a prepaid fund. So, it’s probably no surprise that in the aftermath of last month’s default at Nasdaq Clearing – which left members to mop up losses of €107 million – some firms are wondering whether they really do have to share risk with everyone else. 

The ELP SI Debate – The Trade

As the industry continues to adapt following the implementation of MiFID II, Ben Springett from Jefferies, Matthew McLoughlin of Liontrust and Jonathan Finney from Citadel Securities discuss how the buy-side and brokers are interacting with market maker systematic internalisers. 

Ex-SocGen Trader in Euribor Case Faces $9.1 Million Question – Bloomberg

A former Societe Generale trader was given a $9.1 million challenge by a Paris court: Go to the UK to face charges that he rigged a key interest rate or give up on a multi-million euro lawsuit against the bank.

Bonds are Less Liquid – Here’s How to Deal with It – Financial News (subscription)

The current calm masks the market’s increased sensitivity to sudden shocks, whereby liquidity evaporates, exacerbating price swings.

Regulatory News 

Brexit, Banks and Clearing: Dealing with the Risks – Financial Times (subscription)

The financial industry has raised a cheer for the EU’s decision to address a big potential source of instability in a no-deal Brexit: the issue of access to London’s clearing houses. But banks and other institutions’ worries about the consequences of an acrimonious break-up between London and Brussels are far from over as Brexit day approaches.                                                                                                     

Wall Street May Get Capital Break in New Approach to Derivatives – Bloomberg

The Federal Reserve and two other agencies on Tuesday proposed a new approach meant to answer concerns that existing requirements ignore risk-reducing collateral and didn’t allow enough netting of derivatives contracts with similar risks. The change would free up some of the bank capital demanded after the 2008 financial crisis. 

Basel Committee Names and Shames Regulatory Laggards – (subscription)

The international standard-setting body for banking supervision said a number of member jurisdictions have missed deadlines for the implementation of key measures addressing credit and liquidity risk, as well as the central clearing of derivatives.

Regulators Could Ensure “Optimal” Margin Setting: ECB – Global Investor (subscription)

Variation margin calls after a negative market shock may create an inefficient outcome, an ECB study finds.

EU Investors Could Be “Cut Out of Asian Markets”: Report – Global Investor (subscription)

European investors could be denied access to derivatives contracts referencing non-EU benchmarks after 2020.

Singapore, China to Boost Capital Markets Cooperation – Yahoo News

The Monetary Authority of Singapore and the China Securities Regulatory Commission have agreed to strengthen supervisory cooperation and enhance financial connectivity between their capital markets. 

Crypto News

UK Regulators Reveal ‘Comprehensive’ Crypto Regulation Plans – Investment Week

UK regulators have laid the groundwork for the regulation of cryptoassets and distributed ledger technology, such as blockchain, with the publication of a long-awaited report.

SEI Sees Rise in Crypto Fund Admin Business – Global Investor (subscription)

US fund administrator sees growing interest crypto interest from private equity and hedge funds.

Crypto Hardware Maker Looks to Capitalise on Chinese Demand – Financial Times (subscription)

Ledger, one of the world’s biggest makers of hardware devices used to store cryptocurrencies, is expanding into Asia-Pacific, looking to capitalise on strong Chinese demand for cryptocurrencies storage despite a ban on such exchanges in China.  

Crypto Conferences Ain’t What They Used to Be – Financial Times (subscription)

This week, in the grand surroundings of the Methodist Central Hall in London’s Westminster, a conference was convened with a rather noble title: “Blockchain and the Future of Humanity: Economy. Environment. Ethics.” 

Bitcoin Is Now the Least Volatile Since Late 2016 – Bloomberg

Just as traditional financial markets are getting interesting, the 30-day volatility of the most valuable cryptocurrency has plunged to the lowest since December 2016, months before its head-spinning bull run even began in mid-2017.

Coinbase to Bring in $1.3 Billion in Revenue Despite Crypto’s Massive Slump – Bloomberg

In the last year, the cumulative value of all major cryptocurrencies has tumbled by more than 70 percent. But that doesn’t mean no one’s making money in crypto anymore.

Company News 

Deutsche Börse Revenues Surge in Key Brexit Battleground – Financial News (subscription)

Deutsche Börse has more than doubled revenues from clearing over-the-counter derivatives, a key front in the German exchange’s battle to win business from London after Brexit.

Barclays to Shift Derivs, Sec Finance to Irish Unit – Global Investor (subscription)

Bank to transfer certain derivatives, repo and sec lending contracts to Barclays Bank Ireland post-Brexit. 

HKEX Confirms Digital Asset Partnership for Post-Trade Blockchain Prototype – The Trade

Digital Asset is to provide a blockchain-based platform for completion of post-trade allocations and processing for northbound trades under Stock Connect. 

Market Savvy 

Sterling Climbs Off 10-Week Low as Investors Turn to BoE – Reuters

Sterling on Wednesday rose off a 10-week low as investors turned their attention to a Bank of England monetary policy meeting on Thursday, when it is expected to keep interest rates on hold and detail conditions necessary for policy tightening.

Dollar Scales 16-Month Highs on Cautious BOJ, Weak China Data – Reuters

The dollar rose to its highest levels in more than a year on Wednesday as dovish comments by the Bank of Japan and weak data from China reinforced the greenback’s attractiveness as an investment destination.

India RBI Governor Rumoured to Be on Brink of Exit – Financial Times (subscription)

Urjit Patel, India’s central bank governor, was rumoured on Wednesday to be on the brink of resigning amid a stand-off with Prime Minister Narendra Modi’s government over the administration’s efforts to influence central bank policies.

Damaged Australian Dollar May Sink to 9-Year Low – Bloomberg

Australia’s dollar may drop to a nine-year low of 67 US cents as the central bank is set to become even more dovish and lean more toward cutting interest rates, according to money manager Hexavest.