Top Headlines

Why Liquidity is Drying Up in the Currency Market – MarketWatch
As volatility in the foreign exchange market has risen over the past eight months, currency traders are finding that liquidity has become much patchier than it once was. Several factors, including traders’ increasing reliance on algorithmic trading, the extreme lop-sidedness of the market’s positioning, and reluctance by market makers to take the losing side of the trade are sopping up liquidity in the market when it‘s most needed.

MPs Seek Inquiry Into BoE Liquidity Investigation – Financial Times (subscription)
The origins of an unprecedented criminal investigation into potential rigging of liquidity auctions held by the Bank of England at the onset of the financial crisis should be the subject of inquiry by the next Treasury select committee, MPs have said.

Euro Rises Towards $1.10 – Reuters
The euro climbed towards $1.10 against the dollar on Wednesday and gained against most major currencies, helped by a robust survey of German business morale that added to signs that an economic recovery in the eurozone is strengthening.

Dollar Finds Steadier Footing, Takes Breather from Selloff – Reuters
The dollar hovered above a two-week low versus a basket of major currencies on Wednesday, pausing from the recent selloff sparked by doubts over how soon the Federal Reserve may start raising interest rates.

Fed’s Evans Says Low Inflation Makes Rate Rise Too Risky in 2015 –Bloomberg
Federal Reserve Bank of Chicago President Charles Evans, who votes on policy this year, said inflation remains too low to justify an interest rate increase in 2015, despite “terrific” progress in reducing US unemployment.

Banks Prepare for Asean Race to Become Yuan Hub – South China Morning Post
An integration push by banks in the Association of Southeast Asian Nations has come as booming bilateral trade with China and fast-expanding consumer goods markets are driving competition to become the region’s yuan currency trading hub.

First North American RMB Hub Opens in Toronto – Profit & Loss
The first North American offshore trading hub for the Chinese renminbi (RMB) opened this week (23 March) in Toronto.  The trading hub will allow Canadian firms doing business in China to purchase RMB on the open market without converting to another currency first.

Legacy Exchange Players Rush to Aid Bitcoin Exchanges – Traders Magazine
Following news that Nasdaq will offer trading technology to Noble Markets, legacy exchanges and executives are helping to make the trading of the virtual currency very real indeed.

The Tiny Broker Who Won on the Swiss Franc Shock – Bloomberg
Some of the big guys lost on the Swiss franc. Turns out, one of the little guys won. Private brokerage X-Trade Brokers, based in Warsaw, caters to individuals who want to play the foreign exchange market. Small or not, the firm saw the Swiss shock coming and prepared for the worst. The week before, it doubled the amount of collateral its clients must put up against their trades.

Currency Volatility Reduces Investment, Global Trade: BofAML – The Business Times
The current bout of currency volatility can reduce trade flows and foreign direct investment, said Claudio Piron, Bank of America Merrill Lynch co-head of Asia FX and rates strategy. He was giving a media briefing on Wednesday morning on the recent global phenomenon of “currency wars”.

Regulatory News

ESMA to Revise MiFID II Transparency Regime – FOW Magazine (subscription)
Steven Maijoor, chairman of the European Securities and Markets Authority, has said the regulator is actively looking to revise aspects of the controversial MiFID transparency regime. Under the proposals, trading venues will be required to publish trade data before and after the trade is executed. The regulation allows instruments considered illiquid to avail of a pre­-trade transparency waiver and a post-­trade transparency deferral. However the industry has criticised the agency’s determination of an illiquid market as too broad.

Yes, Regulation is Coming to Bitcoin – Fortune
Coming to the bitcoin world: more regulated exchanges, and more regulation in general. What does that mean for the anti-regulation bitcoin believers?

Company News

Saxo CEO: ‘Massive Room for Disruption’ – Financial News (subscription)
Non-bank players have the potential to disrupt financial services and banks should take note, according to Lars Seier Christensen, chief executive of Saxo Bank.

BATS Plans Hotspot Expansion With London Matching Engine Launch – Profit & Loss
BATS Global Markets is planning to launch the first Europe-based FX matching engine for newly acquired Hotspot later this year in a bid to expand its European and Asian reach.

Moscow Upgrades Offering Across Asset Classes – The Trade
Moscow Exchange has revealed a new line-up of multi-asset products it will be rolling out in April. Trading and settlement will be offered in new products across bonds, repo and derivatives from next month, alongside upgrades to its equities trading.

Market Savvy  

Currency Concerns Everywhere
Reuters MacroScope
Currency concerns in the central banking world have come to the fore again.
Sweden cut interest rates further into negative territory out of the blue last week, fearing its strong currency will engender deflation. The Swiss National Bank said it would aim to weaken what it sees as a “significantly overvalued” franc. And the Bank of England flagged the risk that sterling could strengthen further and leave inflation below target for longer. Governments around the world dismiss talk of a currency war (so far) but the issue is clearly uppermost in policymakers’ minds.

Press Releases

DTCC Encourages Action Ahead of Next Phase of OTC Derivatives Reporting Requirements in Australia
The Depository Trust & Clearing Corp (DTCC) is encouraging institutions to act ahead of the third phase of derivatives reporting requirements to be implemented by Australian Securities & Investments Commission next month.

FXCM to Sell FXCM Japan to Rakuten Sec for $62 Million
FXCM Holdings and FXCM Newco have signed a definitive agreement to sell FXCM Japan Securities to Rakuten Securities, a top five FX broker in Japan, and a subsidiary of Rakuten.

Industry Events