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 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 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.
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”.
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.
The Federal Reserve Board has requested public comment on a proposal for the Federal Reserve Bank of New York, in cooperation with the Office of Financial Research, to produce three new reference rates based on overnight repurchase agreement (repo) transactions secured by Treasuries.
These rates will replace the existing London Interbank Offered Rate (Libor) mechanism as the benchmark for interest rates and the new proposed benchmarks are a Tri-party General Collateral Rate (TGCR), a Broad General Collateral Rate (BGCR), and a Secured Overnight Financing Rate (SOFR).
NEX Data has unveiled the ‘EBS FX Benchmarks’, a series of 30-minute FX fixings. The new fixings went live on 26 July 2017 and, the firms says, “enhance the variety of global benchmarks available, bringing increased transparency to all FX market participants”.
The benchmarks are based on actual transactions and orders during the ten minute fixing window on Nex Markets’ EBS FX central limit order book. The fixings are published 24 hours a day, five days a week and include the full list of core EBS currencies.
Foreign exchange turnover rose in April 2017 compared to October and April 2016 thanks mainly to a surge in activity in the UK.
Six regional foreign exchange committees have released their latest semi-annual reports on FX turnover and together they indicate a 5.3% increase from October and a 2.8 rise on activity in April 2016.Overall the data from the committees suggest a slight increase in global activity and were the Bank for International Settlements to produce an annual turnover report instead of the current triennial report, it would indicate the FX market is now a $5.23 trillion per day industry.
A new research note from Pragma Securities is seeking to challenge the perception that banks are increasingly stepping back from providing liquidity to FX markets.
The firm notes in the paper that the “typical narrative” is that
reduced appetite for risk, controls on
capital at banks, as well as juniorisation of dealer staff have all contributed to this withdrawal that led to an “increased fragility of the FX markets”. The paper adds that the general consensus seems
to be that liquidity is getting more expensive, and while spreads are
narrow in times of normal volatility, in
times of market stress dealers effectively pull away from the markets, contributing to extreme volatility and events like flash crashes.
Investors looking for exposure to emerging markets FX have limited options, with most EM indices offering exposure (currency hedged or otherwise) to local equity and bond markets. They will soon have the opportunity to invest directly in EM FX markets, however as T3Index is set to launch its E8 index, which it says it a first of its kind as it measures the performance of the world’s eight largest emerging market exchange rates. T3Index is a research driven financial indexing firm that specialises in derivatives benchmarking and the development of investible, proprietary indices that track related strategies across a range of asset classes.