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ISDA Launches Global Consultation on Benchmark Fallbacks The International Swaps and Derivatives Association has launched a market-wide consultation on technical issues related to new benchmark fallbacks for derivatives contracts that reference certain interbank offered rates. The consultation sets out options for adjustments that would apply to the fallback rate in the event an IBOR is permanently discontinued. ISDA has been leading an industry effort to implement robust fallbacks for derivatives contracts referenced to certain Ibors since 2016, at the request of the Financial Stability Board’s Official Sector Steering Group.
FSB Reinforces Support for Overnight RFRs The Financial Stability Board has published a statement on reforms to interbank offered rates and the development of overnight risk-free, or nearly risk-free, rates and term rates. The FSB says the statement is intended to provide market participants and other stakeholders with its views ahead of a forthcoming consultation by the International Swaps and Derivatives Association which contemplates fall backs for certain derivative contracts based on overnight RFRs. The FSB started its work on reforms to IBORs following enforcement action taken by FSB member authorities in response to the manipulation of these benchmarks.
CMC Markets Partners with Tradefeedr, Adds Alexa Capabilities Online broker CMC Markets has partnered with Tradefeedr, a data science platform built for financial markets, to deploy cloud based machine learning to improve trading analytics and intelligence around liquidity management. The firm says that the additional capabilities provide for the ingestion, cleansing and store of massive amounts of market and transactional data; high performance computing infrastructure for inspecting, intersecting and querying massive data sets, including data visualisation tools and APIs for extracting the results of analysis for further analysis.
LCH Begins Clearing Mexico-based Trades LCH is now actively clearing trades on behalf of a Mexico-domiciled participant. BBVA Bancomer completed a cleared Mexican peso denominated TIIE  interest rate swap, with BBVA SA Madrid acting as the clearing broker. The transaction marks the first time a Mexican participant has used LCH SwapClear, following LCH’s recognition as a Foreign Central Counterparty (CCP) by Banco de México earlier this month. John Horkan, LCH Group COO and head of North America, says: “We’re excited that BBVA Bancomer has become the first Mexican participant to clear its interest rate derivatives at SwapClear. This milestone swiftly follows LCH’s recent recognition as a Foreign CCP by Banco de México, allowing Mexican entities the benefit of accessing the global liquidity available in SwapClear.”
Global FXC Names Leadership Team, Reports on Progress The Global Foreign Exchange Committee has named Simon Potter executive vice president of the Federal Reserve Bank of New York, as chair for a one-year term. At its meeting this week in Johannesburg, it also nominated and elected Adrian Boehler, global co-head of FXLM and commodity derivatives at BNP Paribas, and Akira Hoshino, senior fellow and managing director, head of global markets trading at MUFG Bank, to serve together as co-vice chairs for a two-year term. Speaking to Profit & Loss after what Potter says was a very productive meeting, he is keen to stress the diversity and engagement represented by the GFXC.
Associations Publish Global Benchmark Report The International Swaps and Derivatives Association (ISDA), the Association of Financial Markets in Europe (AFME), International Capital Market Association (ICMA) and the Securities Industry and Financial Markets Association (SIFMA) and its asset management group (SIFMA AMG) have published a new report that assesses the issues involved with benchmark reform, and makes recommendations on steps firms can take to prepare for the transition from interbank offered rates (IBORs) to alternative risk-free rates (RFRs). The report, which was based on a survey of 150 banks, end users, infrastructures and law firms in 24 countries, shows a gap between high levels of awareness of benchmark reform and concrete steps being taken to transition from the IBORs to alternative RFRs.
LCH Receives Recognition as a Central Counterparty in Mexico LCH has obtained recognition as a central counterparty from the Banco de México. The recognition for LCH’s SwapClear Service is effective from 22 June 2018 and provides a greater choice of CCPs to those participants affected by the Mexican clearing mandate. With this recognition, LCH can expand clearing to Mexican-domiciled market participants to support their interest rate derivatives trading activity.   LCH will continue to offer clearing to global participants for Mexican Peso-denominated interest rate derivatives as one of the 21 currencies offered by SwapClear. LCH clears for members and their clients based in 55 countries.
Johnson Wins Bail Application Mark Johnson has won his bail application in the US Appeals Court and will been released subject to terms laid down by the District Court. Three judges of the US Court of Appeals for the Second Circuit, granted the bail application Wednesday, which suggests that as well as seeing Johnson as no flight risk, they also believe there are credible legal issues surrounding the original conviction. Johnson was found guilty of several counts of wire fraud and sentenced to two years in jail in an original decision that potentially has tremendous consequences for the FX industry.
CLS Confirms FX Volume Boost in May Data from CLS Group reinforces the message from the FX dealing platforms that May was a busy month in spot FX markets. CLS says that average daily FX volume submitted to the mechanism was $1.779 trillion, up 0.8% from April and up 15.9% year-on-year. Volume was highest in FX swaps at $1.188 trillion, a 4.1% decline from April but up 20.1% from May 2017. In outright forwards CLS handled $98 billion per day in May 2018, down 7.5% from April and also down 5.7% year-on-year. The month-on-month decline in these products however, was more than matched by an increase in spot activity to $507 billion per day, up 16.9% from April and 11.7% higher than May 2017.
Northern Trust Partners With Lumint Northern Trust is partnering with Lumint Corporation, a provider of currency management services, to enhance its suite of FX solutions for asset managers and asset owners globally. With this partnership Northern Trust is aiming to strengthen its platform for currency hedging, including portfolio overlay, share class hedging and look-through hedging. The banks says that the partnership will also help support further innovations in hedging program management and analytics to meet the evolving needs of global investors. “Northern Trust is committed to delivering best-in-class foreign exchange services and we are excited to announce this strategic partnership with Lumint for currency hedging. This enables us to offer a differentiated and innovative solution to our clients who are looking to delegate their hedging needs and benefit from our expertise, coupled with Lumint’s powerful tools and technology,” says John Turney, global head of FX at Northern Trust Capital Markets.