Month: April 2017

TriOptima Launches Compression for Client Cleared Trades

TriOptima has included client cleared trades in a triReduce Mexican peso compression cycle in CME Clearing for the first time.

CME Clearing and TriOptima have offered 15 compression cycles in five currencies since they started collaborating in 2016, compressing a total of $26.1 trillion in notional principal, of which $1.2 trillion is in MXN. There were 17 participants in this cycle.

Commenting on the news, Jacaranda Nava, head of derivatives trading at Banorte, says: “We are pleased to be the first Mexican bank to participate in a cleared Mexican peso compression cycle. Since we are a major participant in the derivatives market, this compression process simplifies the management of our swaps portfolio and optimises our capital requirements.”

And Another Thing…

How ironic is it, when the same US president that accuses just about everybody else of being a “currency manipulator”, decides he wants to talk the dollar down? About as Ironic as the Swiss minister who this week claimed that Switzerland was not a currency manipulator – this in spite of the Swiss National Bank telling everyone it bought 66 yards of EUR/CHF in 2016. Perhaps it was short covering, I don’t know. Either way, what happens in FX markets when everyone is trying to manipulate?

CFTC Extends Margin Rule Relief Pending Agreement with EC

The US Commodity Futures Trading Commission (CFTC) has further extended its no action relief for swap dealers that are subject to, and in compliance with, the margin requirements for non-centrally cleared OTC derivatives in the European Union (EMIR RTS) for failure to comply with the CFTC’s final margin rule.
The extension to the relief, which was first granted in February, comes as both the US and European Union continue to investigate the other’s suitability for substituted compliance with their individual final margin rules.

Sterling Extends Rally on Election Call

Cable has extended its bounce from the earlier dip to 1.2515, hitting 1.2665 following UK Prime Minister Teresa May’s surprise general election call amidst polls showing her Conservative Party has a strong lead in the polls. The rally comes in spite of fears in some quarters that the snap poll could turn into a quasi second referendum on UK membership of the European Union with the Liberal Democrats likely to be a magnet for disaffected voters wanting to remain in Europe.

Sterling Recovers from Dip as Election Called

Sterling dropped around 80 points as the market was spooked by news that UK Prime Minister Teresa May was to make a major announcement imminently, Cable falling to 1.2515 from1.2585 in a matter of minutes.
Prime Minister May has surprised by calling a snap general election for June 8 in the UK, however as the announcement was made Cable rebounded strongly to the 1.2575-80 level. Market sources say the initial dip was driven by rumours that May was going to announce her resignation, however the reality of an election has apparently been taken by investors as a sign the UK may have changed tack on Brexit and prompted the rebound.

Are Markets Headed for a Nasty Shock?

When assessing which large tail risk events are likely to take place in 2017, speakers at Profit & Loss’ Forex Network London emphasised that there are other risk factors being overlooked that might have a greater impact on financial markets.

“Like last year, the tail risks this year are quite high compared to normal,” said Colin Harte, strategist and senior portfolio manger at BNP Paribas Investment Partners. “There are some quite material risks that – if they come to pass – could have a significant impact on markets.”

He noted, however, that many of the expected tail risk events from 2016 were less dramatic than expected in the end: sterling took an obvious hit after the Brexit result, but soon became range-bound again, while the Trump election victory actually led to a rally in the equity markets.

FX Code Seeks to Drown Out Drumbeat of Scandal

Following on the heels of the FX Fix scandal that rocked the FX industry over the course of the past few years, the Bank for International Settlements (BIS) set up a working group to draw up a Global Code of Conduct for FX market participants, by FX market participants.

Several of those involved in crafting the Code addressed attendees of Profit & Loss Forex Network London to discuss some of the adherence and compliance mechanisms drafted into the Code.

Speaking at the event, Chris Salmon, executive director, Markets, at the Bank of England (BoE), said: “The drumbeat of scandal in relation to the FX industry created issues for market practitioners, but it also became a concern for the central banks of the world.”

And Another Thing…

The latest suggestion I am hearing is that the UK’s Senior Managers’ Regime will be implemented and monitored by the technology teams at the banks. This sounds like a decent idea, but what doesn’t is the perception that this means the heads of those tech teams will be responsible for anything going wrong. It may sound a reasonable business decision but, in my opinion, it absolutely smacks of people playing silly games and seeking to avoid responsibility by passing the buck.

Standard Chartered Loses Four?

At least four members of Standard Chartered Bank’s voice and trading team have apparently left the bank in the last two weeks according to market sources.
The sources say that Shiyuan (Bob) Qi, the bank’s CNH trader in Hong Kong, Bill Greene, from the bank’s e-trading tea in London, Edison Li, an NDF trader in London and Singapore-based Patrick Yeo, another NDF trader, have all left.
The sources suggest that other traders may have also have left the bank but are unable to provide details.