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.