The wealth of data and predominance of electronic trading mean TCA in spot FX should be a relatively straightforward process. But what happens when a market is mainly voice traded and data is sporadic? Colin Lambert finds out.
Among the many upheavals created by the impending MiFID II regulation is the requirement to timestamp all trades in compass of the regulation. In FX markets this has created a paradox, for while it is easy to timestamp a spot FX trade, this product is not “in scope”.
FX forwards and swaps, on the other hand, are in scope and they are mainly traded over voice channels and no public central limit order book (CLOB) has enough volume or data to provide a “market” price.
In spite of spending a night at the back end of a 747 I am in a strangely optimistic mood this morning - and even more surprisingly I am so after reading through the New York Department of Financial Services' report on its investigation into Credit Suisse’s FX business. I have also read through the GFXC release that highlights the progress being made on last look, however and that, allied with a few voices of dissension recorded in the pages of the DFS report have brightened my mood.
The Global Foreign Exchange Committee (GFXC) met this week to consider the results of its consultation over the wording in Principle 17 of the FX Global Code of Conduct, specifically relating to the use of last look, and says it has concluded that Principle 17 “should indicate that market participants should not undertake trading activity that utilises the information from the client's trade request during the last look window”.
At the same time, however, the GFXC has recognised the concerns by some involved in the feedback process that such an action would negatively impact the quote and cover, or riskless principal model
Credit Suisse has agreed to pay a $135 million fine as part of a consent order with the New York State Department of Financial Services (DFS) for violations of New York banking law, including improper efforts with other global banks, front-running client orders, and additional unlawful conduct that disadvantaged customers.
The violations stem from an investigation by DFS that determined that from at least 2008 to 2015, the bank “consistently engaged in unlawful, unsafe and unsound conduct by failing to implement effective controls over its foreign exchange business”.
Profit & Loss talks to Tim McCourt, managing director and global head of equity products at CME, about why the Chicago exchange is planning to launch bitcoin futures before the end of the year.
Profit & Loss: So why has the CME decided to launch bitcoin futures?
Tim McCourt: We’re launching this futures contract off the back of customer demand. But a key thing for us is that this product isn’t necessarily something that’s new to the CME. We launched the Bitcoin Reference Rate a year ago, and so it makes very good sense – given the feedback and response that we’ve had from customers – that now is the right time to introduce a cash settled futures contract based on this index that tracks the bitcoin reference rate.