Tag: RMB

RMB

In the FICC of It

There’s something for everyone in this week’s In the FICC of It podcast as Colin Lambert and Galen Stops traverse the US legal system, trading, crypto and China.
Listen in as Lambert explains why he is mystified at the prosecution’s flip-flop in the Mark Johnson case and angry at the FX industry’s previous lack of effort to explain how markets work to the US legal authorities; and Stops takes a look at a new report n his favourite industry – CTAs. Having had the data explained to him, Lambert also thinks he knows why some CTA sectors are doing well and some aren’t, so that’s another of his “theories” then…
Our podcasters then move onto debate whether crypto markets will evolve to an OTC model and whether this would be a good thing for attracting institutional money to what is still a relatively nascent market.
Stops closes out by reporting from an analysts’ briefing this week that highlighted a change in approach on the part of China to its programme of liberalisation of the yuan.

Traiana, HKEX in Clearing FX Deal

Traiana is now providing direct central clearing connectivity to the Hong Kong Exchanges and Clearing’s (HKEX) OTC Clearing Hong Kong (OTC Clear).Market participants can now access HKEX’s OTC Clear service to clear USD/CNH and USD/HKD FX forward and swaps, via Traiana’s Clearing Hub (CCP Connect), which provides affirmation, matching and trade processing.The OTC Clear deliverable FX service can be used to mitigate settlement risk that arises when payments and receipts of currencies occur at different intervals during a standard bilateral settlement process. The service can also be used to offset settlement exposure with its clearing house cross currency swaps service.

China Shifts Approach to RMB Internationalisation

China has fundamentally changed its approach towards RMB internationalisation, according to BNP Paribas China’s chief China economist, XD Chen.Speaking at a briefing in New York today, Chen explained that for the past five years the authorities in China had one main policy stance regarding the renminbi: to promote the internationalisation of the currency.However, he then added: “But now this policy stance, in our observation and together with our policy consultation, is no longer. In other words, they’re not going to use the government’s force to promote renminbi internationalisation, instead they will follow market forces.”

The Evolution of an Emerging Market

Greater automation in emerging markets is widely seen to be merely a matter of time. Profit & Loss talks to Darryl Hooker, former co-head of EBS Brokertec Market and currently consultant at Capitolis about his experience in helping bring a larger ‘e’ focus to Russia and China.

Profit & Loss: Can you give us an insight into the thinking that saw you focus on first Russian markets and then China when you were at EBS? What are the main signals that identify a frontier market ready to move into the mainstream of EM?

Darryl Hooker: A common pitfall in emerging markets is to make the mistake of considering them collectively despite the fact that they have very particular and specific nuances.

FX Volumes Dip on SGX Despite USD/CNH Surge

The total volume of FX futures traded on SGX in July was 1.7 million, down 8% month-on-month, despite the exchange seeing record volumes in its USD/CNH futures.

Although volumes were down last month compared to June, they were still up 124% year-on-year. The monthly decrease appears to have been driven by a decline in volumes on SGX’s INR/USD futures, with trading down 23% m-o-m but still up 81% y-o-y.

The bright spot for SGX in July was trading on its USD/CNH futures, as a record $61.5 billion in notional was traded on these contracts, bringing the total volume of these contracts cleared to over $255 billion this year.

NEX Veteran to Leave

Profit & Loss understands that Darryl Hooker, global head of metals and spot and head of FX EMEA at NEX Markets is leaving the firm.
Hooker, who has been with the firm for 18 years having joined its predecessor Icap in 2000, is believed to be leaving this week.
Hooker was co-head of EBS Brokertec Markets before the rebranding to NEX, having also served in a variety of roles including global head of new and emerging markets. During the latter he helped drive the project to establish EBS as the prime ECN for Chinese renmimbi business.

R5FX, Shanghai Clearing House to Launch FX Trading Platform

R5FX and the Shanghai Clearing House (SHCH) will launch a new electronic marketplace next month, in a move which will enable Chinese banks to directly trade offshore RMB with London for the first time. 

The platform, called Connect, is due to go-live on 18 December – following confirmation from the People’s Bank of China. Eight Chinese banks will be participating from launch, with further banks and institutions to be added at a later date.

The products available for trading in this first phase will be USD/HKD, GBP/USD and EUR/USD. Profit & Loss understands that CNH and the remaining G10 currency pairs may also be added towards the end of Q1 2018. 

RMB Internationalisation: Opportunities and Challenges

Celent has released a report today that documents the progress being made in the internationalisation of the renminbi (RMB), and outlines the opportunities that this represents for market participants, as well as the challenges it presents.

Discussing how investment managers can benefit from RMB internationalisation, the report says that they should consider adopting new strategies to respond to greater short-term volatility in the currency.

It notes that investment managers have traditionally looked to gain from China’s one-way currency appreciation and hold bonds till maturity.

“But Chinese regulators’ abandonment of circuit breakers and other protective measures means traditional expectations of regulatory intervention may not hold going forward, opening up more opportunities for short-term price fluctuations,” says the report.

Are Markets Headed for a Nasty Shock?

When assessing which large tail risk events are likely to take place in 2017, speakers at Profit & Loss’ Forex Network London emphasised that there are other risk factors being overlooked that might have a greater impact on financial markets.

“Like last year, the tail risks this year are quite high compared to normal,” said Colin Harte, strategist and senior portfolio manger at BNP Paribas Investment Partners. “There are some quite material risks that – if they come to pass – could have a significant impact on markets.”

He noted, however, that many of the expected tail risk events from 2016 were less dramatic than expected in the end: sterling took an obvious hit after the Brexit result, but soon became range-bound again, while the Trump election victory actually led to a rally in the equity markets.

Bloomberg Continues Push into China

Bloomberg is continuing its push into China with the announcement that Haier Finance has adopted its FX electronic trading platform (FXGO) and Multi-Asset Risk System (MARS).

A subsidiary of the Chinese home appliance company Haier Group, Haier Finance provides financial services including deposits and loans, financial advisory, insurance and investment services. The firm officially adopted FXGO and MARS in the third quarter of 2016.

“Bloomberg’s FX solutions have enhanced our efficiency by allowing us to streamline our workflow from front to back,” says Zhang Bing, head of trading at Haier Finance.