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Articles tagged by FCA

FEMR Implementation Report Sees “Significant Progress” The past year has seen “significant progress” in the implementation of the Fair and Effective Markets Review (FEMR) recommendations; however, “the job is far from being done” as a “lack of trust in financial markets” remains and the focus is ...
FCA Cites “Real Improvements” in Banks’ FX Controls Alongside last week’s publication of an update on the Fair and Effective Markets Review (FEMR), the UK’s Financial Conduct Authority (FCA) has separately published a progress report on its own FX remediation programme. The programme, which was launched ...
An Incomplete Picture: Spotting the Spoofer in FX The incarceration of a trader convicted of spoofing has heightened awareness of the practice, but how hard is it to spot and how prevalent is it in FX? Colin Lambert investigates. “You have to be pretty desperate to resort to spoofing markets – especially on exchanges where it’s nigh on impossible to shield your activities,” argues a senior electronic trader in London. “Even in OTC markets it’s not easy to get away with given the MIS capabilities of firms today.”
FCA Targets “High Risk” CFD Industry The UK’s Financial Conduct Authority (FCA) has proposed stricter rules for firms selling contract for difference (CFD) products to retail customers to improve standards across the sector and ensure consumers are appropriately protected. The FCA says that analysis of customer accounts in the CFD sector indicate that 82% of users lose money. It adds that an increase in the number of firms in the CFD market has led the FCA to air concerns that more retail customers are opening and trading CFD products that they do not adequately understand.
Nex SEF Gets CFTC Approval Nex Group has received regulatory approval from the Commodity Futures Trading Commission (CFTC) for a new Swap Execution Facility, Nex SEF (Nex SEF). EBS is the technology provider to Nex SEF, but the trades are executed on the latter of these two platforms. The new SEF is expected to have onboarded customers and be live for trading in the second quarter of financial year 2017-2018. Nex says that its new SEF will serve as a platform that can be used to launch additional products in the future.
FCA Holds Off Retail Rule Change as ESMA Considers Stronger Intervention Following an announcement from the European Securities and Markets Authority (ESMA) that it is considering exercising its product intervention powers to address its concerns over the use of contracts for difference (CFD), rolling spot FX and binary options contracts by retail traders, the UK’s Financial Conduct Authority (FCA) says it will delay its own rules on the products. In a statement, ESMA says it has been concerned about the provision of speculative products such as CFDs, rolling spot FX and binary options to retail investors for a “considerable period of time” and has conducted ongoing monitoring and supervisory convergence work in this area.
And Finally... Regular readers know that the increasingly blurred lines between retail and institutional FX markets have bothered me for years. Too many customers are unsuccessful in the retail sector and the reputational risk for the entire industry is off the scale. We need to be asking many more intrusive and difficult questions of these firms – for if we do, I think the answers – assuming they are given honestly – will highlight the scale of the problem and help deliver a solution.
NEX SEF Goes Live

in News, Brokers

NEX SEF Goes Live

NEX Group’s Swap Execution Facility (SEF) went live at the start of this week, the firm announces – it received approval from the Commodity Futures Trading Commission (CFTC) in April. Registration with the CFTC and the UK’s Financial Conduct Authority (FCA) will allow the SEF to service customers and traders from the US and European Economic Area. Nex SEF has also received exemption from the requirement to be recognised as an exchange from the Ontario Securities Commission and is therefore approved for servicing customers in Ontario.
FCA Warns on Binary Options; Cryptocurrency CFDs The UK’s Financial Conduct Authority (FCA) has issued two warnings to retail investors over binary options and cryptocurrency contracts for difference (CFDs). On binary options, the FCA says it has concerns about the products – namely its data suggest that a majority of consumers lose money when trading binary options. “To make a profit, a consumer is likely to need both a sophisticated knowledge of financial markets and to ‘beat the odds’, which is always difficult to do,” the FCA says.
And Another Thing... I learnt a new phrase last week, “algo-baiting”, thanks to a former bond trader being fined £60,000 by the UK’s FCA for doing just such a thing. Reading the notice issued by the FCA, however, I find myself wondering why what the trader had done that was deemed illegal? At face value it looks like an open and shut spoofing case but with spoofing there generally is not an intention to deal - in this case I would argue there could have been.
Integral Granted MTF Status Integral Development Corp has received approval from the UK’s Financial Conduct Authority (FCA) to operate a multilateral trading facility. The firm says the MTF, the technology for which is based upon its Open Currency Exchange (OCX) platform, includes all the features and services necessary for clients to conduct MiFID II compliant trading. It adds the MTF will provide enhanced surveillance practices, monitoring procedures, and execution analysis for transparent and compliant trading of FX forwards, swaps, and NDFs. Integral says it will deliver its entire platform with services necessary to meet MiFID II requirements including assistance with pre-trade and post-trade transparency, surveillance, TCA, reporting, and record keeping.
Former RBS Trader Banned, Fined, by FCA The UK’s Financial Conduct Authority (FCA) has fined former Royal Bank of Scotland (RBS) interest rate derivatives trader, Neil Danziger, £250,000 and banned him from performing any function in relation to any regulated financial activity. Danziger was primarily a forward FX trader on the yen book at the bank but he also was RBS’s substitute submitter for the yen London Interbank Offered Rate (Libor) rate set, the activities investigated by the FCA. The FCA says it has found that Danziger was “knowingly concerned in RBS’s failure to observe proper standards of market conduct.
FCA Approves New Change as FX Benchmark Administrator New Change FX (NCFX) has been approved by the UK’s Financial Conduct Authority (FCA) as the first benchmark administrator for live FX spot markets under EU Benchmark Regulation 2016/1011.  NCFX produces live, consolidated, registered spot benchmarks for FX market customers. “The introduction of the NCFX benchmarks means that live FX execution can now be benchmarked against a recognised rate. FX deals can therefore be executed and benchmarked as they arise, rather than waiting for fixing windows. This gives freedom and flexibility to investors and their executing banks. NCFX benchmark rates are calculated 20 times a second so market users can act in the market whenever they choose, rather than being constrained by benchmarks that are calculated infrequently,” says NCFX in a release issued today.
And Finally... The FX industry has been caught out by the advance of technology before, so although the report looks at the issue across broader markets, the FCA’s study on algorithmic trading should be essential reading for anyone senior in the industry. What concerned me reading the report was further evidence of a lack of understanding about the potential impact and risks associated with using algos at the highest level. Of course, whilst highlighting these themes I have grabbed the opportunity to suggest silly names for algo strategies!
Former Deutsche Trader Fined over Libor The UK’s Financial Conduct Authority has fined Guillaume Adolph £180,000 and banned him from performing any function in relation to any regulated financial activity. Adolph formerly worked at Deutsche Bank as a short-term interest rate derivatives trader, trading products referenced to CHF and JPY Libor and for a period of time, acted as the primary JPY Libor submitter for Deutsche. Adolph was initially charged by the FCA in January 2014, however proceedings were stayed due to the ongoing criminal investigation of the UK’s Serious Fraud Office into certain individuals who formerly worked at the bank.
FCA Outlines Plans for Wholesale Financial Markets The UK’s Financial Conduct Authority has outlined its plans for whole financial markets in its 2018-19 Business Plan, which was published this week. The FCA notes that wholesale financial markets are “complex” and have undergone large-scale and complex regulatory change, including the Markets in Financial Instruments Directive (MiFID II) and the Market Abuse Regulation (MAR). It adds that technology and innovation are affecting markets’ business models and their users have different levels of sophistication. It highlights insider trading, market manipulation and other forms of market abuse as activities of interest.
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.
In the FICC of It In this week's In the FICC of It podcast, P&L's editor Galen Stops tries to rein in a punchy managing editor Colin Lambert. So to find out what is a "social experiment" and what report "is a propaganda exercise" listen in. Along the way there will be more considered opinion and insight on the changing dynamic of the LP-client relationship, including a quick way to identify changing LP behaviour, as well as a look at what is, at face value, a surprising deal involving FXall and 360T.
UK Gets New Libor Transition Head The Bank of England and the UK’s Financial Conduct Authority (FCA) have announced the appointment of Tushar Morzaria as the new chair of the Sterling Risk Free Reference Rates Working Group. The group was established in 2015 to implement the Financial Stability Board's recommendation to develop alternative risk-free rates (RFRs) for use instead of Libor-style reference rates. In April 2017, the Working Group recommended the Sonia benchmark as their preferred RFR and since then has been focused on how to transition to using Sonia across sterling markets.
FCA Seeks to Cement CFD, Binary Options Rules The UK’s Financial Conduct Authority (FCA) has issued two consultation papers ahead of the imposition of rules to address what it terms “harm to retail consumers from the sale of certain complex derivative products”, specifically retail –orientated contracts for difference (CFDs) and binary options. The proposed rules would apply to firms acting in or from the UK and ban the sale, marketing and distribution of binary options, as well as restrict the sale, marketing and distribution of CFDs and similar products to retail customers.
B2C2 Gets Green Light for Crypto CFDs B2C2, an OTC cryptocurrency liquidity provider, has been authorised by the UK’s Financial Conduct Authority (FCA) to arrange and deal in Contracts for Difference (CFDs) with eligible counterparties and professional clients. The FCA authorisation will allow B2C2’s clients to gain exposure to cryptocurrency markets via the firm’s CFDs.Max Boonen, founder and CEO, says: “We are excited to have received authorisation from the FCA to introduce a cryptocurrency CFD product. Eligible counterparties and professional clients can now gain derivative exposure to the cryptocurrency markets, benefiting from the competitive pricing and liquidity they’re accustomed to receiving from B2C2, while avoiding the risks associated with crypto custody.”