Latin America

Latin America

Sovereigns shape up for differentiation

Essien’s Ecobank charm offensive

Essien’s Ecobank charm offensive

Albert Essien has brought much-needed calm to the bank

Fix fines fuel technology gold rush

Fix fines fuel technology gold rush

November 2014

Technology companies are gearing up for a potential gold rush around FX benchmark trading, amid expectations the multi-billion dollar fines imposed on banks last week will accelerate appetite for solutions to boost transparency, oversight and pricing, analysts say.

  • Riksbank under pressure for radical action amid deflation

    Despite cutting rates to a record low of 0% end-October, the Swedish Riksbank is under increasing pressure to launch more radical action – from asset purchases, QE and a dual mandate that includes employment, to a currency floor – as deflation fears grow.

  • Japanese portfolio flows support weaker yen but raise default risk

    Long-awaited changes announced last week to the composition of Japan's state pension fund portfolios, combined with increasing flows into foreign – predominantly US dollar – assets from retail investors and the insurance sector, should weaken the yen, but could be storing up problems in the long term.

  • Industry divided as regulators mull NDF clearing

    European proposals for mandatory clearing of non-deliverable forwards (NDFs) published in October seemed to be a decisive step toward a new framework for FX derivatives trading. However, responses to the consultation reveal deep divisions among FX market participants over the way forward.

  • Swiss franc volatility rises on gold vote

    Implied volatility on the Swiss franc has risen sharply in recent days, amid speculation that a referendum at the end of this month might force the Swiss National Bank to greatly increase its gold holdings.

  • South Korea battling for RMB spoils

    Backed by its robust trading relationship with China, the east Asian nation is the latest fledgling offshore renminbi hub. Market participants shed light on South Korea’s renminbi bid as internationalization of the Chinese currency gathers pace.

  • Big data comes to FX

    The analysis of structured, semi-structured and unstructured information from multiple sources, commonly referred to as ‘big data’, could improve FX pricing as well as reduce the potential for regulatory infringements, according to technology experts.

  • Dollar-equity correlation conjures up memories of dotcom boom

    The US dollar has become highly correlated with equities in recent months, conjuring up memories of the late 1990s and the dotcom boom, the last time the two asset classes rose together for such an extended period. But the differences between the two periods are as illustrative as their similarities.

  • 'Perfect storm' on the horizon for commodity FX

    Commodities could be facing further weakness, amid falling demand in China and elsewhere. All eyes are again on the US, where strong growth could support prices and prevent a further sell-off of commodity currencies.

  • FX swaps: Market players grapple with fragmentation risk

    Market participants are relatively relaxed about the impact of last year’s change to the US trading model, relative to the dire warnings from the global trade association for OTC derivatives, but global market fragmentation remains a risk.

  • Euro weakness seen as foreign investors hedge

    European bond and equity markets have been happy hunting grounds for foreign investors of late, and demand for European assets has helped support the euro, despite economic headwinds. However, bankers now report a shift to increased hedging of European exposures, leaving the region’s currency relatively unprotected against interest-rate differentials.

  • ECB commences covered bonds amid intrigue

    The ECB commenced its covered bonds purchasing programme last week, but no sooner had it started than rumours surfaced about a new plan to purchase corporate bonds. The fevered speculation demonstrates the lack of confidence in the ECB's existing plan, reviving questions about full-scale QE and its seniority in bond holdings.

  • Lira in the eye of the storm

    Turkey’s embattled investors can be forgiven feeling defensive, with economic challenges closing in on them from every side – from the Middle East crisis and strengthening dollar to the stubborn current-account deficit.

  • MFX Compass takes aim at the FX flow monsters

    Foreign-exchange technology provider MahiFX is seeking to challenge the dominance of the leading banks in the electronic FX market by eating into their share of trading and sales with second-tier banks and brokers.

  • Regulators seek to restore FX’s broken trust covenant

    The debate around how to strengthen the regulation of FX markets continues to rage. Advocates highlight examples of regulations that have benefited the markets in the long run, while detractors warn of unintended consequences and cite their own examples of risk-mitigating measures evolving naturally within the industry.

  • $4.2 billion FX fines are just the beginning

    Investment banks are keen to close the chapter on the foreign-exchange rate-rigging scandal after Wednesday’s announcement of regulatory fines totalling $4.2 billion, but more banks are expected to be fined and industry participants believe other nefarious practices should now be thoroughly investigated.

  • Russia central bank attempts rouble crisis circuit-breaker

    Analysts support the Central Bank of Russia’s (CBR) response to the collapse of the rouble, arguing it will shift market expectations and could stabilize the currency in the medium-term. In an interview with Euromoney before the move, a CBR official discusses the opportunities and challenges in the regime shift.

  • Hidden FX charges total $18 million a year – study

    Asset managers are still losing millions of pounds a year in hidden foreign-exchange bank charges, research shows, despite the advancement of money-saving solutions such as independent live benchmarks and transaction cost analysis (TCA).

  • Amrolia to lead Deutsche Bank digital drive

    FX market veteran takes up new role developing digital technology and reducing business complexity across Deutsche Bank’s markets platform

  • HFT: Flash boys come to Asia

    High-frequency trading is not confined to Europe and north America. Some Asia-Pacific countries are further along in embracing the strategy than others.

  • Social trading grows amid calls for regulatory oversight

    The full-scale disruptive potential of social trading is beginning to become clear, according to proponents. But there are fears that it is encouraging inexperienced traders to load up with risk in the pursuit of large returns and there have been calls for tougher regulation.

  • Brazilian real troubles far from over

    The decline of the Brazilian real to a nine-year low this week seemed to mark a nadir for a currency buffeted by economic and political concerns. Analysts say, though, that things could get worse before they get better.

  • Yen depreciation back on track after safe-haven strengthening

    A momentary strengthening of the yen amid market panic coincided with reports the government might be having second thoughts about key planks of the reform agenda – the consumption tax and a weak yen. But analysts insist there has been no change of policy, but pension and energy reforms hold the key.

  • FX options awaken amid volatility uptick

    Spikes of volatility have appeared in FX markets in recent weeks, prompting speculation that a long period of dormancy in currency options might be coming to an end. However, reports of a forthcoming bonanza could be exaggerated, some analysts say.

  • Mexico eyes sovereign sukuk

    Latin America’s first such deal; Pemex plans to follow.

  • Banks join forces to confront due-diligence challenge

    With various regulatory initiatives demanding that financial institutions gather and disclose information relating to customers, a number of firms have responded to what they see as a market opportunity to develop customer-identity screening services, with a single, industry-wide utility seen, by some, as the end-goal.

  • OTC derivatives reform challenges regulators from South Africa to Hong Kong

    Over-the-counter (OTC) derivatives market reform outside the US and Europe will be closely monitored by companies who use these derivatives to manage foreign-currency earnings exchange-rate risk.

  • Rising USD tide sinks EM boats

    The dollar has begun what many expect will be a prolonged march higher after a multi-year bear run. A strengthening greenback has traditionally been bad news for emerging markets and the early signs suggest this time will be no different.

  • Political and fiscal risk to pose headwinds for sterling

    Post-Scottish referendum, UK political risks have not gone away, while the fiscal picture remains dire.

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