Month: March 2019

In the FICC of it

Following on from Profit & Loss’ recent Forex Network New York event, Galen Stops gives picks out a few key themes from each panel session for discussion with Colin Lambert.On the trading side, they talk about whether there is such thing as “the wrong kind of volatility”, Stops says that panellist responses to a Brexit question perfectly sums up the confusion around recent political events in the UK and they question whether the industry has become so good at trading FX that it’s effectively killed market.Looking at trends around credit intermedation, Stops reveals that there is an emerging debate about whether more buy side firms will gravitate towards the FXPB or centrally cleared model and the pair discuss why it might be inevitable that market participants will pay more for PB services in the future.

FCA Officially Bans Retail-Orientated Binary Options

Following consultation feedback, the UK’s Financial Conduct Authority (FCA) has confirmed all firms acting in or from the UK are prohibited from selling, marketing or distributing binary options to retail consumers.
The FCA aired its concern about the products in late 2017, before issuing a consultation paper in late 2018 seeking industry feedback, It now says that following that feedback it will officially introduce new rules on April 2, 2019, “to tackle widespread concerns about the inherent risks of these products, and the poor conduct of the firms selling them”. It adds, “This has led to consumer harm in the UK and internationally through large and unexpected trading losses.”

Second Barclays Trader Convicted of Euribor Manipulation

Just days after former colleagues Carlo Palombo was convicted of similar charges, a UK jury has found a second former Barclays interest rate trader guilty of Euribor manipulation.
Former managing director at Barclays, Colin Bermingham, has been convicted of manipulating the benchmark rate at the height of the financial crisis following an investigation and prosecution brought by the UK’s Serious Fraud Office (SFO).
A third trader, manager of the liquidity management portfolio at Barclays, Sisse Bohart, was acquitted last week.

Brachet Leaves Citi?

Profit & Loss understands that Alexis Brachet has left Citi in New York where he was a managing director and head of emerging markets FX trading for Latin America.
Brachet joined Citi subsidiary Banamex in 2008 in Mexico City before moving to New York in 2015, prior to Banamex he worked for BNP Paribas for six years and Donaldson, Lufkin and Jenrette Securities for three years in trading role.
His destination is unknown and Citi did not comment by press time.

And Finally…

One aspect of the feedback to my midweek column caught my imagination and, possibly thanks to sleep deprivation, made me fear that I have seen the seeds of the next FX scandal being sown. I think the banking industry has a problem with how it judges the performance of voice traders – what worked two decades ago simply doesn’t now, and we need it to change before we breed a similar level of desperation to hit targets to those that incubated the chat room scandal.

BIS Launches 2019 Triennial Survey

The Bank for International Settlements (BIS) formally launched the 12th Triennial Central Bank Survey of Foreign Exchange and Over-The-Counter (OTC) Derivatives Markets – the survey that is universally used as the benchmark measure of the size of the daily FX market.
Conducted every three years since 1986, the Triennial Survey is the most comprehensive source of information on the size and structure of global foreign exchange and OTC derivatives markets. It aims to help central banks, other authorities and market participants monitor developments in OTC markets and inform discussions about reforms to OTC markets.

And Another Thing…

I have been quite vocal in recent weeks about the need for responsibility in financial markets generally and in particular have expressed the opinion (which has not gone down that well I will confess) that unless there are specific circumstances, for example, a bilateral trade on a private venue where both parties agree it was wrong, we should never consider re-papering trades. It is now time to take a different perspective on this, although I hasten to add I have not changed my mind – “always certain”!

FastMatch to Launch Singapore Matching Engine

FastMatch is setting up a new matching engine in Singapore, which is expected to be fully operational in the fourth quarter of 2019. In addition, FastMatch has opened a new commercial office in Singapore.“This expansion in the Asian market reflects FastMatch’s ambition to be closer to its clients worldwide and creates a strong development base to become a major FX marketplace in the region,” says the ECN operator in a release announcing the news.The new matching engine comes in addition to the platform’s existing matching engines located in New York, London and Tokyo.

New Goldman Sachs Algo Offers Basket FX Trading

Goldman Sachs has launched a Basket Algo, which gives clients the ability to take numerous FX trades and then trade them as a basket.“The launch of this algo came from really recognising the pinch points of clients’ workflows and understanding what they’re trying to achieve,” David Wilkins, global head of e-FX sales at Goldman Sachs, tells Profit & Loss. “And I want to make it very clear: this is not any kind of simple trade batch uploader. Indeed, we think this is an entirely new way to trade FX.”The essential thesis behind the algo is that deeper examination of client workflows and trading activity shows that although these firms tend to execute trades on an individual basis, in many cases, they don’t need to be, and it would in fact be cheaper and more efficient for them to instead execute them as a basket.

Former Barclays Trader Guilty of Euribor Manipulation

A jury at a London court has found former Barclays interest rate trader Carlo Palombo, guilty of manipulating the Euribor benchmark interbank lending rate, however it found a fellow former Barclays trader not guilty and is still considering its verdict in a third related case.
The UK’s Serious Fraud Office (SFO) brought the case, alleging that Palombo, Sisse Bohart, who was acquitted, and Colin Bermingham, who is awaiting a verdict, colluded with former Deutsche Bank counterparts Christian Bittar and Phillipe Moryoussef to fix the benchmark rate set. The methodology alleged by the SFO was very familiar to anyone following these cases – the dealers allegedly pressured fellow workers who were charged with submitting the bank’s reference rate, to alter to suit the accused’s books.
Bittar and Moryoussef were convicted last year on the same charges, the latter was given an eight-year jail sentence, which Bittar, who pleaded guilty, was sentenced to five years’ imprisonment.