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Dodd-Frank Repeal Bill: What Does it Mean? Galen Stops takes a look at Republican attempts to repeal the Dodd-Frank Act On Thursday last week, the US House of Representatives approved the Financial Choice Act (Choice Act), which would repeal major elements of the Dodd-Frank Act. But what does this actually mean in practice? Well, if it is enacted, the bill passed by the House will lead to a whole range of changes to Dodd-Frank. For starters, the Choice Act would implement significant changes to Title 1 of Dodd-Frank, entitled “Regulatory Relief for Strongly Capitalised, Well-Managed Banking Organizations”, which would specifically alter the remit of the Financial Stability Oversight Council (FSOC).
Breaking the Mold Noble Bank International recently launched with a new business model aimed at alleviating the current credit constraints in the FX market. Will it be a “game changer” for the industry? Galen Stops takes a look. If every new product or service launch that claimed to be “game changing” actually was, the FX industry would be a dizzying place to work in, such is the popularity of this phrase and its variant forms. As a result, it was hardly surprising to see Noble Bank International (Noble) hail its new real-time, post-trade FX service as “industry changing”, when its official launch was announced last month. And yet, if the Noble model manages to gain significant traction within the FX industry, it could have a significant impact on how the market operates.
A Perfect Storm: The Buy Side’s Liquidity Conundrum David Newns, senior managing director at State Street and global head of Currenex, speaks with Nicola Tavendale about the confluence of factors that are creating a unique set of challenges for the buy side. I ncreasing regulatory requirements, coupled with the changing characteristics of liquidity in the FX market place in recent years, has resulted in a heightened focus from the buy side on how it can effectively manage its FX exposures. The phase two release of the Global Code will also address specifics relating to the principle of execution.
Blockchain Vs. Bitcoin: Is the Pendulum Swinging Back? Galen Stops looks at why demand for cryptoassets has skyrocketed in 2017 and assesses whether they have any future in mainstream financial markets. The first working implementation of a blockchain that the world had ever seen was in the Bitcoin software released in 2009. Bitcoin the cryptocurrency then rose to prominence in 2013 when, driven in part by a flurry of media attention, its value rose past $1,000 for the first time. Following that, 2014 represented a long and painful year of price decline for Bitcoin as an asset, but it continued to garner a lot of attention, not always for good reasons. Then in 2015 the narrative began to change as people really started talking about the potential applications of blockchain technology distinct from any digital assets.
The Code and the Individual Although most of the attention is on institutional adherence to the Code of Conduct, Colin Lambert suggests there is also a great deal that individual employees need to know. It was one of the first challenges identified by those creating the FX Code of Conduct – how do we get the message out there? It is not just about ensuring that all firms that operate in the foreign exchange industry understand their responsibilities under the Code – individuals too have responsibility. It was notable, talking to people this time last year, how few were concerned about the Code’s impact upon them.
The FoXy’s: Profit & Loss Readers’ Choice Awards Profit & Loss readers cast large numbers of votes this year for their preferred market makers and service providers. Last year was the first that we changed the category description from banks to market makers to account for the larger proportion of non-banks that now comprise an important part of market making, and this is again reflected in the results. The industry’s changing dynamics are starting to show. Voting, which spanned across time zones, was close in many categories, so we have listed the top three for each category to acknowledge the runners up.
The FoXy’s: Profit & Loss Readers’ Choice Awards Profit & Loss readers cast large numbers of votes this year for their preferred market makers and service providers. Last year was the first that we changed the category description from banks to market makers to account for the larger proportion of non-banks that now comprise an important part of market making, and this is again reflected in the results. The industry’s changing dynamics are starting to show. Voting, which spanned across time zones, was close in many categories, so we have listed the top three for each category to acknowledge the runners up.
A Last Look at Last Look? There is one area of the Global Code of Conduct that continues to attract controversy, and, Colin Lambert says, we all know what it is… Although the assessment is a little harsh given the type of misconduct that led to the creation of the FX Global Code of Conduct, it is hard not to understand where the head of e-FX trading at a major bank in London is coming from when they note, “The Code had one job – give us clarity on last look – and it has failed miserably.” There remains the odd voice still raising concerns about Principle 11 and its apparent endorsement of pre-hedging, however, Guy Debelle, chair of the FX Working Group that created the Code, stresses this Principle is really about the “demonstration effect”.
Euronext and FastMatch: the Perfect Combination? As reported earlier, European exchange group Euronext is buying a majority stake in FX ECN FastMatch. Not only is this a deal that has long been rumoured (only the identity of the buyer was unknown) it also appears to be a deal that makes a great deal of sense. Euronext is buying a 90% stake in an FX ECN that is seeing tremendous volume growth – the first four months of 2017 have seen average daily volume of $18.1 billion compared to $11 billion the same time in 2016 – and FastMatch is gaining access to a potentially huge distribution network.
Ready for Launch Profit & Loss talks to David Puth, CEO of CLS and Chairman of the Market Participants Group (MPG), about how the FX Global Code of Conduct will work. Profit & Loss: What was the process like to develop the Code from start to finish? Were there challenges in achieving consensus amongst so many different market participants? David Puth: The development of the Code has generally been a constructive process. The committees involved in its creation are: the FX Working Group (FXWG), which is the central bank working group; the Market Participants Group (MPG), which is the group that I chair; and a number of industry groups, including regional FX committees.