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Mispriced Risk in Australia

Before last month’s RBA rate cut to 2.25%, divergence in views between domestic and international market analysts had become apparent. Symptomatic of the divide were contrasting portrayals of the drop in Australian yields by the Sydney Morning Herald (7 January) as indicative of risk-haven demand for Australian dollar assets, versus opinions from international analysts (such as UBS, cited by Bloomberg earlier on 3 December), who saw the writing on the the wall last month’s RBA cut to 2.25%. From domestic analysts’ perspective, the RBA’s action was a surprise last month, which led them to downgrade their expectations after-the-fact. But once downgraded, the RBA trumped expectations in the opposite direction today.

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US Banks Pass the Fed’s Latest Stress Test

The Federal Reserve has announced that all of the 31 biggest US banks included in its supervisory stress tests now have enough capital to continue lending during severely stressed market conditions

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UK’s SFO Investigating Bank of England Auctions

The UK’s financial markets sector has again been rocked by new investigations into possible market rigging

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And Another Thing...

Without in any way pre-empting an investigation and without in any way accusing unknown people of insider trading, I do have to wonder if the message on compliance and conduct is getting through?

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UK Bankers to Face Higher Conduct Standards From 2016

From next year UK financial watchdogs will be able to fine or sanction senior bankers for wrongdoing that occurs in their areas of responsibility, as part of the government’s reforms to the banking sector

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Take a Walk Through London’s Parks for Futures for Kids

Futures for Kids (FFK) will be holding its fourth Walk to Work fund-raising event on 15 May 2015

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Gammons Appointed Head Southeast Asia, as Loh Exits BAML

Bank of America Merrill Lynch has confirmed that Boon Chye Loh, deputy president for Asia-Pacific, head of Asia-Pacific global markets and country executive for Singapore and Southeast Asia, has decided to leave the firm

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Tullett Prebon Sheds 166 Brokers in Cost-Cutting Exercise

Tullett Prebon made 217 employees redundant in 2014, including 166 brokers and 51 support staff, according to its annual report. The inter-dealer broker attributed the headcount reduction to a challenging market environment and shrinking profits

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Landmark Clearing House Ruling Goes in Favour of UK

The General Court of the EU has protected London’s position as a major financial centre and prevented clearing houses from being forced to move large chunks of their euro-denominated operations to continental Europe.

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Citi Cuts EMEA Jobs While Goldman Sachs Reduces Singapore Business

Citi is planning a further round of redundancies from its markets and securities business in the Europe, Middle East and Africa region, coinciding with Goldman Sachs having reduced the size of its investment banking team by about a third so far this year

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Volumes Drop Across the Board in February

Foreign exchange volumes on reporting venues declined in February from a month earlier and in some cases fell year-on-year

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ASIC to Investigate Market Activity Around RBA Decision

The Australian Securities and Investment Commission (ASIC) is to investigate price action in the AUD/USD in the lead up to yesterday’s Reserve Bank of Australia monetary policy announcement

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CFTC at Odds With Europe Over Benchmark Administration

Commodity Futures Trading Commission (CFTC) chairman, Timothy Massad, says that the European proposal of government involvement in financial benchmarks could have a negative impact on the markets

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Barclays Profits Hit By FX Probe Fines Provision

Barclays has more than doubled its litigation provision ahead of reaching a combined settlement with global regulators, expected in the coming weeks, in relation to the alleged manipulation of the FX market

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RBS Reshuffles Heads in Major FX Restructuring

Several sources tell Profit & Loss that RBS is undergoing a major reorganisation of its management team, which will include global co-heads of FX, Tim Carrington and Fabian Shey, stepping down from their current responsibilities and working as part of the team leading the transition to a smaller, more focused bank

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Mallett Could Have Brought BoE Into Disrepute, Says Carney

The Bank of England governor Mark Carney says that its former FX chief dealer’s various misjudgements could have brought the Bank into “disrepute”

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FXPro Releases Slippage Statistics in Transparency Boost

FXPro has released its slippage statistics for February, claiming that such a move will help encourage greater transparency within the retail FX industry

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Hotspot Sees FX Volume Drop in February

Hotspot FX, KCG’s ECN soon to be handed over to BATS Global Markets, reports a 23% decrease in average daily volume (ADV) last month compared with January, a trend expected to be replicated across other FX trading platforms

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Buy Side Split on Internalisation and Last Look…

Buy-side participants have expressed differing opinions as to the risks associated with internalisation and “last look” practices in foreign exchange in their responses to the Fair and Effective Markets Review

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…While Banks Warn Against Over-Regulation While Defending Last Look

The sell-side appears to be united in general agreement that the industry would benefit more from standardised codes of conduct rather than increased regulatory intervention, according to the various responses submitted to the UK’s Fair and Effective Markets Review

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RBS Internal FX Probe Claims Three Jobs, Deputy Head of Markets Suspended

Three RBS FX traders who were suspended as part of the bank’s internal investigations into alleged FX malpractice have since been dismissed, according to RBS CEO Ross McEwan

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Bank of England Tightens Procedures After FX Investigation

The Bank of England has announced tougher rules for its employees after staff failed to spot market malpractice by currency traders at some of the major banks

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IG Changes Margin Rates Following EURCHF Cap Removal

IG Group has increased its margin rates for a number of retail FX products, notably including the Swiss franc Profit & Loss has learnt

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Saxo Clients Increase Calls for Refunds After EURCHF Losses

Law firm Andersen Partners, which represents a group of around 20 Saxo Bank customers, is preparing a letter to the bank calling for its clients to be reimbursed for losses made as a result of the bank’s re-pricing of EURCHF trades

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Citi Shuts Down Selected FXPB Accounts

Citi’s FX prime brokerage (PB) business has terminated selected customer accounts, it has confirmed

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Hong Kong’s Tax Reforms Target Corporate FX Hubs

Hong Kong is tabling amendments to its tax laws in order to become a more attractive financial centre for multinational companies to trade FX, following up on plans announced last year

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Hill Calls For Greater EU/US Cooperation to Reach Clearing Agreement

The EU’s financial services commissioner, Jonathan Hill, has called for increased efforts to resolve extraterritorial regulatory disputes with the US, proposing a treaty-based system as the solution

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ISDA Calls For Cross-Border Cooperation in Trade Reporting

The International Swaps and Derivatives Association (ISDA) has warned that major challenges remain in the realm of trade reporting, mostly due to lack of standardisation within and across jurisdictions in reporting requirements

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EBS Direct Signs RBC as Liquidity Provider

EBS Direct, Icap’s electronic FX platform, has added the Royal Bank of Canada (RBC) as its 19th – and first Canadian – liquidity provider

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RBS Reserves £320 Million for Future FX Settlements

The Royal Bank of Scotland is setting aside £320 million for ongoing FX settlements, according to it chief finance officer

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Best Execution Enforcement ‘Falls Short’: ESMA

ESMA has raised concerns about how national regulators are monitoring and enforcing best execution requirements under the Markets in Financial Instruments Directive (MiFID), which obliges investment firms to provide best execution, or obtain the best possible result, for their clients when executing their orders

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Europe and Japan Sign Clearing House Oversight Agreement

Regulators in Europe and Japan have signed a Memorandum of Cooperation (MoC), which establishes oversight of Japanese clearing houses in accordance with European rules

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Parker FX Index Up 2.71% in January

Currency hedge funds in the Parker FX Index reported an aggregate gain for the seventh straight month in January

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Giancarlo Share Divestment was “By the Book”

Legal experts in Washington have dismissed questions about how the Commodity Futures Trading Commission’s (CFTC) Christopher Giancarlo divested himself of his GFI shares as political maneuvering

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Bitcoin Market Development Continues…

LedgerX has selected Ancoa to provide real-time market and trade surveillance platform for monitoring Bitcoin options trading on its platform

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…And Bank of England Looks at Digital Currencies for Central Banks

The Bank of England (BoE) has released a paper examining the potential for central banks to utilise digital currencies

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On the Move

Credit Suisse, Citi, Tullett Prebon, Credt Agricole, KCG, ICE, SGX, LCH Clearnet…

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Around the World

East African currency union and the march of the FTT…

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And Finally...

BGC and GFI: a hostile takeover turned friendly?

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SGX CEO Böcker Plans to Step Down

Singapore Exchange’s CEO, Magnus Böcker, says he is not seeking an extension of his current contract and is planning to step down at the end of June this year

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BGC Purchase of GFI Gets Green Light

BGC Partners has secured the agreement of GFI Group’s board of directors to proceed with its takeover of the firm, after BGC exceeded its 45% requirement with nearly 48% of shares tendered

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Banks to Charge Clients for Executing at the Fix

A number of major FX banks are planning to charge their clients for executing FX trades at benchmark rates, in response to the FX Benchmark Group’s final recommendations and ahead of WM/Reuters changing its methodology for establishing the Fix as of 15 February

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New York Regulator Extends FX Probe to Algorithms

New York State’s financial regulator has widened its investigation into possible foreign exchange rate manipulation by looking at whether computer programs have allowed banks to front-run clients

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ICE CEO Says EMIR’s Clearing Rules Will Increase Cost for End-Users

Incoming European legislation around open access to clearing houses and the region’s divergent clearing model will culminate in greater costs to the end-user, says Intercontinental Exchange’s chief

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FXPA Elects Officers While Membership Grows

The Foreign Exchange Professionals Association (FXPA) elected its first permanent board of directors and officers this week

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FEMR Responses Hint at Direction Review May Take

A number of leading industry bodies are revealing their responses to the UK’s Fair and Effective Markets Review early, potentially allowing a glimpse into what the review’s final recommended standards are likely to be

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Coyne Departs Traiana, Hunt is on for New CEO

Traiana’s CEO, Andrew Coyne, has decided to leave Traiana to pursue other opportunities, Profit & Loss can exclusively reveal

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Lewis and Yoshida Depart State Street Amid Reshuffle

Cliff Lewis, head of eExchange and executive vice president of State Street Global Markets and Rodney Yoshida, CFO at State Street Global Markets, have left their roles at the company as Jeff Conway is named to lead data and analytics services for clients amid a reorganisation at the firm.

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