Month: December 2018

ESMA Renews CFD Restrictions

The European Securities and Markets Authority (ESMA) has agreed to renew the restriction on the marketing, distribution or sale of contracts for differences (CFDs) to retail clients.
The rule, which has been in effect since 1 August 2018, was due to expire on 1 February 2019 but has now been renewed for a further three-month period.
ESMA says it has “carefully considered” the need to extend the intervention measure currently in effect, adding, “ESMA considers that a significant investor protection concern related to the offer of CFDs to retail clients continues to exist.”

FX: Still a Relationship Business

As FXSpotstream (FSS) approaches its sixth anniversary its CEO, Alan Schwarz, argues that a shift towards disclosed trading is one of the biggest industry trends that has emerged during this time.

In particular, he highlights when the Swiss National Bank (SNB) pulled its peg to the euro – which caused massive volatility in the market – as a catalyst for this trend.

“Post-SNB you have Brexit and then you have the US election and there’s been an increase desire –and not only do we hear it but we see it based on the volume growth – for people to know who their counterparty is for credit reasons and market impact has become a very significant piece of the conversation. That’s fundamentally what we’ve seen change,” he says. 

Making Internalisation Work

Discussing the launch of NEX’s (Nex) new data analytics suite, Tim Cartledge, global head of FX and head of product at NEX Markets, says that it aims to make internalization more beneficial to both liquidity providers and consumers.

“The problem that we’re trying to solve is that the relationship between liquidity provider and consumers on a relationship based platform actually doesn’t have much relationship left in it anymore because the way the market has evolved is that the liquidity consumers really don’t know how how the liquidity providers are making that liquidity, they don’t know how they’re holding the risk for an extended period until they find an offsetting client trade. In short, they don’t understand how internalization works,” says Cartledge.

And Finally…

And so, with the usual mixture of celebration and regret, we arrive at the final Accolade of 2018 – my FX Person of the Year.
Obviously last year was a little controversial as I awarded it to an anonymous person (although I think I know the identity of the person concerned) and, you will be pleased to hear, this year is little different.
There was a reasonable field this year, although perhaps not quite up to the standards of previous years.

Marex Spectron Acquires Customer Base of RCG

Commodity broker Marex Spectron has signed an agreement to acquire the customer business of Rosenthal Collins Group (RCG), an independent Futures Commission Merchant (FCM).
The acquisition is expected to complete in January 2019 and Marex says it will maintain the RCG name and brand, gain 14,000 client accounts and balances, 150 associated staff and the Chicago headquarters. RCG has little overlap with Marex Spectron’s existing North American business, which operates out of New York, Calgary, Connecticut and Houston, the firm says.

ISDA Confirms Benchmark Fallback Results

The International Swaps and Derivatives Association (ISDA) has published a report summarising the final results of a consultation on technical issues related to new benchmark fallbacks for derivatives contracts that reference certain interbank offered rates (IBORs).
The report, Anonymized Narrative Summary of Responses to the ISDA Consultation on Term Fixings and Spread Adjustment Methodologies, was prepared for ISDA by The Brattle Group and confirms the preliminary findings published by ISDA at the end of November. 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.

In the FICC of It

It’s the end of year It’s the end of year special podcast and Colin Lambert and Galen Stops are in jovial mood as they bring the curtain down on another busy year in the FICC industry. Listen in as they each identify a key theme from the past year and look to re-assess them with the benefit of hindsight, before moving into less certain territory by providing a price prediction for everyones favourite out-of-control child, Bitcoin.
They also – this being the season of making a wish, share their one hope for 2019, although one of them (Lambert of course) appears to have forgotten it’s the season of goodwill!
In a sensational end to the year’s podcasts, Lambert also reveals that yes, he did indeed quote from the film Love Actually in a podcast earlier this year, but he tries (and fails) to make amends by setting listeners another teaser by paraphrasing from a much more acceptable movie…in his mind at least!

Euronext FICC Head Steps Down

Paul Humphrey, global head of FICC at Euronext, is leaving the firm to pursue other opportunities a spokesperson for the exchange confirms. He has been at Euronext for three years and was responsible for building and managing the FICC business and led the group’s purchase of a majority stake in FX platform Fastmatch.
Chris Topple, CEO of Euronext London, has been named to head the FICC business going forward.
Humphrey has more than 25 years experience in the FICC industry.

Masters Steps Down as CEO of Digital Asset

Distributed ledger technology (DLT) provider Digital Asset has announced that Blythe Masters, the company’s CEO since formation in 2015, has asked to step down as CEO for what the company terms “personal reasons”.
AG Gangadhar, who joined the company’s board of directors in April, has been appointed the board chairman and will serve as the acting CEO until a permanent CEO is named. The frim says Masters will remain involved in the company as a board member, strategic advisor and shareholder.

Regulators Welcome EC’s Recognition of UK CCPs

The Bank of England, European Securities and Markets Authority (ESMA), and the US Commodity Futures Trading Commission (CFTC) have all welcomed the decision by the European Commission (EC) to adopt a temporary equivalence regime for central counterparties (CCPs) and Central Securities Depositories (CSDs).
ESMA says it supports continued access to UK CCPs, in order to limit the risk of disruption in central clearing and to avoid any negative impact on the financial stability of the EU. It adds it aims to recognise UK CCPs in a timely manner, as long as four recognition conditions under Article 25 of EMIR are met.