Month: December 2016

Can Blockchain Help Alleviate the Credit Crunch in FX?

Franck Mikulecz, managing director of FXCH, talks to Galen Stops, deputy editor of Profit & Loss, about how blockchain technology can help mitigate some of the credit challenges facing the FX industry.
With blockchain, or distributed ledger technology, still being so new to financial services, Mikulecz claims that banks are still trying to figure out the most effective way to deploy this technology.

“I can see a lot of banks have an interest because they know that the market will evolve and the market will potentially be disrupted by the technology but they don’t really know how it’s going to happen and they don’t really know how to use it themselves.

Swinburne to Continue in CCP-Focused Role

The Economic and Monetary Affairs Committee of the European Parliament today agreed that Kay Swinburne MEP, on behalf of the European Conservatives and Reformists (ECR) group, will continue to lead the Parliament’s negotiation team developing the legislation concerning CCP recovery and resolution.

Following the G20 agreement in 2010 to centrally clear derivative products, international work has continued as more focus has come upon central counterparties as a new point of systemic risk.

Commenting on the news, Swinburne says: “I am glad that my colleagues in the Parliament have confidence in my technical knowledge of the subject and are willing to put financial stability ahead of the politics on this important subject.

Saxo Sells Uruguayan Subsidiary

Saxo Bank has agreed to sell its Uruguayan subsidiary, Saxo Capital Markets Agente de Valores, to DIF Broker, a long-term white label client of the firm.

The transaction, having been approved by the relevant authorities, is subject to customary closing conditions and DIF is expected to be the new shareholder of the company as of 31 December 2016.

Saxo says that the sale of the Uruguayan subsidiary is part of its strategy to deepen the physical presence in selected markets whilst having a strategy of working closely with local partners in markets where the benefits of a partnership outweigh the need of a physical presence.

Steady as She Goes: BoE Leaves Rates Unchanged

The Bank of England’s (BoE) Monetary Policy Committee (MPC) today voted unanimously to maintain Bank Rate at 0.25%.

The Committee also decided to continue with the programme of sterling non-financial investment-grade corporate bond purchases totalling up to £10 billion, financed by the issuance of central bank reserves.

Additionally, it will continue with the programme of £60 billion of UK government bond purchases to take the total stock of these purchases to £435 billion, financed by the issuance of central bank reserves.

BlackRock Selects HSBC as Custodian in China

HSBC Bank (China) has been appointed as the onshore custodian bank for BlackRock, which has been granted approval by Chinese regulators to use the RMB to directly access China’s onshore securities market.

Blackrock is the first US-based institutional investor to obtain a Renminbi Qualified Foreign Institutional Investor (RQFII) license.

The RQFII programme provides global investors with direct access to invest into China’s capital markets. In June 2016, China allocated to the US a milestone RQFII quota of RMB250 billion, the largest quota globally outside of Hong Kong.

And Another Thing…

The Regulator of the Year will, I am sure, become one of, if not absolutely, my favourite Irrational over the years, if for no other reason than it gives me a chance to have a pop at those in authority!
It will also, I suspect, be one of the tougher gongs to hand out given the tradition (see this column December 5) of no repeat winners, because the Commodity Futures Trading Commission is, as regular readers know, my (irony warning) favourite regulator.

Fed Raises Rates, USD Surges in Response

The US Federal Reserve increased interest rates by a quarter point today, also indicating that it now expects to increase rates three more times in 2017.

“In view of realised and expected labour market conditions and inflation, the committee decided to raise the target range for the federal funds rate to half to three-quarters per cent. The stance of monetary policy remains accommodative, thereby supporting some further strengthening in labour market conditions and a return to 2% inflation,” says the Federal Open Market Committee in a statement issued today.

Currencycloud Turns to Duco

Currencycloud, an international payments engine, has announced that it will use technology from Duco, a fintech that provides data control services for a variety of operational functions including cash, trade-to-cash, and bank cash flow reconciliations.

“We are excited to be working with an innovative firm focused on using technology to drive change across the industry – which is also one of Duco’s core missions,” says Christian Nentwich, CEO of Duco. “Currencycloud’s payment engine streamlines processes, reduces manual intervention and cuts inefficiencies in currency transfers, which is exactly what we are achieving for firms in the data control space.

Good Month for CLS

CLS was another market mechanism to receive a boost from the US election, with data from the settlement services provider showing the number of instructions submitted and the value settled both rising strongly.
CLS says the average daily input volume submitted, combining its settlement and aggregation services, was 1,167,833 up 15.0% from 1,015,928 in October 2016
The average daily input value submitted to CLS was $4.99 trillion up 1.4% from $4.92 trillion in October 2016.
The volume of instructions rose 21% year-on-year and the value settled was 13.2% higher than November 2015.

Tradebook Launches Cross-Asset Benchmark Tool

Bloomberg Tradebook has released a new cross-asset tool designed to enable firms to trade one security relative to a set benchmark.

In a release issued today, Bloomberg Tradebook claims that this Relative Benchmark Trading (RBT) algorithm will help traders using its PAIR (Pair) platform generate alpha, reduce the costs of trading and better manage risk.

It does this, the firm says, by enabling firms to leverage Bloomberg’s data to help them capture gains from the dynamic relative pricing of securities by tracking the performance of other instruments that drive the price of that stock.