Citi – Last man standing
In-depth guide to renminbi globalization and potential repercussions of RMB growth
China’s shock RMB devaluation is unlikely to influence the Federal Reserve’s decision to hike, or otherwise, in September, but it could shape the path of subsequent increases, say analysts.
July 2015 |
Sponsored by Thomson Reuters
Final implementation of MiFID II is now just under 18 months away, yet the systems required to comply with the APA regime for pre- and post-trade reporting have not yet been built. Time is running out for the industry to assess the implications of these rules and to build the systems to comply, says Chris Leonard-Appleton at Thomson Reuters.
Emerging market (EM) FX is convulsing amid deflationary fears in China – the engine of EM growth – with the crash in its equity market illustrating the loss of control of its authorities. Meanwhile, the US inches closer to raising rates, while there is a risk of a technical blow-up among EM market-makers.
Analysts foresee a surge in corporate FX hedging activity, onshore and offshore RMB spreads to normalize, and a dip in dim sum issuance after the RMB’s shock adjustment.
The jury is out on whether the rise of tech-savvy non-banks means FX banks should adopt either a full service, market champion model or a simplified, limited service provider model, or something in between.
Euromoney can reveal more details emerge about IG’s alleged failures to deliver best-execution practice on Black Thursday.
Fuelled by regional treasury centres, electronification of FX is gathering pace in Asia.
Brokers and even the likes of Western Union are finding success in selling complex foreign-exchange options to small to medium-sized enterprises (SMEs) as banks retreat from servicing their smaller customers, but industry figures warn of a new ‘Wild West’ and the need for robust compliance standards.
P2P FX is rapidly gaining traction in the retail space, but even providers acknowledge it will take time to achieve significant volumes at the upper end of the corporate market.
While the central bank has ruled out further currency devaluation, markets continue to price in a weaker naira and the prospect of weak foreign capital inflows.
CLS, the provider of settlement services for FX, is inching closer to bringing the Hungarian forint into the fold of currencies it settles. This is just one of a catalogue of projects the group is working on, as it extends its settlement reach further across the FX world.
Six months have passed since the Swiss National Bank (SNB) scrapped its EUR/CHF 1.20 floor on January 15, unleashing a torrent of volatility and burning traders across the globe. What lessons should we remember from one of the craziest days in currency markets?
Renminbi internationalization a big opportunity; commodities counterbalance bank retreat.
Banks cannot afford to ignore the potential value of using insights from data analytics to personalize their FX services.
A number of extreme market events in recent months, combined with ultra-loose monetary policy by the world’s leading central banks, have changed the relationships between many asset classes, including the euro, Swiss franc, yen and sterling.
The Swiss National Bank has been under sustained fire in its attempt to defend its euro peg in recent years. Accordingly, the shift in the long-defended policy regime has shocked markets and will have far-reaching implications for the euro, eastern Europe and private banking, among other things. Euromoney investigates.
China’s economic downward spiral and weakening renminbi has dragged down neighbouring countries’ currencies and burnt investor appetite for emerging markets (EMs), but as currencies hit record lows and approach fair value, some market participants smell a ‘buying opportunity’.
Everyone knew a revaluation of renminbi was coming sooner or later, yet China's announcement, including reform of the dollar fixing mechanism, caught many off guard. The move left observers debating whether it was stimulating its economy or acquiescing to calls for exchange-rate liberalization.
Areas of the FX market where outsourced or cloud solutions have the potential to exert a greater impact include platforms that electronify the workflows associated with FX options trading, although bank conservatism is likely to prolong the lifespan of in-house solutions.
While substantial investment has been made in FX technology since the global financial crisis, there are areas of the market where its impact has yet to be felt.
FX traders have happily reported an increase in volatility during the past year, driven by the onset of divergent G7 central bank policies, after several years of relative abeyance. Though volatilities have softened in recent summer months, US rate rises from September could re-trigger turbulence.
Demand for single-dealer platforms continues to drive adoption of platform-as-a-service (PaaS) in the FX space, allowing smaller players to compete with the top-tier firms in pre- and post-trade services.
FX managers see growth in active currency hedging and alpha-generating FX funds in the years ahead.
Providers of FX transaction cost analysis (TCA) are proof ‘it’s an ill wind that blows nobody any good’, as they aggressively promote their services to institutional clients after fixing scandals.
In addition to facilitating more efficient payments, corporate cards can also help treasurers reduce their FX costs.
China’s bid to join the currencies in the IMF’s SDR basket is more than a footnote of interest only to economists. Policymakers should take note.
The benefits of in-house banks are evident to companies with businesses in multiple countries and substantial FX exposure, although implementation challenges can be considerable.
In the absence of an industry-wide consensus on faster settlement, availability of real-time FX conversion is likely to remain patchy – challenging the growth of immediate payments in corporate banking.
Opportunity for banks same as in FX; Goldman investment ‘a positive signal’
An in-depth guide to global currency wars; how Beijing is seeking to globalize the renminbi, through currency swaps and trade-financing facilities; the rise of the offshore bond market; and how fee-hungry banks are salivating at the prospect of the RMB’s growth.
The journey to financial process transformation DONG Energy
Sponsored by Nordea
Transparency in the FX industry
Looks Can Be Deceiving
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