Month: June 2017

Currency Headwinds Lighten But Unlikely to Remain So: Report

The latest quarterly report from Fireapps shows that currency headwinds for those corporations that reported them fell to $6.7 billion in Q1 2017 – mainly thanks to North American firms reporting a $6.47 billion negative currency impact on earnings. This compares to a collective $16.88 billion hit in Q1 2016, the firm says.
Fireapps analyses the earnings calls of 1200 publicly traded North American and European companies and says the companies included in the dataset are large multinational firms with at least 15% international revenues in at least two currencies.

Report: Liquidity, Funding Challenges Shifting Buy Side Behaviour

Market and regulatory reforms are forcing buy side firms to look for new ways of accessing collateral, funding and liquidity, according to a new report from BNY Mellon and PWC.

Based on a survey that 120 buy side respondents with a combined $12 trillion in AUM participated in, the report claims that “access to high-quality collateral, funding and liquidity is not only a pressing concern, but has emerged as the essential new performance driver for the buy side”.

The current challenge with accessing these is twofold.

Edgewater Goes Live in TY3

Edgewater Markets is launching a local server in Tokyo.

The deployment of the server in the TY3 data centre will enable customers to connect directly to the Edgewater local environment.

The installation of the TY3 server follows a year’s worth of development by the firm.

It also follows a number of senior hires last year in Edgewater’s New York, London, Singapore and Mexico City offices and the launch of the first-ever local matching engine in Mexico City’s KIO-5 data centre.

CME Gets Green Light for OTC FX Options Clearing Launch

CME Group has received regulatory clearance from the US Commodity Futures Trading Commission (CFTC) to start providing clearing services for OTC FX options.

The service will launch with dealer-to-dealer client clearing and is planned to be available in Q4. It will sit alongside CME’s suite of other FX cleared instruments, including listed FX futures and options, cash-settled forwards and NDFs.

Although FX is not currently mandated for clearing, Paul Houston, global head of FX products for CME, says the move is in-line with the group’s aim to provide cost-effective clearing solutions for market participants.

NEX Compression Service Hits $1 Quadrillion Mark

NEX Optimisation, announced today that participants in its triReduce compression service have eliminated over $1 quadrillion in OTC derivative notional principal since its introduction in 2003.

TriReduce a multilateral risk-constrained compression service that offers compression for cleared and non-cleared interest rate swaps in 28 currencies, cross currency swaps, inflation swaps, credit default swaps, FX forward, and commodity swaps.

Eliminating unnecessary swap inventory can help improve credit risk and capital management, reduces operational costs and risk, improves leverage ratios, and reduces systemic risk.

Redline Updates Feed Handlers Ahead of Mifid II Deadline

Redline Trading Solutions has updated its InRush feed handlers for European trading venues in response to the Mifid II compliance in January 2018.

“Next generation exchange platforms, originally designed to improve throughput and latency, are now also serving as the mechanism for meeting the looming mandates of MiFID II regulations,” says Matt Sexton, CTO of Redline. “Redline is supporting our customers with the rollout of new feed handlers for virtually every exchange in Europe this year, as well as providing the tools and infrastructure needed to help meet Mifid II testing requirements,” he adds.

In a release issued today announcing the update, Redline highlighted the number of major European exchanges that are moving to new or updated protocols ahead of the Mifid II compliance deadline.

INTL FCStone Enhances Small Payments Business

INTL FCStone has announced that the Global Payments Division (GPD) of its London-based subsidiary has introduced Automated Clearing House (ACH) connectivity, enhancing the company’s high-volume, low-value cross-border payments offering.

Low-value payments are the single largest driver of growth in GPD’s payments volumes, which are currently 60% up year-on-year, the firm says. In order to support this increasing demand, the firm launched an initiative to securely access a greater number of global ACH low-value clearing systems.

“In the past, how a payment was sent and what the cost of sending it was didn’t matter as much because the absolute value of that payment was usually relatively high. But today, as payments become smaller and smaller, it becomes more and more important to build networks that are cost effective,” Carsten Hils, the global head of GPD, tells Profit & Loss.

And Finally…

Does a magic genie do the work of developing the next generation? No, it’s people like you and me and I think it is about time that the industry – and especially the major institutions and other employers – recognise that. Because without the volunteer network – people willing to give up their time to help develop the next generation of industry participants – FX loses its community spirit and that surely has to lead to greater regulation – something few, if any, of us want.

Thomson Reuters Adds 15 Pairs to Faster Data Feed

Thomson Reuters has added 15 new currency pairs to its binary multicast feed for Matching.
Profit & Loss previously reported in October 2016 that the firm was planning to increase update frequencies for Matching real-time market data by up to 10 times to 25 milliseconds.
In phase one of the roll-out Thomson Reuters put USD/CAD, USD/SGD and EUR/USD pairs in the binary feed on May 21, 2017. Then on Sunday it launched phase two, adding the following 15 currency pairs: AUD/USD, AUD/NZD, NZD/USD, GBP/USD, EUR/GBP, EUR/DKK, EUR/NOK, EUR/SEK, NOK/SEK, USD/MXN, USD/CNH, USD/HKD, USD/JPY, USD/CHF and USD/RUB.

US to Replace Libor

The US appears to have settled upon a reference rate to replace the current London Interbank Offered Rate (Libor).
At a meeting last week, the Alternative Reference Rates Committee (ARRC) identified a broad Treasuries repo financing rate, which the Federal Reserve Bank of New York has proposed publishing in cooperation with the Office of Financial Research (OFR), as the rate that, in its consensus view, represents best practice for use in certain new US dollar derivatives and other financial contracts.