Month: November 2018

LCH Compresses $4.5 Billion in FX Outstandings

LCH says that its ForexClear members have reduced their notional outstanding by $4.5 billion through the use of the service’s compression solution. Citi and Standard Chartered Bank are among the first participants to actively compress their trades at ForexClear.
Compression is the process by which clearing members and their clients can eliminate offsetting trades to reduce notional outstanding and the number of line items in a portfolio. Capital requirements such as those introduced under the Basel III leverage ratio have incentivised banks to reduce notional outstanding.

ISDA Publishes Responses to Benchmark Consultation

The International Swaps and Derivatives Association, (ISDA) has published a statement summarising the preliminary results of a consultation on technical issues related to new benchmark fallbacks for derivatives contracts that reference certain interbank offered rates (Ibors).
The consultation, which was launched in July, covered the proposed methodologies for certain adjustments that would apply to the fallback rate in the event an IBOR is permanently discontinued. ISDA says it received 152 responses from 164 entities to the consultation from a variety of market participants.

Refinitiv Adds Thai Baht to WM Service

Refinitiv is enhancing the WM/Reuters Thai Baht Spot FX Benchmarks with data sourced from Matching, the firm’s anonymous central limit order book. This has allowed the Thai baht (THB) and Thai baht offshore (TOF) benchmarks to become ‘trade’ currencies using the WM/Reuters Trade Methodology. This change was launched on 1 October 2018 and is available now, the firm says.
Previously, the THB/TOF benchmarks were calculated from indicative interbank quoted rates, provided by multiple financial institutions. Following analysis about the feasibility of introducing transactional data from the available FX trading platforms and a public consultation, Refinitiv says it found that the inclusion of data from Matching achieves the necessary requirements regarding sufficiency, quality and data hierarchy to evolve these benchmarks to become trade based.

Shterenberg Joins Barclays

Barclays has appointed Alex Shterenberg as global head of G10 and EM e-FX Trading, based in New York.

In this role, Shterenberg will be responsible for leading Barclays’ electronic FX trading business globally. Profit & Loss initially reported on rumours that he was headed for Barclays in October, when he left his role as global head of FX algorithmic execution and head of e-FX trading for the Americas at Bank of America Merrill Lynch (BAML).

Fabio Madar, global head of G10 FX trading and distribution at Barclays, says

P&L Talk Series with Nomura’s Ian Daniels

Ian Daniels, executive director, head of e-FX distribution, EMEA, at Nomura, talks about algorithmic trading trends in the FX market.

Profit & Loss: Since you joined Nomura, you’ve been working on developing the bank’s algo offering, what are the latest developments there?

Ian Daniels: Our algos are now live on Bloomberg and will soon be live on a number of other major third party venues. I think that one of the benefits of being a later entrant into this space is that you have the experience of previous roll-outs to draw upon. So we knew that access to liquidity and the customisability of our algos would be important characteristics for our clients and that’s why we created algos that enable clients to execute in a default mode or that can be tailored to meet their specific needs.

Citi Raises $7 Million in Latest Education Campaign

Citi says it has raised a record $7 million through the 2018 edition of its annual e for Education campaign. Launched in 2013 by Citi’s foreign exchange and local markets (FXLM), the initiative has raised $30 million over the past six years in support of several key projects focused on youth education and literacy.
The banks says that more than 300,000 students have been supported by the campaign globally through various initiatives spanning 28 countries worldwide. Citi’s FXLM business donates $1 for every $1million of FX that clients traded via a broad range of electronic platforms including its single-dealer platform Citi Velocity and CitiFX Pulse for corporate clients. For the first time this year, the campaign also included local market bonds, in addition to FX.

And Finally…

The FX industry is advancing how it deals with certain issues, but the pipeline of areas in need of clarification and further debate shows little sign of slowing down. Two areas that concern me at the moment are exactly how platform operators are enforcing their rulebooks – are they being fair and balanced to both LPs and LCs? – and exactly what constitutes “full amount” trading? An open and data-backed discussion will solve the latter, but I wonder if we need an industry ombudsman for the former?

FSB Names New Chair

The Financial Stability Board (FSB) has named Randal Quarles, governor and vice chairman for supervision at the US Federal Reserve, as its new chair. In addition the FSB appointed Klaas Knot, president of De Nederlandsche Bank as vice chair. Both men have been appointed for a three-year term starting on 2 December 2018.
The FSB’s Plenary, which made the appointment, also agreed that after three years on 2 December 2021 Knot will take over as chair for the next three-year term.
Plenary members unanimously welcomed these appointments, FSB says, which were made at the recommendation of a specially constituted Nominations Committee.

Dinosaur Launches New FX Service

Dinosaur Financial Group (Dinosaur), a broker-dealer and subsidiary of Dinosaur Group Holdings, has launched a new global FX trading service.

Through this service, Dinosaur will provide the option of electronic or voice trading for FX spot, forwards, swaps, NDFs, options and deliverables.

Glenn Grossman, founder and chairman of Dinosaur, based in New York, says: “We are pleased to announce our new FX service. With tier-1 banks increasingly ‘derisking’, we find ourselves at an evolutionary point for Dinosaur, and our clients are looking to us to provide a wider range of services.

In the FICC of It

High drama in this week’s podcast as it is revealed that editor Galen Stops has been removed from duties…either that or he is in Bali on holiday. Thankfully, P&L’s editor-in-chief Julie Ros is on hand to step in as guest podcaster, and while this does mean regular Colin Lambert feels he has to be on his best behaviour (he fails of course), it does mean we can bring you a quick trip around the wild life of upstate New York!
The last week has seen the return of volatility to crypto markets, which has at least got Lambert excited (he never can resist a moving market), although Ros has a different take on what people should be talking about when it comes to these still relatively nascent markets.
Our podcasters look at potential use cases for the technology underpinning the crypto space, liken it to the e-FX boom that accompanied the launch of P&L, before moving on to discuss the changing attitude of customers to FX markets.
The randomisation that has become associated with In the FICC of It is maintained as well, with a closing question to Lambert that is definitely from left field!