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Northern Trust Outlines New e-FX Growth Strategy Dan Torrey, global head of FX e-commerce sales, at Northern Trust, talks to Profit & Loss deputy editor Galen Stops about how the bank is planning and building a more comprehensive FX e-commerce strategy to meet the changing needs of its client base, noting it’s not just as simple as offering RFS in spot, forwards and NDFs in different regions across a broad array of pairs, but also being able to come up with customised solutions and putting more sophisticated execution tools in the hands of clients.
Deutsche Bank Fined by Fed Over Lack of Controls The Federal Reserve has announced two enforcement actions against Deutsche Bank that requires the bank to pay a combined $156.6 million in civil money penalties. The bank will pay a $136.9 million fine for “unsafe and unsound practices” in the FX markets, as well as a $19.7 million fine for failure to maintain an adequate Volcker rule compliance programme. The Fed says it found deficiencies in the Deutsche’s oversight of, and internal controls over, FX traders and that the firm failed to detect and address that its traders used electronic chat rooms to communicate with competitors about their trading positions.
SocGen Launches New Risk Event Tracker App Societe Generale (SocGen) has launched a new Web app that uses FX options to monitor the pricing of risk events, such as elections, central bank meetings or economic releases. The app, the SG FX Event Tracker (SG FX-ET), computes the overnight forward volatility that the FX options market expects for any trading day up to one year ahead, linked to the bank’s internal data and the weights that its market makers attach to risk events. The charting module is designed so that users can dynamically compare the relative pricing of an event according to different currencies and can directly compare the pricing of different events.
Two More Australian Banks Settle FX Claims ANZ and Westpac have both accepted enforceable undertakings (EU) from the Australian Securities and Investment Commission (ASIC) relating to control failures in their global FX businesses. In December, the other two “majors” in Australia, CBA and NAB, each paid AUD 2.5 million after accepting similar charges. Both ANZ and Westpac will both make a “community benefit payment” of AUD 3 million to support the financial capability of vulnerable people including women experiencing family violence, the elderly and youth at risk, ASIC says.
Citi’s South African FX Settlement Hearing Set A Tribunal at South Africa’s Competition Commission will officially hear details of Citi’s agreed settlement with local authorities to end charges of collusion and market manipulation on May 22. Although the bank has reached an agreement with the Commission and agreed to pay ZAR 69.5 million for its role in the alleged manipulation, local sources say the deal has to be rubber stamped by the Tribunal. Citi was the first bank of 17 charged to settle with the Commission on February 20.
JPM: 2017 to Be “Watershed” Year for FX Algo Usage A new survey released by JP Morgan, which almost 200 institutional FX traders took part in at the end of last year, shows that although just 12% of respondents currently use algorithms for trading, 38% plan to increase algo usage in 2017. This, in and of itself is not necessarily a surprising statistic. Numerous market commentators have been predicting for a few years now that more institutional FX trades will employ algorithms for a variety of reasons. These include navigating an increasingly fragmented liquidity landscape, helping firms to minimise their market impact, providing a more auditable trading record, and potentially enabling buy side firms to take on more risk themselves as some banks drift towards a more agency-focused business model.
Citi Reorganises – Creates Single FX Business Following the retirement of head of G10 FX James Bindler, Citi is reorganising its business structure by merging its G10 and emerging markets FX activities into a single global foreign exchange trading business. As previously reported by Profit & Loss, Itay Tuchman has been appointed to head the new business, reporting to Nadir Mahmud, head of FX and Local Markets. Tuchman will be relocated from Sydney, where he is currently head of the Markets and Securities Services business for Australia and New Zealand.
Fourth Trader Wins Unfair Dismissal Claim Against Citi Baris Ozkaptan has become the fourth former Citi FX trader to win a claim of unfair dismissal against the bank. Although a London employment tribunal judge Alison Russell found in Ozkaptan’s favour overall, informed sources say she did note in the judgement that Ozkaptan contributed to the dismissal, meaning the final compensation paid could be reduced. Currently the maximum amount that can be awarded is GBP 78,800, a remedial hearing will be held at a later date to finalise any compensation paid to Ozkaptan.
Citi Settles South African FX Manipulation Claim Citi has become the first bank to settle with South Africa’s Competition Commission, paying the equivalent of a just over $5 million fine related to charges it participated in a cartel that manipulated prices in the rand. The Commission found that from at least 2007, Citi and its competitors had a general agreement to collude on prices for bids, offers and bid-offer spreads for the spot trades in relation to currency trading involving USD/ZAR. The Commission last week charged 14 banks with collusion.
South Africa Sues Banks over FX Collusion South Africa’s Competition Commission says it is commencing prosecution proceedings against 14 banks over alleged collusion in ZAR markets. The Commission has been investigating the issue since April 2015 and says it has now referred the case to the country’s Tribunal for prosecution. The banks are Bank of America Merrill Lynch; BNP Paribas; JP Morgan; Investec; HSBC; Standard Chartered Bank; Credit Suisse; Standard Bank of South Africa; Commerzbank; ANZ; Nomura International; Macquarie Bank; ABSA Bank; and Barclays. In some cases the case is being brought against two entities with the same organisation, if found guilty, the banks could face fines of up to 10% of their annual turnover.