US leaders march on Swiss banks’ global territory
Ana Botín’s whirlwind start
The convulsions after the SNB’s decision to cease pegging the Swiss franc to the euro are still being felt, with regulators in Europe and Australia debating the merits of tougher controls on leverage in FX markets for retail investors.
Foreign-exchange broker FXCM’s CEO calls for wider adoption of circuit breakers on FX platforms to prevent another Swiss franc shocker as seen on Black Thursday, but critics question whether it is the right solution and even suitable for an over-the-counter (OTC) market such as FX.
In its fair and effective markets review, the Bank of England has acknowledged end-users are largely ill-suited to the task of combating market misconduct in FICC markets. But opinion remains deeply divided over how best to strengthen oversight in wholesale markets, and which regulatory body should lead the charge.
Volume on anonymous platform EBS Market has increased during recent volatility, while disclosed EBS Direct continues to gain traction in Commonwealth currencies.
Volatile currency markets in 2015 threaten to erode international investors' portfolio returns on traditional equities and bonds, highlighting the need for a strong hedging strategy, advise market participants.
China’s currency might look overvalued, but that is only half the story.
FX volatility highlights the need for corporates to stick to long-term hedging programmes, so that they can protect profits and their credit ratings. Some firms are also positioning themselves for opportunistic trades and upgrading their treasury and FX management systems.
The need of banks to raise awareness and staffing levels around the renminbi within their own organizations looks set to be key as the battle for business heats up.
International banking alliances offer a number of benefits to treasurers – from FX hedging to cash pooling – while Sepa and the rise of non-bank payment providers have yet to diminish their allure.
After the shock removal of the Swiss peg to the euro, speculators are testing the DKK peg, though, for now, the central bank is well-placed to withstand the pressure.
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.
Russia has been caught in the eye of a perfect storm. Battered by falling oil prices, US and EU sanctions and a dramatic market correction as the rouble was allowed to float, the currency has been in free-fall and liquidity has largely evaporated, with many brokers ceasing rouble trading altogether.
Despite its extension to FX last year, market participants acknowledge it is likely to be some time before they feel the full impact of the liquidity-enhancing trading enablement standardization initiative (TESI).
Despite the strengthening dollar and lower oil prices, tactical opportunities in emerging market (EM) foreign exchange abound. The choice of funding currency will be crucial in driving returns in the asset class, say investors.
Opinion is divided on how automation of trade-finance processes is changing bank practices in relation to FX reporting and processing.
FX platform Hotspot will launch a European matching engine later this year, after its acquisition by Bats Global Markets.
Bank-backed spot FX trading platform is seeing increased participation from buy-side firms, but further growth is still top of its agenda.
International investors are increasingly looking at Latin America’s local currency markets, but foreign exchange volatility makes the buyside wary of losing any potential gains, as has happened with some recent deals. The mixture of currency and credit risk may be too heady a cocktail for some.
As China gradually loosens its grip on its FX regime, an ostensibly overvalued RMB is expected to fall back in line with global currencies, presenting a range of opportunities for traders, ranging from USD/CNH spot positions and the options market, to punts on the CNY-CNH differential.
After the events of Black Thursday, the CEO of crest-fallen FXCM, the FX broker, discusses the shake-up in its business model, the future for retail flows, and lashes out at the institutional FX market structure.
For corporate treasurers, currency volatility is heightening the importance of updating FX hedging policies, amid rising costs.
What goes up must come down, even the renminbi. Having appreciated by more than 30% since 2008 against a trade-weighted basket, there is growing consensus that 2015 will see further falls in the Chinese currency.
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The sovereign’s risk score is sliding again, raising doubts over its safety.
How did the relationship of the Swiss franc and the euro turn out to be purely platonic? Conscious uncoupling was perhaps inevitable.
The retail FX market is ripe for further consolidation as brokers that successfully navigated the volatility of the Swiss franc cap prepare to swoop on strugglers that took a hit, says the CEO of US forex broker Gain Capital.
The eurozone’s economic fortunes should start to recover with the arrival, at last, of full-blown quantitative easing. As the world’s leading currencies are set for a race to the bottom, it could be time to buy gold.
The SNB's removal of its currency floor with the euro and a rising greenback call into question the strength and wisdom of currency pegs elsewhere, especially in the Gulf and Hong Kong.
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.
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