UK to Unveil Financial Market Reforms

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Top Headlines

UK to Unveil Financial Market Reforms – Wall Street Journal (subscription)
The UK will unveil a suite of reforms Wednesday aimed at cleaning up British financial markets after a series of scandals. The yearlong Fair and Effective Markets Review – a joint effort between the Bank of England, the UK Treasury and Britain’s Financial Conduct Authority – will zero in on practices such as “front-running” and “last-look,” controversial strategies that can be used by traders in a way that can disadvantage their clients, according to participants in the consultation and the bodies’ initial review document.


Cost of FX Trading to Rise as Firms Continue Re-Pricing Risk – Profit & Loss (free story)
The FX industry is being forced to re-price risk, which could potentially lead to higher costs for the end users.

Compression of Swap Trades Gains Pace as Banks Tear Up Old Trades – Financial Times (subscription)
The global derivatives market contracted in notional size during the second half of 2014, driven by banks tearing up old outstanding trades in order to reduce capital requirements. Total notional outstanding over-the-counter derivatives contracts fell by more than $60 trillion, from just over $690 trillion in June 2014 to $630 trillion at the end of last year.

Justice Department Probes Banks for Rigging Treasuries Market – New York Post
The Justice Department is looking into possible fraudulent manipulation of the $12.5 trillion Treasurys market.

CCP Stress-Test Rifts Emerge as Review Gets Underway – Risk Magazine (subscription)
Calls for more transparency surrounding stress-testing methodology and practice have led to CPMI-Iosco launching a policy working group to investigate whether to introduce standardisation, but the clearing houses argue CCPs know their products and markets, and should be allowed to design their own tests.

BBA Avoided Knowing Which Banks Were Rigging Libor, Jury Hears – Operational Risk & Regulation (subscription)
The director of Libor at the British Bankers’ Association (BBA), John Ewan, did not know what his responsibilities would be once he knew which panel banks were deliberately skewing their Libor submissions between 2005 and 2007, so he told his informants not to name names, Southwark Crown Court heard yesterday (June 8).

IT Vendors Take the Strain – FOW (subscription)
Pressed heavily by regulatory costs, sell­-side firms are increasingly turning to off­-the-­shelf IT solutions. Barclays’ decision to outsource its post-trade derivatives trading technology to capital markets IT giant SunGard comes as a slew of sell-­side firms have stepped back from the servicing clients’ trading and post­-trade derivatives needs.

ICE Chief Hits Out at Exchanges, Banks and Brokers – The Trade
Intercontinental Exchange chief executive Jeffrey Sprecher has called out exchanges, brokers and banks for fragmenting liquidity which has ultimately hit institutional investors.

 

Regulatory News

Remarks of Chairman Timothy Massad Before the FIA International Derivatives Conference
Clearinghouse equivalence – Where are we today? Europe has not yet recognised the US. Meanwhile, nobody’s moved clearing of US futures contracts back to the US, though there is occasional talk of that. I suspect some of you are wondering, well, why is it taking so long for the US and Europe to resolve this?

CFTC Grants Relief to International Financial Institutions – FOW (subscription)
The US Commodity Futures Trading Commission has granted no­-action relief from CFTC registration to foreign introducing brokers and commodity trading advisors that facilitate swap transactions for International Financial Institutions with US offices.

Regulator Said to Have Pressed for Exit of Deutsche Chiefs – New York Times
When the two executives who lead Deutsche Bank, Germany’s largest bank, unexpectedly announced their resignations on Sunday, pressure from angry shareholders was widely seen as the chief factor. In fact, the German regulator pressed for Anshu Jain and Jürgen Fitschen to step down because of unhappiness over the way they had handled an investigation into alleged manipulation of benchmark interest rates by bank employees.

Clearing Equivalence on Track, But Remains a Concern – The Trade
Regulators and derivatives exchange chief executives have weighed in once again on the issue of Europe granting equivalence to US central counterparties, as an agreement between regulators seems imminent. Comments at the Futures Industry Association’s annual IDX event in London showed the standoff is still a major concern despite US and European authorities working towards an agreement this summer.

 

Company News

HSBC to Shed up to 50,000 Jobs, Slash Investment Bank – Reuters
HSBC said on Tuesday about half the staff cuts will come from the sale of businesses in Brazil and Turkey. The other half will come from cutting about 10% of the remaining 233,000 staff by consolidating IT and back office operations and closing branches. About 7,000-8,000 cuts are expected to be in Britain, or one in six UK staff.

Citigroup Adds Futures to Trading Screen – FOW (subscription)
Citigroup has extended its main electronic trading system Velocity to include futures for the first time, meaning clients can now trade futures, foreign exchange, credit and interest rates on the same screen.

Eurex Looks to Provide Third-Party Clearing Services in Asia – Asia Risk (subscription)
Global exchange groups have been increasingly turning their eyes towards Asia but Eurex is more advanced than most with a mixture of cross-product listings, stakes in regional exchanges, a joint venture between parent group Deutsche Boerse and two major Chinese exchanges to trade RMB in Frankfurt, a Singapore clearing licence and most recently an application to set up a trading operation in the city-state.

New Deutsche Bank CEO John Cryan to Tackle Cost-Cutting, Regulatory Challenges – New York Times
While Deutsche Bank’s co-chief executives tried to move beyond lawsuits, scandals and management shake-ups over recent months, their boss, chairman Paul Achleitner, already had engineered a backup plan to move beyond the duo with a new CEO.

 

Market Savvy  

Animal Spirits Batter the Currency Market
Financial Times
Animal spirits are patrolling the forex kingdom. The question is: what creature does the currency market most resemble right now? “A goldfish,” says Peter Kinsella, currency analyst at Commerzbank, “swimming around in the dark with absolutely no memory.”

Dollar Volatility Rises Most in Three Weeks as Currency Fluctuates
Bloomberg
A measure of dollar volatility increased by the most in three weeks as the currency pared a decline from Monday against the euro. The US currency is fluctuating as investors speculate on the timing of the Federal Reserve’s first increase in borrowing costs since 2006.

Greece Crisis Sees Swiss Franc Eclipse Yen as Top Safe-Haven
Reuters
The Swiss franc has emerged as a big winner from Greece’s debt problems, overtaking the Japanese yen as investors’ favourite safe-haven currency despite Switzerland offering the world’s lowest interest rates.

 

Press Releases

Fidessa Launches New Order Analytics Service for Derivatives
Fidessa has launched a new order analytics service for its derivatives community that brings greater precision to the control and measurement of derivatives algos.

CQG to Provide Connectivity to Cryex Crypto Currency Trading Platform
Cryex, the new digital currency trading and clearing platform, is partnering with CQG, the trade routing, global market data and technical analysis provider, to offer connectivity to its members and participants from launch.

ABN AMRO Clearing To Clear Derivatives On The Brazilian Exchange BM&F/Bovespa
ABN AMRO Clearing has been admitted as a carrying broker and clearing member of the derivatives segment on the Brazilian exchange BM&F/Bovespa and has cleared the first transaction, early 2015.

 

Industry Events

 

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