CLS FX vols Oct14: Vols down -10.9% to $5,290bln/day, whilst setting new record transactions of 1.465mln/day

The CLS settlement system has reported a -10.9% drop in the average daily value of FX trades settled through their platform in October 2014 compared to the record set in September, which is in-line with similar drops seen in Thomson Reuters and Hotspot volumes (although EBS bucked the trend with a 10pct rise).

However, whilst the value of trades has dropped, the number of instructions submitted was up 3.2% at a new record of 1.465mln instructions/day.

Details from the platform and charts are as follows: Continue reading

Thomson Reuters FX vols for Oct 2014: Down 10.4pct at $373bln/day

Thomson Reuters has released Oct 14 volumes for their FX platforms, which show an overall -10.4% drop in volumes, with Spot FX down a smaller -6.4%, in contrast to the strong performance from EBS last week which showed a healthy +10.2% gain in the same period.

Detailed volumes for the main platforms are now as follows: Continue reading

Regulators hit five leading banks with FX manipulation fines of over $3bln

The US (CFTC), UK (Financial Conduct Authority) and Swiss (Finma) regulators delivered a concerted and coordinated attack on the manipulations that have dogged the FX market for too long. The three regulators have hit five top global FX banks with fines totally over $3bln, but there is certainly more to come.

The banks: Citi, HSBC, JPMorgan, RBS and UBS  (Barclays are negotiating their own settlement with regulators), are all accused of manipulating the FX benchmark fixings, front running client orders and collusion. The authorities have also released what amount to damning transcripts from private FX chat rooms that clearly show that traders at these banks were colluding and front running client orders.

CFTC has released transcripts from the private FX chat rooms used by the traders, whilst the UK FCA provides similar examples of manipulation including a number of videos with graphics explaining what went on in the chat rooms ahead of the fixings, below is a visual from the video Continue reading

EBS & Hotspot FX vols Oct 2014: EBS up 10pct whilst Hotspot down 10pct!

EBS the FX platform owned by ICAP saw a strong performance in Oct 2014, with daily volumes rising 10.2pct to $129.9bln/day, the highest volumes since Feb 13 as volatility returns to the FX markets. Although at same time Hotspot (whose owners Knight Capital Group KCG are looking to sell the platform), saw Oct 14 daily volumes drop by 10.3pct to $34.3bln/day.

Actual figures for platforms are as follows: Continue reading

Are FICC markets ‘effective and fair’?

The Fair and Effective Markets Review (FEMR) has today published a consultation document (available on the Bank of England website), on what needs to be done to reinforce confidence in the fairness and effectiveness of the Fixed Income, Currency and Commodities (FICC) markets.

The Review was established by the Chancellor in June 2014, to conduct a comprehensive and forward-looking assessment of the way wholesale financial markets operate, to help to restore trust in those markets in the wake of a number of recent high-profile abuses, and to influence the international debate on trading practices.

To have lasting impact, the Review intends to Continue reading

Regional banks looking at Fixed Income SDPs

The evolving regulatory regimes and mandates of Dodd-Frank, Volcker Rule, EMIR, MiFid II and Basel capital reforms are designed to increase transparency, reduce risk and drive OTC derivatives markets onto transparent and regulated markets and platforms.

As a result banks are radically changing, (and indeed cannibalizing) business models within the fixed income (FICC) businesses, pulling back or even withdrawing from more capital-intensive inventory based market-making activities in products such as credits as they move towards what is called a ‘capital light operating model’.

Banks are now specialising around core skills, value propositions and client franchise, with a reduction in those willing to be flow banks, whilst others specialise in execution capabilities around an agency model. As a result, clients will be offered execution services from banks that will be a blend of principal/agency, bilateral/cleared, all of which requiring investment by dealers in new technology and connectivity pipes to execution venues such as SEFs, post-trade reporting (TR) repositories, central clearing houses (CCPs) and more.

So, what’s happening in Europe in terms of fixed income e-trading, and in particular what’s the future for single-dealer platforms in fixed income? Continue reading

24 European Banks fail ‘Stress Tests’ – 9 of them Italian!

The European Banking Authority (EBA), has released the results of ‘Stress Tests’ on 123 banking entities in Europe. The tests were designed to test the resilience of banks to adverse economic conditions.

The stress tests are based on common macroeconomic scenarios and a consistent methodology and unparalleled transparency into banks’ balance sheets and the potential impact of severe but plausible shocks on them.

The impact of the stress test is assessed in terms of the CRD IV Common Equity Tier 1 ratio for which a 5.5% and 8.0% rate are defined for the adverse and the baseline scenario respectively.

Some 24 banks (20%) failed the tests, of which 9 were Italian.

Here is a list of failed banks:

Banks that failed Stress Tests

 Shortfall for individual banks 2016 under the adverse scenario, capital raised or converted in 2014 and net shortfall (EUR BN) 

Full report available here, and individual bank stress test results and interactive visual display tools here.


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