A new research report from JP Morgan Chase Institute highlights the impact of central bank communication choices on financial market volatility.In the report, Does the Timing of Central Bank Announcements Matter?, the authors analysed data around the Swiss National Bank’s (SNB) decision to remove the EUR/CHF floor in January 2015, and found evidence that the timing of the decision increased subsequent market volatility.This latest research builds on a previous paper released by JP Morgan in June 2018, in which it found evidence that many hedge funds had predicated trading strategies on the belief that the SNB would maintain the EUR/CHF floor at 1.20.
The FICC Markets Standards Board (FMSB) has published the final version of its Statement of Good Practice (SGP) on Suspicious Transaction and Order Reporting.The FMSB is an independent body set up by market practitioners to try and improve standards of conduct in wholesale FICC markets. It aims to bring transparency to grey areas in the wholesale FICC markets by identifying emerging vulnerabilities, clarifying and documenting practice and agreeing standards to improve conduct and market behaviour. Setting up the FMSB was one of the main recommendations to emerge from the Fair and Effective Markets Review (FEMR), which was conducted by HM Treasury, the Bank of England and the Financial Conduct Authority (FCA).
Sebastien Galy has joined Nordea Asset Management as a senior macro strategist.Now based in Luxembourg, Galy joins from Deutsche Bank, where he was a senior macro and currency strategist in the firm’s New York office. Prior to joining Deutsche Bank in 2015, Galy spent over four years as a senior currency strategist at Societe Generale and over two years in the same role at BNP Paribas. Both of these roles were based in New York.
Before that, Galy had spells as a senior currency strategist at Dresdner Kleinwort in London between 2007-2008 and at UBS in Zurich between 2006-2007.
HSBC has now settled more than three million FX transactions and made more than 150,000 payments worth $250 billion using distributed ledger technology (DLT), it announced today.The bank’s DLT solution, called HSBC FX Everywhere, has been used for the past year to orchestrate payments across HSBC’s internal balance sheets.HSBC highlights three key benefits of the solution. The first is that it provides a shared, single version of “the truth of intra-company trades”, from execution through to settlement, which reduces risk of discrepancy and delay. Secondly, it means that confirmation and settlement is automated by matching and netting transactions, which reduces costs and reliance on external settlement networks.
Trading on SGX’s FX Futures more than doubled to $914 billion in 2018 as the exchange saw a record monthly volume of $96 billion traded in December.In aggregate, 1.76 million FX futures contracts were traded on SGX in December, up 87% from the same month in 2017. Meanwhile, the notional volume of $96 billion traded on the platform was a 122% year-on-year increase.“The robust annual growth is strong evidence of the role SGX plays as a key risk management venue for market participants as they manage their Asian currency risk exposure,” says the exchange group in its monthly newsletter.
TriOptima, a provider of multilateral compression services for OTC markets, set a new record for its triReduce portfolio compression service in 2018, having compressed $250 trillion gross notional value of trades at LCH SwapClear.The firm says this record, which represents an annual increase of 31% in terms of notional value, was driven by a combination of increased participation of both dealers and their clients, increased trade submission to triReduce cycles and a wider adoption of the Trade Revision methodology, which improves compression efficiency by up to 50% by allowing a wider range of trade economics to be changed.“We are proud that another record compression year continues to help the industry achieve important capital and operational cost reductions,” says Peter Weibel, co-CEO at TriOptima.
OTCXN, a blockchain-powered capital markets infrastructure company, has announced that Independent Reserve, a regulated cryptocurrency exchange that operates in Australia and New Zealand, has joined the OTCXN network. “We are excited to have Independent Reserve as the first exchange to go live on our network. Their forward-thinking management team was quick to see the benefits of joining OTCXN, where Independent Reserve’s order book is tradable by any institutional client on OTCXN’s global network without holding assets at the exchange. OTCXN brings exchanges the deepest institutional liquidity, increasing trading volume and ultimately increasing revenues and improving client execution,” said Rosario Ingargiola, CEO and founder of OTCXN.
MarketFactory has secured a strategic investment from Accel-KKR, a technology-focused investment firm based in Silicon Valley with over $5 billion in capital commitment. In a release issued today, MarketFactory says the funding will accelerate its expansion into new markets and services for currency traders globally.“MarketFactory’s platform provides detailed data about the currency market that helps traders to innovate. We are very excited to find the right partner in Accel-KKR who understands the market structure importance of our business and growth trajectory,” says Darren Jer, CEO and co-founder of MarketFactory.
Spotex, a developer of technology systems for the FX markets and ECN operator, has hired John Miesner as executive managing director, global head of sales and distribution. “We are fortunate to have John join us at this transformative point in our evolution,” says Ritesh Agrawal, CEO of Spotex. “John’s vast knowledge of the institutional foreign exchange market and its key participants will be a tremendous asset as he leads the company forward.”Spotex was launched in 2014 by Agrawal, who previously held senior IT positions at Hotspot FX (now Cboe FX), GFI and PwC, and COO Chris Mitchell, who held similar positions in financial technology.
A survey of more than 100 firms associated with the derivatives markets and conducted by JCRA, an independent financial risk management consultancy, along with law firm Travers Smith, has found that a large majority of firms with exposure to Libor are yet to start making preparations for its discontinuation.
The benchmark is set to be withdrawn in 2021, but the firms say that most of those surveyed have not started negotiating replacement language in their contracts that reference the outgoing benchmark.