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FMSB Seeks Feedback on Information Sharing Guidance The FICC Markets Standards Board (FMSB) has published a Transparency Draft of a new Statement of Good Practice on Information and Confidentiality for fixed income and commodities markets. The FMSB says the proposed guidance is not intended to apply to the FX markets, which is covered by the FX Global Code, or to the precious metals markets, which is covered by the Precious Metals Code, rather it seeks to build on those works for the fixed income and commodities markets.
CLS Welcomes First Mexican Settlement Member Banco Monex has joined as a CLS settlement member, becoming the 70th firm to assume the status. “I could not be more pleased to welcome Banco Monex as the first Mexican bank to participate directly in our settlement service,” says David Puth, CEO of CLS. “Participation in CLS Settlement continues to grow, and our settlement members, such as Banco Monex, play a critical role in ensuring market participants have access to the highest standard of risk mitigation to support their trading operations and enable us to deliver a safer and more stable FX market. We look forward to continued growth in the Mexican market.” Mauricio Naranjo, CEO of Grupo Financiero Monex adds, “Joining CLS as a member with direct participation in the CLS settlement service is an important milestone for Banco Monex. The Mexican peso is the most actively traded currency in the Latin American region and mitigating settlement risk is a key priority for many institutions. Participation within the CLS ecosystem will enable us to achieve this goal for our operations and through time for our clients as third parties, while significantly enhancing liquidity efficiencies for the Mexican market.”
Bloomberg Rates Added to NEX eFix Bloomberg FX fixing rates (BFIX) will be added to the NEX eFix Matching Service, which enables customers to execute fixing interest electronically via the EBS Market platform, the firms have announced. The eFix Matching service was launched in 2014 as a central market utility for reducing benchmark fixing risk, NEX says that it has seen a growth of 25 percent API to 65 percent API execution since 2014, driven by the continued trend towards automation and a shift in the way banks manage client fixing orders.
FX Volumes Slightly Lower: Surveys The latest round of FX committee semi-annual turnover surveys indicate that activity globally dipped slightly in October 2017 from the previous April, but was up year-on-year. The US was the bright point amongst the surveys, showing a 6.2% rise from April 2017’s level and 7.2% higher than the previous October, while the UK, still easily the world’s largest FX market, saw activity decline by 4.3% from April, however it was up 5.4% year-on-year. Elsewhere, all centres saw slightly higher activity from the April 2017 survey, however Singapore and Canada were up on a year-on-year basis while Japan and Australia declined slightly.
UK Businesses Increase FX Hedging Ahead of Brexit As UK businesses prepare for Brexit, small firms are managing their FX risk more and more as they look to increase trade internationally, and exporters forecast increased growth in FX turnover, according to a new report from East and Partners released this week. Following interviews with 2,211 UK corporates, East and Partners has revealed that 25% of micro businesses and over 40% of SMEs used FX forwards in the second half of 2017, an increase of 16% and 15%, respectively, over the last six months. The report also shows that larger businesses are also using hedging options on a more regular basis, with nearly half indicating their use. “Awareness and understanding around the benefits of FX risk management solutions has clearly hit home with UK small business, leading to record highs in its usage,” says Simon Kleine, business lead at East and Partners Europe.
NEX Group Sees Increased Revenues NEX Group has unveiled increased revenues for the six months to September 2017, however operating profit has dipped. Nex Markets performed well, however, and contributed to the increased revenues. Nex says that revenue was £287 million, up from £254 million in the same period last year, a 13% increase that is trimmed to 7% on a constant currency basis. Meanwhile, trading operating profit fell from £75 million to £63 million and its trading operating profit margin fell from 30% to 22%.
BNP Signs Treasuries Deal with GTS BNP Paribas and non-bank market making firm GTS, have announced a strategic collaboration, which they say, marks “a new era for banks and electronic market makers”. Under terms of the strategic collaboration, BNP Paribas will seek to improve the client experience by providing improved pricing in the secondary market for US Treasuries by the addition of GTS liquidity into its pricing framework. A dedicated team from both firms will leverage a mutually developed technology platform that seeks to provide BNP Paribas with access to greater liquidity.
NEX Markets Launches NEX Quant Analytics NEX Markets has launched a new suite of analytical tools on its EBS FX trading platform that seeks to match the sophistication levels of those available at banks and trading firms, however at market level. NEX Quant Analytics was launched today and uses benchmark data taken from the entire EBS ecosystem. It delivers “real and measurable” insight for clients into their own trading activities and the ability to look at their performance versus that of their peers. With execution quality taking a more prominent role in FX market participants’ thinking, especially around their market impact, the timing would appear to be good for the firm.
FMSB Annual Report Highlights Progress made in FICC Reform The UK’s FICC Markets Standard Board (FMSB) has issued its 2017 Annual Report setting out the progress it has made to enhance standards of behaviour in the wholesale fixed income, currencies and commodities markets. FMSB was established in 2015 following the recommendations of the Fair and Effective Markets Review (FEMR), which was conducted by the Bank of England, the UK Treasury and the UK’s Financial Conduct Authority. FMSB says it has achieved “significant momentum and has received strong support from market participants and public authorities”.
BIS Paper: Should FX Swaps be Visible on Balance Sheets? A new paper published by the Bank for International Settlements (BIS) asks the question, what would balance sheets look like if the borrowing through FX swaps and forwards were recorded on-balance sheet, as the functionally equivalent repo debt is? The authors of the report, FX Swaps and Forwards: Missing Global Debt? observe that these products “create debt-like obligations” and state that non-banks outside the US owe large sums of dollars off-balance sheet through these instruments. They add that the total is of a size similar to, and probably exceeding, the $10.7 trillion of on-balance sheet dollar debt.