Tag: Compliance

Compliance

And Another Thing…

I teased a theme on Monday in the column regarding the oversight of FX businesses to which I want to return. If there is one recurring theme that I hear from talking to managers in the trading businesses, both voice and ‘e’, it is that not only do their compliance teams not understand the nuances of markets, they take up valuable time from people on the desk asking unnecessary questions and having basic themes explained to them. It’s just not an efficient model.

Refinitiv Launches Cloud-Based FX Tool

Refinitiv has introduced Deal Tracker as a Service (DTaaS), a Cloud archiving and compliance tool for FX post-trade flow sourced from Refinitiv FXT. DTaaS is an extension of Refinitiv Deal Tracker, which is designed to help firms monitor and process FX trades on all major FX platforms globally, both in the front and back office, by allowing them to monitor trade activity in real time, track net positions, and archive data for easy searching as well as compliance needs.“As a Cloud-based service fully managed by Refinitiv, DTaaS can help eliminate the need for local software deployment, reducing total cost of ownership – a key benefit as financial companies look for ways to reduce spending, particularly on technology,” says Refinitiv in a release issued today.

Blockchain in FX: A Solution That’s Found a Problem?

Galen Stops takes a closer look at the distributed ledger technology solution that HSBC has deployed for settling FX transactions.One of the long-standing accusations levelled against distributed ledger technology (DLT) within financial services is that it is a solution looking for a problem, an accusation that appears to have gained some weight over the past few years given the vast disparity between the initial level of hype around this technology and the actual implemented use cases for it.Which is why it is significant that HSBC recently announced that it has settled more than three million FX transactions and made more than 150,000 payments worth $250 billion using DLT. If this announcement caught FX market participants by surprise, this is probably because this DLT solution, called HSBC FX Everywhere, has thus far only been used to orchestrate payments across HSBC’s internal balance sheets.

Is the Global Code of Conduct in Trouble Already?

The opening panel discussion of this year’s Profit & Loss Forex Network Chicago conference featured an unusually frank and honest discussion about the challenges associated with implementing the FX Global Code of Conduct. 

I t has been well documented that buy side firms have been much slower than their sell side counterparts to commit to the Global Code, with one panellist at Profit & Loss Forex Network Chicago highlighting that of the 452 entities that have signed the statement of commitment only 23 were asset managers. Indeed, they noted that of the asset managers that have signed the Code, the majority trade currency as their primary business, or even as their sole focus.

And Finally…

People are fond of “looking at the bigger picture” but when it comes to the legal profession and FICC markets, frankly the bigger picture confuses me. How else can we explain how a number of traders are facing jail time and yet so many other traders are winning their unfair dismissal cases? To me, the issue clearly highlights the level of collateral damage in the industry and requires the banks (and regulators to a degree) to have a serious reappraisal of their approach.

FXC Critical of Shifting Compliance Burden to FX Dealers

The Federal Reserve Bank of New York’s Foreign Exchange Committee (FXC) has issued a letter criticising market participants for trying to shift the burden of enforcing internal policies and controls towards FX dealers.

In the letter, the FXC says that its member firms have noted that FX market participants occasionally send notices, letters and other communications (“authorisation letters”) to dealing firms “that limit and/or restrict the authority of individuals to submit orders or instructions, trade, invest or authorise settlement-related instructions on the firm’s behalf”.

Goldman Fined $109.5m for FX Misconduct

Goldman Sachs has been fined $54.75 million by the US Federal Reserve (Fed) and New York Department of Financial Services (NYDFS) for “unsafe and unsound” practices in its FX trading business.

This fine is part of a consent order that the bank has agreed to that will also see it submit to NYDFS written plans for enhanced internal controls and compliance risk management.

The fine announced today stems from an investigation by NYDFS determining that from 2008 to early 2013, Goldman Sachs FX traders participated in multi-party electronic chat rooms, where traders, sometimes using code names to discreetly share confidential customer information, discussed potentially coordinating trading activity and other efforts that could improperly affect currency prices or disadvantage customers. 

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.

Aston Capital Management Gets Swap Dealer Status

Aston Capital Management is now a provisionally registered US Swap Dealer.

The National Futures Association (NFA) notified the firm and updated its website to reflect this news on April 2.

According to the NFA website: “A swap dealer (SD) is an entity that holds itself out as a dealer in swaps; makes a market in swaps; regularly enters into swaps with counterparties as an ordinary course of business for its own account; or engages in any activity causing the entity to be commonly known in the trade as a dealer or market maker in swaps.”

Will the FX Global Code Gain Traction in Mexico?

A new survey from Bloomberg suggests that authorities in Mexico may face an uphill struggle when promoting the FX Global Code of Conduct amongst the local market.

In the survey, which Bloomberg says more than 100 financial professionals in Mexico participated in, 39% of respondents said that they will not endorse the Code. This is in comparison to 40% who said that they are reviewing the Code, 8% who said they have signed the letter of commitment to the Code’s principles and 12% that said they have implemented Code training. 

“What the survey results tell us is that many people still do not understand what the FX Global Code of Conduct is and does,” said Mariana Suarez, Bloomberg’s Head of Sales for Mexico and Central America.