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Articles tagged by HSBC

Reports: HSBC Executive Arrested in Currency Investigation A senior HSBC executive has been arrested in New York in connection to the US Justice Department’s FX rigging investigation, according to various news outlets. These reports are naming the person arrested as Mark Johnson, global head of FX ...
Waters Departs HSBC Betsy Waters is leaving her role as head of transactional FX for the Americas at HSBC to join global financial settlement solutions provider, Ripple, as US sales director. She starts at Ripple on September 6. At HSBC, Waters focused on cross ...
Bilateral Margining Driving Growth at LCH Clearing house LCH says its ForexClear service has seen 10 entities turn to actively clearing FX non-deliverable forwards in the past six months and that it has experienced a “significant” rise in cleared notional and trade count in 2016, with over $220 billion in notional cleared to date in September 2016. As of 23 September, the firm says over $1 trillion in notional has been cleared in 2016. “The uncleared margin rules that are coming into force across the world have been a catalyst for driving eligible and appropriate derivatives trades towards central clearing,” says Daniel Maguire, LCH’s global head of rates and FX derivatives.
Fed Seeks to Bar HSBC FX Traders The US Federal Reserve has moved to ban Mark Johnson, global head of spot FX trading at HSBC, and Stuart Scott, the bank’s former head spot trader for EMEA. According to court documents, the Fed argues that both mens’ continued service or participation in the conduct of the affairs of any relevant depository institution posed, poses, or may pose a threat to the interests of depositors of such institution, or threatened, threatens, or may threaten to impair public confidence in such institution.
Firms Missing Out on China Boom Despite RMB Uptake Nearly a quarter of global businesses are now using the renminbi (RMB) to trade with China, yet only two in five firms are aware of the trade initiatives being put in place by the Chinese government to facilitate cross-border trading, a HSBC Commercial Banking survey shows. Of the 1,600 decision-makers polled, 24% of companies that are trading with China say they now do so using the renminbi, up from 17% last year. But just 41% said they were aware of the government’s flagship Belt and Road initiatives, intended to generate USD2.5 trillion of cross-border commerce annually through policy and infrastructure developments, including plans to boost trading connectivity.
FX Trader Arrest: Do Not Pass Go, Do Not Collect $8m Two UK-based FX traders have been charged with wire fraud by the US Department of Justice, one of which has been arrested in New York. Galen Stops reports on the case. On July 19, Mark Johnson, the head of global FX cash trading at HSBC, was arrested at New York’s JFK airport in connection with an ongoing investigation by the US Department of Justice (DoJ) into currency rigging. Two days later, the DoJ officially brought charges against Johnson and Stuart Scott, former head of FX cash trading for EMEA at HSBC, for wire fraud.
US Seeks HSBC FX Dealer’s Extradition The US is to file for the extradition of HSBC’s former senior FX trader Stuart Scott from the UK to face charges under its broad wire fraud laws. According to a report first published by Reuters the US Department of Justice has filed a letter in a in Federal court in New York, stating the US’ intention to initiate formal proceedings to seek Scott's extradition after learning he did not wish to come to the United States voluntarily to face the charges.
BlackRock Selects HSBC as Custodian in China HSBC Bank (China) has been appointed as the onshore custodian bank for BlackRock, which has been granted approval by Chinese regulators to use the RMB to directly access China’s onshore securities market. Blackrock is the first US-based institutional investor to obtain a Renminbi Qualified Foreign Institutional Investor (RQFII) license. The RQFII programme provides global investors with direct access to invest into China’s capital markets. In June 2016, China allocated to the US a milestone RQFII quota of RMB250 billion, the largest quota globally outside of Hong Kong.
HSBC Broker Banned by Hong Kong Regulator A former broker at HSBC Broking has been banned for life by Hong Kong’s Securities and Futures Commission (SFC) after he illegally used clients’ accounts for trading in futures markets, including FX contracts. SFC says an investigation into activities by Lam Yuk Wai found that between September 2011 and July 2015, he had conducted over 100 unauthorised transactions in the accounts of seven clients, causing them to suffer substantial losses. It also finds that Lam deceived his clients by providing them with false and misleading account information.
The FoXy’s: Profit & Loss Readers’ Choice Awards Profit & Loss readers cast large numbers of votes this year for their preferred market makers and service providers. Last year was the first that we changed the category description from banks to market makers to account for the larger proportion of non-banks that now comprise an important part of market making, and this is again reflected in the results. The industry’s changing dynamics are starting to show. Voting, which spanned across time zones, was close in many categories, so we have listed the top three for each category to acknowledge the runners up.
Ferretti Handed New Role at HSBC HSBC has named Michael Ferretti to a newly created role as regional head of global intermediary services (GIS), Americas. With immediate effect, Ferretti will be responsible for structuring and developing HSBC’s FX prime brokerage business, while promoting GIS, including execution services, FX overlay and custody FX across the Americas. GIS provides clients with access to a comprehensive and advanced range of FX services, which support them through the lifecycle of their FX execution strategies and investments, the bank says. Ferretti will be based in New York reporting globally to Vincent Bonamy, global head of GIS, and locally to Gregory Pierce, head of markets, Americas.
HSBC Back in the Legal Firing Line HSBC is facing renewed legal action over alleged activities within its FX business. According to a report in the Financial Times, which cites legal filings it has seen, global macro advisory firm ECU Group is requesting a court order the bank to hand over deal logs and other information relating to three separate stop loss orders the firm left with HSBC is 2006. A source familiar with the matter tells Profit & Loss that ECU questioned the bank over market behaviour around the stops, but was told there was nothing untoward going on.
And Another Thing... I have been stating in recent months that one of the challenges for the FX industry will be promoting the “good news” story that it is reforming itself, while at the same time being on the end of negative headlines around actions that allegedly took place a decade ago. This week’s headlines around HSBC and the alleged running of stop losses is a case in point, but the accusation from ECU Group against the bank also raises an early question about one of the Global Code of Conduct’s principles.
Second Former HSBC FX Trader Arrested Stuart Scott, formerly head of FX trading EMEA at HSBC, has been arrested in London and appeared in court to face extradition to the US over allegations of front running and insider trading relating to the bank’s handling of a large order for one of its customers. Last year, Mark Johnson, global head of FX trading at the bank was arrested in New York over the same allegations and also faces charges of front running. Scott was arrested following a formal extradition request by the US Department of Justice (DoJ) and was bailed following the court hearing.
LCH Introduces SwapClear Client Account LCH has introduced a new type of client account within its SwapClear service. The account allows buy side clients to deliver collateral directly to the clearing house and to retain beneficial title to it. Segregation at an International Central Securities Depository (ICSD) ensures that such securities collateral remains client-specific. This aims to increase operational efficiency and also eliminates the transit risk arising where a client delivers collateral to the clearing house via its clearing member. JP Morgan is the first clearing member, and Aviva Investors is the first buy side client, to use this new account type. BNP Paribas and HSBC have also confirmed their readiness to support the new account structure.
HSBC’s Execution of Cairn Order “Followed Standard Industry Practice” Documents lodged by the team representing HSBC’s former global head of FX trading, Mark Johnson, in his defence against market manipulation claims, indicate that should a defence case be needed it will focus on proving that the bank – and Johnson’s conduct – was in line with standard industry practice. Johnson and former head of EMEA FX trading Stuart Scott have been charged by the US Department of Justice with allegedly front running a large fix order from Cairn Energy.
HSBC Fined by Fed for “Unsafe and Unsound” FX Practices The Federal Reserve Board has fined HSBC just over $175 million for the firm's “unsafe and unsound practices” in its FX trading business. The Fed says it levied the fine for deficiencies in HSBC's oversight of, and internal controls over, FX. It adds that the firm failed to detect and address its traders misusing confidential customer information, as well as using electronic chatrooms to communicate with competitors about their trading positions. The Board's order requires HSBC to improve its controls and compliance risk management concerning the firm's FX trading.
And Finally... Yet again as I find myself wondering about the timing of an official sanction. The Federal Reserve Board has fined HSBC for "unsafe and unsound" practices in its FX business, but in doing so has made an explicit link between the sanction and the ongoing trial of Mark Johnson in a US court. The Fed has "previous" for doing this of course, but last time the case in question was offshore and pending - this time it's happening down the road.
And Finally... With apologies to those loyal readers who normally part with their hard-earned cash to read this column, today I am going to make it “free to air” – mainly because I feel there is a message that simply has to get out there regarding FX execution and liquidity. If nothing else, the ongoing Mark Johnson trial in New York is highlighting how there are some seriously poor assumptions made in the wider world about how the FX market really operates.
And Finally... George Bernard Shaw is widely attributed with the comment that the English and Americans are two peoples separated by a common language, but the fact is language can very easily take on a different meaning in print than was originally intended when it was spoken or typed. The FX industry has not been taking enough care over the language it uses in communications and that is bait for underperforming clients trying to make a few extra bucks and lawyers sensing an easy kill.
No Answer to the Bitcoin KYC Problem in Sight Yet Despite a growing desire from some mainstream regulated financial services firms to trade bitcoin and other cryptocurrencies that are based off a public blockchain, there doesn’t seem to be many solutions on the horizon for the Know Your Customer (KYC) challenges this presents. At the Sibos conference being held in Toronto this week, Elisabeth Rochman, financial services chief technologist at Hewlett Packard Enterprise, noted that a lot of the “BigTech” firms – such as Google and Facebook – are behind the curve compared to banks when it comes to looking at use cases for blockchain.
Former HSBC Exec Found Guilty in FX Fraud Case Mark Johnson, the head of global FX cash trading at HSBC, has been found guilty of eight counts of wire fraud and one conspiracy charge by a US court. The jurors in the Eastern District Court of New York announced the decision on Monday. They found Johnson guilty of defrauding Cairn Energy by using information provided in confidence to HSBC to about a $3.5 billion transaction to front-run the order and generate trading profits.  Johnson was arrested at JFK airport in New York in connection with this case in June 2016, as Profit & Loss reported at the time. 
Scott Loses Extradiction Case Just a few days after his former manager Mark Johnson was found guilty of wire fraud by a New York jury, HSBC’s former head of European FX trading, Stuart Scott, has failed in his efforts to block his extradition to the US to face similar charges. Scott was charged by the US Justice Department, along with Johnson, of conspiring to defraud Cairn Energy with regard to a large sterling buy order for the firm in December 2011. Scott continues to deny he did anything wrong.
Deutsche Hires Two in New York Deutsche Bank has unveiled two hires for its North American FX business with the hire of Winfield Sickles and Donna DiDomenico. Sickles has joined from Tiger Management as a director in macro FX sales, based in New York. In addition to working closely with Deutsche’s institutional clients in the FX space, the bank says he will build on its cross-asset presence within the global fixed income client base. DiDomenico joins Deutsche in New York from HSBC to focus on the bank’s real money clients.
Banks Preparing to Settle EU FX Cartel Case? A report in the Financial Times says that eight banks are preparing to settle with the European Commission (EC) over allegations they formed a cartel to rig foreign exchange markets. The FT names six of the banks as Barclays, Citi, HSBC, JP Morgan, RBS and UBS and says two others are also preparing to settle. Any settlement may also provide extra impetus for the various legal firms seeking to replicate their success in winning civil settlements from banks in the US, in the European Union.