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FCA Paper Claims to Throw New Light on Sterling Flash Crash A new paper published by the UK’s Financial Conduct Authority (FCA) claims to throw new light on events surrounding the sterling flash crash of October 2016 by being the first paper to use trade reports to the FCA under EMIR to analyse how different market participants react in times of market stress and their impact on the liquidity dry-up in a flash crash. The paper has, however, triggered some confusion amongst market participants thanks to ambiguous terminology, mainly the constant reference to “OTC derivatives”, without specifying exactly what products it is talking about.
JPM Research Looks into FX Trading Behaviour Around Events Inaugural financial markets research from the JP Morgan Chase Institute studies trading behaviour around three major market events, and while the findings will not come as a surprise to most FX market participants – active traders were much more involved in the market than passive investors or corporate hedgers – they should prove useful to central banks as they come to terms with a changing market structure. The research, FX Markets Move on Surprise News, was written by Diana Farrell, Kanav Bhagat and Chen Zhao at the Institute and looks at three specific surprise events, the Swiss National Bank’s decision to remove the EUR/CHF floor in January 2015, the Brexit vote in June 2016 and the 2016 US presidential election.
Banerjee Wins Unfair Dismissal Claim Profit & Loss understands that John Bannerjee, who claimed unfair dismissal against former employer Royal Bank of Canada, has won his case. Sources say that the tribunal judge at the London Central Tribunal found that the principal reason for his dismissal was the making of a protected disclosure. The judge also found, the sources say, that Bannerjee contributed 25% to his dismissal, however the compensation awarded will be boosted by 25% because the bank failed to comply with the UK’s Advisory, Conciliation and Arbitration Service (ACAS) Code of Practice.
ACI FMA to Launch New Global Code Exam ACI – the Financial Markets Association (ACI FMA) is launching a new online version of its FX Global Code Certificate. The new exam will be available from 25 May 2018. ACI says the 60-minute online exam is aimed at certifying that market participants across buy side, sell side as well as intermediary institutions, regulators, central banks, middle and back-office, operations personnel and compliance and risk officers have taken the first step towards demonstrating adherence and knowledge of the FX Global Code.
Survey: Derivatives Trading to Grow Despite Rising Costs In a new survey conducted by the International Swaps and Derivatives Association (ISDA), a majority of respondents said that they expect derivatives volumes to stay flat or increase in the future, despite also predicting that the cost of trading these products will increase. Asked about their expectations for overall derivatives activity, 83% of those surveyed said that they thought volumes will increase or remain the same over the next three to five years. The same proportion felt end-user activity will rise or remain unchanged over the same period. When asked to rate their optimism about the future of derivatives on a scale of one to 10, with 10 being the most optimistic, 65% opted for between seven and 10.
Survey: NAFTA Cited as Main Driver of MXN this Year The North American Free Trade Agreement (NAFTA) is the top macroeconomic issue that will affect the Mexican peso this year, according to the results of a Bloomberg foreign exchange survey announced today. After polling more than 100 financial professionals in Mexico, Bloomberg found that 46% said that NAFTA is the macroeconomic factor that will have the biggest impact on the peso. Meanwhile, 34% of attendees said that the peso would be most affected by the presidential election on July 1.
NEX Group In CME’s Sights NEX Group has issued a statement confirming that it has received a preliminary approach from CME Group to acquire the company. The firm says discussions are at an early stage and there can be no certainty that an offer will be made, or one is, its terms. This publication has previously predicted such a move, however, sources familiar with the matter say this may not be the end of the story and that a competing bid could emerge for NEX, which is valued at around £2.5 billion.
FIA PTG Calls for “Data-Driven” Discussion on Liquidity As part of what it terms a continuing effort to foster a productive, data-driven discussion about the nature of liquidity and liquidity provision, FIA PTG has released a white paper entitled Liquidity in Today’s Markets that seeks to promote principles that it says are fundamental to building healthy, liquid markets. The paper includes recommendations detailing what the association believes to be the general parameters necessary to promote liquidity, thereby establishing a basis for further discussion between market participants and regulators.
Markets, Ratings Agencies Divided Over “Too Big to Fail” A new blog by economists at the Federal Reserve Bank of New York (NY Fed) shows that ratings agencies and financial markets are divided about whether the Dodd-Frank Act has significantly reduced the “too big to fail” problem. Noting that one of the goals of Dodd-Frank was to end “too big to fail”, the blog points out that to this end, the Act required systemically important financial institutions to submit detailed plans for an orderly resolution (“living wills”) and authorised the Federal Deposit Insurance Corporation (FDIC) to create an alternative resolution procedure. The response from the FDIC was to create a “single point of entry” (SPOE) strategy, announced in December 2013, in which healthy parent companies bear the losses of their failing subsidiaries.
InTouch FX Expands into North America Market intelligence provider InTouch FX, part of the InTouch FX Capital markets Group, has expanded its coverage to cover North American hours with the hire of Adrian Thong who will lead the service. Thong joins after a long career in trading and portfolio management. He spent 18-years at Citibank, where he traded a variety of products and helped develop the bank’s electronic NDF pricing platforms. He has also worked at a LatAm-focused hedge fund and more recently at broker GFI.