HSBC
I may, not for the first time, be reading too much into a brief sentence, but I found it significant in my conversation with Simon Potter, outgoing chair of the Global FX Committee, that when talking about the review of the Code he mentioned “the handling of larger orders” as one area of possible review. […]
P&L Report Card If there is one intangible benefit in firms allocating budget to the FX businesses it is that it allows people to think innovation once more. After years of throwing resources at seemingly ever-increasing regulatory demands, there is a sense that last year – and this – the shackles are finally off and […]
Written testimony has been lodged relating to former HSBC FX trading head Mark Johnson’s appeal against his conviction for wire fraud in the US and it contains a few surprises – some of which may indicate stronger implications for the FX industry than the original trial, as Colin Lambert discovers.The original trial of HSBC’s former global head of FX trading Mark Johnson was widely seen in the FX industry as being, aside from the outcome on his personal circumstances, a single issue case – what would the US legal system say about pre-hedging? The initial outcome – which is now being appealed – was a conviction and a jail sentence under the very broad umbrella of “wire fraud”, a decision that was seen as potentially having an impact on the FX Global Code, which explicitly (under certain circumstances), endorses the practice.
Written testimony has been lodged relating to former HSBC FX trading head Mark Johnson’s appeal against his conviction for wire fraud in the US and it contains a few surprises – some of which may indicate stronger implications for the FX industry than the original trial, as Colin Lambert discovers.The original trial of HSBC’s former global head of FX trading Mark Johnson was widely seen in the FX industry as being, aside from the outcome on his personal circumstances, a single issue case – what would the US legal system say about pre-hedging? The initial outcome – which is now being appealed – was a conviction and a jail sentence under the very broad umbrella of “wire fraud”, a decision that was seen as potentially having an impact on the FX Global Code, which explicitly (under certain circumstances), endorses the practice.
Capitolis has announced that Citi and HSBC are the first FX prime brokers to go live on its novation service.The two banks were live in December 2018 and contributed to bringing the service to market alongside Capitolis. The service, called Capitolis Novation, is a technology platform that automates manual workflows in both FX prime broking and bilateral trading, working collaboratively to provide capital efficiencies for the FX market. The service aims to help reduce overall balance sheet notional and risk exposures that banks currently employ to meet their regulatory capital requirements.
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.
I have previously argued that the FX industry needs to pay attention to the outcome of the Mark Johnson trial. Reading through the appeal documents, however, indicates the stakes have been raised. The prosecution’s original case was, in my opinion, flawed when looking at how the FX market works, but the new charges take this to a new level and they throw into a harsher light the reluctance of certain trade associations to engage and educate the US authorities earlier in this case – we can only hope it is not too late.
The defence team conducting former HSBC FX trading head Mark Johnson’s appeal against his conviction in late 2017 have filed their appeal brief to the US Court of Appeal, in which they argue that the US Government’s brief offers, “…the latest flavour of the prosecution’s many ever-shifting, imprecise, and contradictory attempts to explain just what, exactly, the crime here was, and it exposes why there was none.” It highlights a series of new arguments put forward by the Government that were not heard by the jury, as well as a series of back tracks by the prosecution side.
In football parlance it’s a tap in for Galen Stops and Colin Lambert in this week’s podcast as they have more academic-research-that-states-the-obvious to poke fun at. Listen in as they discuss last week’s report on the Swiss National Bank debacle in 2015 as well as the FX market’s handling of the Brexit vote. They also take a look at the potential impact of last week’s HSBC announcement that it had settled FX trades using distributed ledger technology, as well as the mysterious disappearance from marketing material of two asset classes at a recent platform media day.
HSBC has now settled more than three million FX transactions and made more than 150,000 payments worth $250 billion using distributed ledger technology (DLT), it announced today.The bank’s DLT solution, called HSBC FX Everywhere, has been used for the past year to orchestrate payments across HSBC’s internal balance sheets.HSBC highlights three key benefits of the solution. The first is that it provides a shared, single version of “the truth of intra-company trades”, from execution through to settlement, which reduces risk of discrepancy and delay. Secondly, it means that confirmation and settlement is automated by matching and netting transactions, which reduces costs and reliance on external settlement networks.
