RBS to refocus CIB Investment bank on core market segments (plus updated FX scorecard)

RBS released full 2014 figures today, reporting £3.5bln loss (following £4bln write-down on US Citizens Bank), with operating profits were £3.5bln.

Significantly, RBS is further downsizing its Corporate and Investment Bank (CIB), in order to ‘create a more focused corporate and institutional bank’.

The report identifies the drivers for change being:

  • Returns are too low Costs are too high
  • Capital usage is too high
  • Operating risks are outside of our go-forward risk appetite

The CIB will reduce country operations from Continue reading

FX Platforms – Jan 15 vols: Spot vols up 27% at Reuters

The major platforms have now released their Jan 15 volumes, with all platforms spot volumes reporting very strong figures, driven by the increased volatility resulting from the SNB surprise move to withdraw the EURCHF 1.20 floor.

Reuters Spot: $135bn/day in Jan, up +27.4% on Dec, and unchanged compared to Jan 14 level of $135.1bn/day.

Reuters Other Products: $263bn/day in Jan, up +7.8%  on Dec, and up 10.6% compared to Jan 14 level of $238bn/day.

Reuters total: $398bn/day in Jan, up +13.7% on Dec, and up some +6.8% compared to Jan 14 level of $373bn/day.

EBS $129.6bn/day in Jan, up +23.7% on Dec, and +48.1% compared to Jan 14 level of $87.5bn/day.

As reported previously Continue reading

EBS reports strong Jan 15 vols and releases new HTML5 ‘everything EBS’ platform

EBS has reported a strong start to the year, with Jan 15 vols +23.7% at $129.6bln/day, some 48.1% up on Jan 14.

The increase was driven in part by the increased volatility seen in the wake of the SNB decision to let the CHF appreciate against the Eur, which according to sources saw EBS volume that day nearly triple to $300bln. EBS volumes have now almost doubled compared to the low of $69bln/day seen in Apr 14.

EBS Jan 15

EBS Jan 15 FX volumes

We will wait to see how EBS figures compare with Reuters who should report their Jan volumes next week.

January figures also coincide with EBS announcing they are launching a new HTML5 platform, dubbed Continue reading

ESMA provides clearing exemption for NDFs (for now)

Back in October 14, European Securities and Markets Authority (ESMA) published a consultation paper on the mandatory clearing of swaps and Non-Deliverable Forwards (NDFs). At the time it was thought the publication was significant, coming a week before the Global Markets Advisory Committee (GMAC) of the CFTC, was to hold a public meeting to discuss whether a clearing mandate is appropriate for NDF’s, with a particular focus on how such a mandate would impact foreign exchange contracts. It was felt that the timing could signify a convergence between Europe and US on NDF clearing mandates.

However, on the basis of feedback received to ten key questions, ESMA has decided to not propose a clearing obligation on the NDF classes at this stage. ESMA believes that more time is needed to appropriately address the main concerns raised during the consultation, although there is still a possibility to propose a clearing obligation at a later point in time in order to take into account further market developments.

Below is a summary of the questions and some of the key responses from the report:

1) Clearing Obligation procedure
2) Structure of the NDF classes: Participants felt that the definition of what constitutes an NDF (currency pair, settlement currency, settlement type and maturity) was not broad enough, and that the criteria should also consider the documentation under which the contract was concluded. Specifically it was felt that only contracts which are traded under non-modified EMTA templates should be subject to the clearing obligation. This would ensure that only standardised classes were considered for clearing.
3) NDF classes proposed for the clearing obligation: Reservations towards mandatory clearing for NDF (or at least mandatory clearing under the proposed time frame) for two main reasons: a) The clearing offer for this asset class is still in its infancy and b) Lack of international convergence
4)  Maximum maturity of the NDF contracts
5)  Criteria for the determination of the dates
6) Categories of counterparties
7) Dates of application of the clearing obligation
8)  Frontloading and the minimum remaining maturity
9) Other comments
10) Cost Benefit Analysis

Full consultation feedback Statement paper here

Central Bank FX Semi annual surveys Oct 14: Record vols seen in 5 out of 6 top centres

The major central banks reported their latest semi-annual FX survey results for Oct 14 today.

Record high daily volumes were reported for London ($3.097bln/day +12.3%), NY ($1,096bln/day +35.1%), Singapore ($481bln/day +30.1%), Japan ($374bln/day +3%) and Canada ($67bln/day +8.5%) with only Australia showing a fall ($151bln/day -14%). London once again dominating the FX market, with volumes in London approaching 60% of global daily volumes.

Top 6 FX centres Apr-Oct 14


Top 6 Global FX centres

Top Global FX Centres (based on Central Bank FX Semi annual FX survey data for Oct 14)

A quick look at the trend in volumes by instrument shows that Continue reading

CLS FX Dec14: Vols down -6% to $4,870bln/day

The CLS settlement system has reported a -6% end of year drop in the average daily value of FX trades settled through their platform in Dec 2014, and some -18% lower from the record $5,940bln/day set in Sept 14.

The monthly drop is roughly half the average fall seem in the major platforms that reported last week, which saw falls ranging from 11-15%.

Details from the platform and charts are as follows:

CLS value of instructions submitted: $4,870bln/day, down -6% on the $5,170bln/day in Nov 14, and unchanged compared to Dec 13.

CLS number of instructions submitted: 1,223,109, was down -12% on 1,385,840 in Nov14, although still +23.7% up on Dec 2013 level of 988,674.

Average Trade size: $3.92mln was up 7% on the $3.73mln in Nov 14 and down -19.2% compared to the $4.93mln in Dec 2013.

Note: CLS reports both sides of an FX transaction. To adjust the average daily value data to equate to the same reporting convention used by the Bank for International Settlements and the semi-annual foreign exchange committee market reports, the gross values should be divided by two.

CLS Dec 2014

CLS - charts Dec 2014

CLS Data: Value and number of transactions submitted to CLS in Dec 2014

Major FX Platforms report Dec 14 volumes: Spot vols down across the board between 11-15%

The major platforms have now released their Dec 14 end year volumes, with all platforms spot volumes down as follows:

Reuters total: $350bn/day in Dec, up +0.9% on Nov, and up some +9.2% compared to Dec 13 level of $321bn/day.

Reuters Spot: $106bn/day in Dec, down -11.7% on Nov, and only up 5% compared to Dec 13 level of $101bn/day.

Reuters Other Products: $227bn/day in Dec, up +7.5%  on Nov, and up 11.4% compared to Dec 13 level of $219bn/day.

EBS $104.8bn/day in Dec, down -14.8% on Nov, although still up a respectable+47.6% compared to Dec 13 level of $71bn/day

Hotspot: $27.7bn/day in Dec, down -15.5% on Nov, and almost unchanged at +0.4% compared to Dec 13 level of $27.6bln/day

Year-end slowdown affected all platforms, and nothing particularly interesting to note here, although the battle between Reuters and EBS continues, with EBS having eroded a near $50bln/day volume advantage that Reuters had built up this year as can be seen from the last chart below.

According to CLS the FX settlement platform, volumes surged on black Thursday to $9.2trn/day, and sources at EBS commented in a WSJ article that EBS volume nearly tripled to $300bln that day, so it will be interesting to see whether Reuters announce their volumes for that fateful day, and how they compared.

26 Jan Update: According

Reuters, EBS & Hotspot Dec 14

Reuters, EBS & Hotspot -chart Dec 14

Reuters, EBS and Hotspot FX volumes Dec 2014

Reuters minus EBS

Reuters-EBS volume differences Jan 13-Dec 14


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