Top Headlines

UK Toughens Remuneration Rules – Profit & Loss (free story)
The UK’s Prudential Regulatory Authority (PRA) and Financial Conduct Authority (FCA) have jointly released tougher rules on remuneration in financial services, including an extension of the period during which bonuses can be clawed back. “Today’s rules are part of a wider package that is being announced over the summer to embed an accountable culture in the City,” says Martin Wheatley, CEO of the FCA. “Our rules will now mean that senior managers face claw back of bonuses for up to 10 years, if misconduct comes to light.”

Concessions from Athens Keep Hopes of Greece Bailout Deal Alive – Financial Times (subscription)
Greece on Monday kept alive hopes of an eleventh-hour deal with creditors to avoid default after Athens presented its first substantial concessions in months of fruitless negotiations.

Euro Falls as Investors Look Past Greece Bailout Talks – Financial Times (subscription)
Growing market confidence that a deal to resolve Greece’s stand-off with its creditors is imminent left investors looking past the talks and towards a US rate rise, leaving the euro under pressure on Tuesday.  Fears about the turmoil that a Greek exit from the euro could have caused eased a little, giving investors a clearer line of sight to position for the Federal Reserve’s first action to take US interest rates off historic lows.

FX Market Readying Systems on Potential Greek Spasm – Bloomberg
The operator of a key piece of the foreign exchange market’s financial plumbing says it’s readying its systems for potential spasms in trading if Greece leaves the euro. “It makes sense to prepare your systems for all eventualities,” said Dino Kos, the head of global regulatory affairs at CLS Group Holdings AG. “We are certainly doing so at CLS.”

Clearing Houses Reduce Risk, They do not Eliminate It: Goldman Sachs’ Gary Cohn – Financial Times (subscription)
What innovation has done most to reduce risk in capital markets in the past decade? A leading contender is surely the wider use of “central clearing”, which entails a single institution acting as the buyer to every seller and the seller to every buyer of a particular kind of security. Since these long and short exposures cancel each other out, it should be impossible for a clearing house to run into trouble if the market moves against it; its sole risk exposure is to the credit of its counterparties.

Foreign Exchange Hedged ETF Demand Slows as Volatility Declines – Bloomberg
Demand for exchange-traded funds that provide investors with protection against swings in exchange rates is slowing as volatility in currency markets eases.



Regulatory News

Is Regulation Damaging Market Liquidity? – Financial Times (subscription)
Post-crisis regulation is harming market liquidity, says Christopher Giancarlo, a commissioner with the Commodity Futures Trading Commission. He tells Philip Stafford, editor of FT Trading Room, that regulators are giving too little thought to trading as they test their rules.

Canada Senate Committee Urges Government to Explore Blockchain Technology – Profit & Loss (free story)
A Canadian Senate Committee has released a report urging the government to explore ways to use the blockchain technology that underpins the cryptocurrency, Bitcoin.

India to Launch New Overnight Benchmark Rate from July 22 – Reuters
India will adopt from July 22 a new method to set the overnight interest rate benchmark that will be based on traded levels instead of contributions from market participants. The new method will be administered by the board of Financial Benchmarks India Private Ltd (FBIL). The new FBIL Overnight Mibor reflects the Reserve Bank of India s response to the rigging controversy that affected the London interbank offered rate (Libor) last year.

Clearers Challenge Massad over EU Client Protections – Risk Magazine
Clearing banks and central counterparties have challenged a top US regulator’s suggestion that European clearing rules put customers at greater risk. Timothy Massad, chairman of the Commodity Futures Trading Commission (CFTC), drew attention to what he called “a difference in the treatment of house affiliates” under European rules at the European Parliament, where he delivered a speech on margin methodologies.

The Effect of Derivatives Regulation on UCITS – The Lawyer (subscription)
There is a conflict between the operation of the undertakings for the collective investment in transferable securities (UCITS) directive and the operation of the European Market Infrastructure Regulation (EMIR) for cleared OTCs of UCITS.



Company News

HC Technologies Team with Tudor for LaunchPad Trading – Profit & Loss (free story)
HC Technologies and Tudor Investment Corporation have announced the formation of LaunchPad Trading, a joint venture established to “actively seek the next generation of trading talent”.

Barclays Trials Bitcoin Tech With Pilot Program – CoinDesk
Barclays has signed off on a proof-of-concept to trial bitcoin technology. Following an agreement with bitcoin exchange Safello, the UK bank says it will explore how blockchain technologies could bolster the financial services sector.

Nigeria Bourse Seeks to Start Trading Local Currency Futures – Bloomberg
The Nigerian Stock Exchange plans to start trading naira futures that will help investors hedge against movements in the local currency.

Citadel Makes Inroads Into Swaps Arena – Wall Street journal (subscription)
Citadel has emerged as a top dealer in US interest rate swaps, becoming one of the first non-bank firms to step into a breach created by post-crisis rules overhauling trading in those derivatives. The Chicago hedge-fund firm’s Citadel Securities unit has the largest market share by number of trades and the third largest by dollar volume in the second quarter, according to documents reviewed by The Wall Street Journal showing the firm’s rankings on a swaps platform operated by Bloomberg.



Market Savvy  

Battle for Currency Dominance Heats Up, with Eyes on Yuan Convertibility
Channel News Asia
Some market watchers predict yuan convertibility could happen within six months and boost China’s wealth management businesses seeking more overseas investments.

A Glimmer of Hope for USD Bulls
Saxo Bank
The way EUR/USD traded yesterday may speak volumes on the way the super-major pair may trade in the event we get full clarity on the negotiations between Greece and its creditors by Friday. First, we see a knee-jerk reaction higher, and then everyone realises that the market was sending EUR/USD higher anyway, even with all of the Greece uncertainty, and that an eventual deal might see the focus swing strongly back to the carry trade, short euro’s theme.

Russian Cenbank Sees No Need to Inject Extra Liquidity to FX Market
The Russian central bank sees no need to provide additional liquidity to the foreign exchange market at the moment. This signals that the bank is comfortable with the current rouble rate, which is now about 40% weaker against the dollar than a year ago.



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