The Financial Industry Regulatory Authority’s (FINRA) board of governors has approved the next step in what it terms its ongoing initiative to strengthen controls on brokers with a history of significant past misconduct.
The recommended changes also seek to ensure greater accountability for firms that choose to employ high-risk brokers.
FINRA says it plans to issue a Regulatory Notice seeking comment on the key proposals – which would strengthen protections for investors and range from additional disclosure on its BrokerCheck platform to heightened supervision of brokers appealing disciplinary matters.
This week's In the FICC of it Colin Lambert and Galen Stops discuss the implications of an FX market where intermediaries are sometimes more profitable than the risk-taking firms that are using their services, and the former - for once - is unsure who to blame for this state of affairs.
Elsewhere, a new report claims that the FX Global Code is already leading to greater transparency and improved behaviour in the FX market, but Lambert isn't buying this explanation, and Stops recounts comments from a recent interview with the FinTech firm, Cobalt, and asks: is the #blockchain fad over in FX?
The pair also explain that while, yes, hedge fund fees are in general still coming under downwards pressure, if you scratch beneath the surface there is evidence that investors are still willing to pay for alpha, they've just become savvier about analysing exactly what this constitutes.
A storm is brewing in the world of FX derivatives. Driven by, surprise surprise, Brexit uncertainty and Trump - there’s a sizable chunk of activity in GBP/USD options relative to the other major currency pairs.
Now the geopolitical landscape is of course backed into the price of the underlying currency pair, as opposed to the activity of the options. But the challenge is that as volumes increase, investment banks have to inevitably pay more in interdealer broker (IDB) fees. And the bigger the volume, the bigger the brokerage cost. Already under intense scrutiny to reduce costs wherever possible, this is a major headache that any desk head could do without right now.