London remains the dominant offshore centre for RMB FX trading and payments according to the latest RMB Tracker from Swift.
The Swift report focuses on the City of London as an offshore RMB hub and includes statistics and analysis for the first three months of the year as well as insights about the RMB and the state of play in London’s FX market.
As of March 2017, Swift’s data shows that 36.3% of the RMB FX transactions (excluding China) are conducted with the UK.
The average daily traded volume (ADV) submitted to CLS was $1.6 trillion in March, up 6.7% from February. This figure also represents a 9.6% increase from the $1.46 trillion ADV recorded for the same period a year ago.
At $462 billion in ADV, spot volumes were up 8.1% month-on-month, but down 1.3% year-on-year for March.
In contrast, swap volumes in March reached $1.04 trillion ADV, a 14% increase from the year before and a 6.2% increase from February.
Meanwhile forward volumes, at an ADV of $95 billion, were up 3.3% month-on-month and up 17.3% year-on-year, in March.
LMAX Exchange has publicly committed to support the impending Global Code of Conduct in FX markets, however the operator has done so with a small caveat.
LMAX says it is “committed to serve as the industry’s best practice for transparency and fairness in FX execution and to lead, by example, the positive reforms aimed at restoring trust and integrity in the FX marketplace”.
It adds that it is from this stance that it is committing to the Code, “after we have been assured that the Code will be updated post- publication”.
As some of you are aware, one of the victims of the atrocity on Westminster Bridge in London, was the wife of John Frade, who works in our industry at Citi in London.
I would like to thank everyone who gave so generously to the cause that evening, if nothing else it is a gesture that shows the FX industry stands alongside one of our own and that John and his family will – hopefully never be alone.
I would also like to express my profound thanks to our sponsor of that evening, LMAX Exchange and specifically CEO David Mercer, for agreeing at the last minute to the change in donation – all charities are important, but this event has hit close to home for our industry.
The Monetary Authority of Singapore (MAS) has issued guidelines for the conduct of businesses offering execution advice, including in foreign exchange markets.
MAS says the guidelines are intended to set out standards to be maintained by dealers when they provide execution-related advice and they do not apply in circumstances where a dealer merely carries out instructions by a client to buy or sell a specific product without the dealer making any recommendation or giving any advice in relation to that product.
P&L Report Card: For yet another year we were thinking (yes, we know that should read “hoping”) that 2017 would be the year in which the FX options market’s structure was finally sorted out. We were optimistic over the availability of clearing services, customers were more open to structured solutions to their hedging problems, and the multi-dealer world – something we consider to be important for a market’s development – was looking up. A year on? Well not a lot has happened.
Volumes continue to struggle in the public markets and clearing has not taken off, but at least the event-driven nature of markets means that customers still see value in FX options. So, the future of the market is no closer to being defined than it was a year ago (actually, if we are being honest, four years ago).
A Singapore man has been sentenced to 16 weeks’ imprisonment for spoofing contracts for difference (CFD) markets in the city state.
ACI – The Financial Markets Association has announced that 2017 it is mandating its 9,000 members to explicitly commit to the FX Global Code of Conduct, the complete version of which will be released on May 25.
“In the three years since the process began to develop a single, global code of conduct for the FX market, the Foreign Exchange Working Group (FXWG) and Market Participants Group (MPG) have made enormous strides forward,” says Brigid Taylor, managing director of ACI.
A US judge has reportedly dismissed a class action brought against a group of banks and brokers alleging manipulation of Yen Libor rate settings.
According to a release from Nex Group, Icap Plc and Icap Europe were among the defendants in two lawsuits, the Sonterra Yen Libor Class Action and the Laydon Yen Libor Class Action, along with 43 others, mainly banking groups and subsidiaries. Nex says that a US judge in the Southern District of New York has dismissed the Sonterra action in its entirety.
Despite the numerous technological advances in the FX industry in recent years, panellists at Profit & Loss Latin America emphasised the significant role that humans, and human relationships, still play in regional markets.
However, seemingly juxtaposed against the importance of human relationships is the inevitable drift towards further automation of FX trading activity.
As John Ashworth, CEO of Caplin Systems, explained: “The thing that separates regional markets from mainstream markets is that there’s still a very strong focus on relationships in the sales function, where human beings want to talk to human beings."