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Regulation

Giancarlo Lays Out New Regulatory Agenda Following the news that he had been nominated by the Trump administration to be the new chairman of the Commodity Futures Trading Commission (CFTC), Christopher Giancarlo, has laid out a new agenda for the Commission. Speaking at the FIA Boca conference in Florida, Giancarlo emphasised the need for the CFTC to foster economic growth in the markets that it oversees by reducing regulatory burden, improving market intelligence and embracing new technology. To help reduce the regulatory burden on derivatives market participants, Giancarlo announced the launch of “Project KISS”, with the acronym standing for “Keep It Simple Stupid”.
Thomson Reuters Adds MiFID II Tool Thomson Reuters is creating a suite of reporting services that will support the workflow of market participants in their efforts to meet post-trade transparency requirements mandated by the Markets in Financial Instruments Directive II. In preparation for the new regulations, the company says it is working closely with over 50 European exchanges and more than 30 additional venues to onboard new MiFID II content to its Elektron Data Platform. It is also providing test data to market participants so that they can prepare their systems for new parameters, such as high-precision time-stamps, in advance of MiFID II deadlines.
FX Service Providers Witness Probable Delay of Controversial Fiduciary Rule For those FX providers who were ensnared by the US Department of Labor's (DOL) controversial fiduciary rule, the recent proposed delay of the rule may provide relief. The fiduciary rule, a product of the Obama Administration, would significantly expand the ways in which one can become a fiduciary to a retirement investor by reason of giving investment advice. Certain sales activities to a retirement plan investor or IRA owner, for example, may create a fiduciary relationship, which would result in significant compliance costs and legal risk. It was set to go into effect on April 10, 2017. On March 2, however, the DOL formally proposed delaying the applicability date of the Fiduciary Rule by 60 days. As part of this proposed delay, the DOL has solicited comments from all stakeholders on two central issues: (1) the pros and cons of delaying the full implementation of the fiduciary rule by 60 days; and (2) suggestions on revisions to the rule, including comments on whether the DOL accurately captured the economic costs of the rule on the various financial market industries. Comments on the delay are due by March 17, 2017. Comments on the substantive provisions of the rule are due by April 17, 2017.
FXPA Elects New Officers, Board Members The Foreign Exchange Professionals Association (FXPA) announced the results of its elections, which took place on February 16, and resulted in a slate of new Board members, as well as four officers to serve on the FXPA’s Executive Committee (ExCom). FXPA members re-elected Chip Lowry, senior managing director of State Street Global Markets, as chair, and Sean Tully, senior managing director, financial and OTC products, CME Group, as treasurer. FXPA members also elected two new officers to the ExCom, Fulinda Rouse, co-head of global accounts, EBS BrokerTec, as vice chair, and Paul Millward, head of FX product strategy, Bats Global Markets, as secretary.
Thomson Reuters Launches MiFID II Platform Thomson Reuters has made key enhancements to its data analytics platform, Velocity Analytics, to provide high-speed processing of real-time, streaming and historical data that the firm says will help EU and non-EU financial markets participants meet their MiFID II obligations. The enhanced platform, which is now powered by Kx’s technology, enables a range of use cases such as best execution compliance, transaction cost analysis, quantitative and systematic trading. It will also support new multi-asset best execution and Systematic Internaliser determination capabilities from Thomson Reuters in 2018.
Bowen Warns of “Reckless” Dodd-Frank Repeal Sharon Bowen, commissioner at the US Commodity Futures Trading Commission (CFTC), warned that it could prove “reckless” to repeal Dodd-Frank, despite calls from Donald Trump to do so while he was campaigning for the presidency. Speaking at the 2017 Brodsky Family Northwestern JD-MBA Lecture Series, Bowen acknowledged that the regulatory agenda under a Trump presidency is likely to be very different compared to when she joined the commission almost three years ago. “When I first became a commissioner, it was with the expectation that the CFTC would continue its mission, established by long-standing laws and reaffirmed under the Dodd-Frank Wall Street Reform and Consumer Protection Act,
CFTC Extends the Runway for Margin Rule Compliance The US Commodity Futures Trading Commission (CFTC) has issued a no action letter stating that it will not enforce the variation margin requirements that come into effect for swap dealers (SD) on March 1 for six months. The CFTC’s Division of Swap Dealer and Intermediary Oversight (DSIO) has issued a time-limited no-action letter stating that, from March 1, 2017 to September 1, 2017, it will not recommend an enforcement action against an SD for failure to comply with the variation margin requirements for swaps.
CFTC Hits FXCM with Another Fine FXCM has agreed a settlement for $650,000 with the US Commodity Futures Trading Commission (CFTC), relating to allegations that the firm was under-capitalised following the volatility caused by the Swiss National Bank’s (SNB) decision to abandon its peg to the euro. The CFTC originally filed the civil action against FXCM’s US subsidiary in the Southern District Court of New York on August 18, 2016. The action alleges that FXCM US was briefly under-capitalised as a result of the SNB’s unexpected announcement on January 15, 2015, that it was abandoning its historical policy of pegging the Swiss franc to a fixed exchange rate of 1.2000 Swiss francs per euro.
AIMA Publishes MiFID2 Guide The Alternative Investment Management Association (AIMA) has published a guide for investment managers to help them understand and implement the requirements of the European Union’s updated Markets in Financial Instruments Directive (MiFID2), which will apply from January 2018. The guide received significant input from leading law firm Schulte Roth & Zabel, who are also sponsors of the guide. AIMA says the MiFID2 Guide aims to provide investment managers with a better understanding of which aspects of MiFID2 are relevant to them, what the rules require and what practical steps they can take to ensure compliance with the new framework.
CFTC Fines RBS Over ISDAfix The US Commodity Futures Trading Commission has issued an Order filing and settling charges against The Royal Bank of Scotland for attempted manipulation of the ISDAfix benchmark. The Order requires RBS to pay an $85 million civil monetary penaltyafter it finds that over a five-year period, beginning in January 2007 and continuing through March 2012, the bank, through the acts of multiple traders, attempted to manipulate the US Dollar International Swaps and Derivatives Association Fix, a global benchmark reference in a range of interest rate products.