Top Headlines

UK Markets Rally as Conservatives Head for Outright Election Win – Reuters
British financial markets rallied on Friday as election results pointed to a shock outright victory for Prime Minister David Cameron’s Conservative Party, wiping away the uncertainty for investors that a hung parliament had threatened to deliver.

Europe and US Fail to Agree on Derivatives Rules – Financial Times (subscription)
The two main regions for derivatives trading have failed in their latest push to harmonise industry rules, with US and European regulators aiming to settle a long-running spat by the summer. Talks in Brussels between Jonathan Hill, the European Commissioner for financial stability, and Timothy Massad, chairman of the US Commodity Futures Trading Commission, concluded on Thursday, with no agreement reached over the recognition of each region’s rules on clearing houses.

CME FX Fix Under Microscope in New Lawsuit – FX Week (subscription)
A CME Group benchmark referenced as the daily settlement price for FX futures and options on the exchange has been brought into question, following another class action lawsuit against 12 banks in the US for its alleged manipulation.

Firms Vie to Set Up New Ways to Trade Treasurys – Wall Street Journal (subscription)
A host of companies are vying to set up new electronic networks for trading US Treasurys, the latest upheaval in a $12.5 trillion market already being reshaped by some large banks’ pullback and the growth of fast-trading firms.

Hong Kong Monetary Authority Racks Up HK$85.9 billion in FX Losses Over 15 Months – South China Morning Post
The Hong Kong Monetary Authority needs to improve its foreign exchange trading strategies after racking up a grand total of HK$85.9 billion in forex losses over the past 15 months. Cutting exposure to the yen, euro and pound and using hedging tools are among the investment advice offered by currency traders.

Emerging Europe: CIS counts the cost of Russia – Euromoney (subscription)
The rouble’s crash sent currencies tumbling across the Caucasus and Central Asia. Banks look relatively well placed to withstand an inevitable downturn. But with protracted stagnation looming, is it time for policymakers to build bridges further afield?



Regulatory News

Regulators to Put CCP Risks Under Microscope – (subscription)
An international effort to standardise stress tests for clearing houses has morphed into a broader evaluation of their risk management practices. Banks and buy-side firms have been calling for central counterparties (CCPs) to be subject to more stringent standards. The Committee on Payments and Market Infrastructures (CPMI) and the International Organization of Securities Commissions (Iosco) set up a working group last October to examine the stress-testing practices of CCPs.

Korean Parliament Fails to Pass Clearing Bill – Asia Risk (subscription)
Korea’s National Assembly has failed to pass a new bill on reforming the country’s default risk waterfall model, raising questions about whether the EU will be able to grant Korea Exchange third-country central counterparty status ahead of a September deadline.

Financial Transaction Tax: A Relentless Pursuit? – The Trade
Many thought the dreaded European Financial Transaction Tax (FTT) had gone away, but in January, French and Austrian finance ministers wrote a letter to counterparts in the 11 supporting countries suggesting a revival of the tax, with a proposed arrangement date of January 2016.

Australian Govt Urged to Tighten FX Trading Rules – The West Australian
A few of Australia’s larger FX/CFD brokers have been worried enough about their industry’s cowboy reputation to ramp up calls for a federal government crackdown on lax local rules.

France’s AMF blacklists 70 unauthorized Forex brokers – LeapRate
Autorité des marchés financiers (AMF), the French regulator responsible for the country’s financial services industry, has updated its “Black list” of FX companies that provide their services to French investors without having the required licenses.



Company News

Eight Liquidity Providers to Support FX Outrights and Swaps on EBS Direct – Profit & Loss (free story)
Eight major liquidity providers have agreed to support the beta launch of FX outrights and swaps on EBS Direct. Icap’s electronic FX business plans to add the products in Q4 2015, subject to regulatory approvals.

SocGen Revamps Global Markets Structure – Financial News (subscription)
Societe Generale is disbanding the cross-asset solutions team it created in 2009 and is instead broadening its existing fixed income and currencies and equities businesses to include structured as well as flow products.

Q1 FX Activity Hard to Replicate, Says Virtu CEO – Profit & Loss (free story)
Virtu Financial’s CEO, Douglas Cifu, has warned the FX trading activity that lead to a 103% year-on-year increase in revenue in the first quarter of this year is unlikely to be replicated in Q2.

Societe Generale Initiates NDF Clearing – GlobalCapital (subscription)
Societe Generale, in its capacity as a futures commission merchant, is executing and clearing NDFs through LCH.Clearnet, using the latter’s ForexClear service.

McGowan Retires From Industry, Leaving Barclays – FX Week (subscription)
McGowan, global head of FX trading at Barclays, is leaving the bank to retire from the industry, people familiar with the situation say. His role will be taken over by Robert Bogucki and Nat Tyce as co-heads of macro trading.



Market Savvy  

UK General Election: Markets Must Temper Relief at UK Poll Result
JP Morgan Asset Management in the Financial Times          
We do not have the uncertain outcome to the UK general election that pretty much everyone expected. A bit of market relief is understandable. But it is important to realise that none of the factors that will do most to shape Britain’s medium-term outlook was decided on May 7.

Beijing’s Rise Threatens US Dollar Supremacy
BNP Paribas in Barron’s
A rising Renminbi (RMB) is likely to start casting doubt around the ‘special’ status of the US dollar. Institutional and policy dynamics suggest that the USD’s special status will start to come into question with the increased usage of the RMB. In this FX Thematic Insight, we recommend entering a long CNH position against a proxy trade weighted short basket of USD, GBP, JPY, AUD and EUR.



Press Releases

Cryex Announces New Institutional FX and Digital Currency Marketplace and Clearing House
Cryex today announced the filing of an application with the Swedish Finansinspektionen (SFSA) to become a regulated clearing organisation and create a member-only marketplace with clearing and settlement for FX and digital currencies.



Industry Events