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LATEST ARTICLES
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With monetary union off the table, a national break-up could make Brexit seem like a skirmish.
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Next month, all UK employers with more than 250 workers must disclose the gender pay gaps for both salary and bonus.
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UK banks scraped through the latest stress tests with no need to raise capital, but add a disorderly Brexit onto recession and overseas investor flight, and they could face serious trouble.
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The industry reacts to RBS's decision to retrench its international transaction services operations, referring clients instead to BNP Paribas.
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The headline results of Euromoney's 2015 foreign exchange survey show the leading banks have been remarkably consistent, despite the upheavals in the sector. But, beneath the surface there are changes that will transform the competitive landscape of the industry. Deeper analysis of the survey results demonstrates that’s already starting to happen.
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Citi retains top spot in Global FX as clients execute more than half electronically for the first time
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The pace of UK growth is set to almost double in 2014, but the economy is suffering structural imbalances that threaten stability in the medium term.
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After a roller-coaster ride this year sparked by fears of Fed tapering, emerging market equities could be calmer in 2014, but will continue to face challenges as investors reappraise the risk-reward expectation.
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Germany’s export machine will be hit by a rebalancing of China's economy, but the special relationship between the world’s second- and fourth-largest economies might provide a springboard for the development of more sustainable economic ties.
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A new Isda report reveals how the fight for currency liquidity is on as foreign exchange trading venues struggle to adapt to the new regulatory landscape
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The Bitcoin rollercoaster has lurched down as BTC China said it would no longer be accepting renminbi deposits, triggering a massive sell-off across most cryptocurrencies. But Bitcoin believers remain unbowed. Here is a round-up of the most bullish projections.
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Buy-side involvement in repo markets has yet to recover from lows plumbed following the financial crisis, despite increasing disintermediation of banks resulting from regulatory pressures and the search for yield.
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Businesses must embrace the digital revolution taking place in international trade.
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The Bank of England’s more activist mandate may push the Monetary Policy Committee to leave interest rates on hold for too long, complicating efforts to bring down inflation and cut British household debt.
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It’s been a torrid year for emerging market local- and hard-currency bonds. After a 2012 rally, credit picking has reigned supreme and the conventional investment case – emerging markets are at a different stage of the credit-rating and growth cycle than developed market issuers – took a knock.
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UK companies offering peer-to-peer lending are following their US counterparts into the financial mainstream, with an hospitable regulatory climate, as well as new sources of demand and products.
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Businesses may be taking on exposures to FX risk unnecessarily because they think hedging costs are too expensive. Understanding these costs is the springboard to a robust hedging strategy that avoids too much damage when an unexpected devaluation hits.
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A Damascene conversion in some regulatory circles in favour of securitization, as a means of boosting the real economy, has heartened market participants, but regulatory hurdles remain, including the liquidity coverage ratio. While continental European issuance has demonstrated growth, there are grounds for cautious optimism that 2014 will see the securitization market, from CLOs to RMBS, spring back to life.
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With a shrinking economy and a deteriorating balance of payments, Ukraine is in a downward spiral that risks plunging the country into crisis if the current political unrest is not defused with haste.
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US stock indices are at record highs but the exuberance is not irrational, say bullish analysts, because the level of valuations is justified by strong earnings and a market with some of the world’s most profitable companies.
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China’s once-in-a-generation economic reforms have largely pleased some notable bears, as new policies reflect Beijing’s recognition that a growth-at-all-costs investment-led model is bust, while capital-account opening could help navigate short-term credit challenges.
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Regulation, staying on top of cash flows and the importance of agility – our experts from EMEA, Asia Pacific and the US discuss the major issues facing corporate treasurers. By Etienne Bernard, Head of Transaction Services, EMEA, Julian Oldale, Head of ICM International Solutions, Americas, and Manfred Schmoelz, Head of Transaction Services, Asia Pacific.
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High-volume European car makers look set to emerge stronger than many thought possible from the lowest sales volumes for 17 years and decades of overcapacity issues. This could release more than EUR15 billion for shareholders, new projects or acquisitions, writes Michael Ward, Head of Diversified Industrials.
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Global banking regulators have placed the risk-absorbing capacity of government bonds at the centre of their brave new financial world, ostensibly opening up revenue opportunities for banks in collateral-transformation for OTC purposes.
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Author and former trader Nassim Taleb, who shook the financial world with his best-selling book on risk The Black Swan, recently spoke at an RBS Insight dinner for clients in Milan. Here, he shares his thoughts on handling the unpredictable.
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With inflation continuing to fall and growth flatlining, pressure is mounting on the ECB as it edges closer to exhausting less contentious policy weapons to combat the threat of deflation.
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Typhoon Haiyan is tempering exuberance over the Philippines’ growth story by exposing structural limits on its growth potential – most significantly inadequate infrastructure and governance issues.
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Risk managers have made use of exchange-traded FX options to hedge foreign exposures this year amid a volatile global macro environment.
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In an exclusive interview, a former drafter of the Volcker rule explains why, in its current trajectory, the flagship regulation will fail to distinguish legitimate market-making and proprietary risk-taking while banks sound the alarm on compliance costs, hit to earnings and extraterritoriality concerns.
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Italian companies are poised to issue bonds quickly as growing investor confidence creates significant opportunities to access the market, writes Andrea Soro, RBS Country Executive, Italy.
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An end to Quantitative Easing could pose a number of corporate financing challenges. The risks include rising medium-to-long-term interest rates, wider credit spreads and higher yields on risk assets, writes Eu-Jin Ang, Senior Director, Corporate Advisory, RBS.
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As economic headwinds increase across Asia, darker clouds could be about to descend on the region’s corporate credit markets thanks to increased pressure on balance sheets. However, on a relative-value basis, Asia still looks attractive.
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Allowing China’s financial institutions to establish wholesale branches in the UK is a major step in cementing London’s pre-eminent role in global finance. It holds out the promise of greater investment flows into Britain’s recovering economy, while making it easier for British companies to export to China, writes Janet Ming, Head of RBS China desk in London.
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South Africa has, on the face of it, huge strengths: commodities, rule of law, strong institutions and consumption prospects, a social contract – aided by decent incomes per capita – and a sophisticated financial system, among other factors. But it’s failing in five key areas.
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It’s unclear whether a negative deposit rate – as mooted by ECB officials in recent weeks – would trigger corporates to invest excess cash or, given risk aversion and the deficit of demand, continue to hoard cash, say analysts.
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China’s leaders are likely to disappoint those hoping for sweeping economic reforms at the next big meeting of Chinese leaders - the third plenum of the 18th Communist Party congress.
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Chancellor Angela Merkel’s election campaign highlighted a lack of focus on the longer-term issues facing Germany, says academic Horst Opaschowski.
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Rising interest rates, wider credit spreads and higher yields on risk assets are some of the potential impacts on global markets when Quantitative Easing starts coming to an end, writes Eu-Jin Ang, Senior Director, Corporate Advisory, RBS.
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P2P lending is coming of age, thanks to pent-up demand for credit, new technology and new innovative providers in the market, but the jury is out on whether the sector can become a long-term viable alternative to traditional bank finance.
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The revised approach to the regulation of banks’ trading books – focusing on capturing deep losses during systemic crises and a tougher approach to internal-risk modeling – will limit lucrative arbitrage and trading opportunities.
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Malaysia is at growing risk of an economic bubble that could come to a sticky end as China, its largest trading partner, rebalances its economy away from a commodity-intensive investment-led growth model, analysts warn.
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The Chinese government says it wants to transform its asset management companies – established to take on growing bad debts in the banking system – into commercially driven enterprises. In reality, a lack of transparency on portfolio loans means analysts are none the wiser as to the scale of the problem and the resolution process for legacy loans.
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The new flexible liquidity rules will prove key to realizing Bank of England governor Mark Carney’s bold ambition to further entrench London’s status as a global financial hub while addressing the challenge of rising interest rates and a collateral shortage.
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The European high-yield bond market has enjoyed stellar growth since 2009. Its value has risen from EUR50 billion to EUR300 billion*. We believe it has the potential to expand by half as much again to EUR450 billion in the next five years, writes Kevin Connell, Managing Director High Yield Markets, Merijn Nederveen, Managing Director, Corporate Advisory and Usman Qureshi, Corporate Advisory at RBS.
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The UK Treasury’s courtship of Chinese banks highlights, in part, London’s relatively flexible regulatory regime for foreign banks – in contrast to the Fed. It also opens up a broader debate about subsidiarization and global banking models, more generally, amid regulatory turf wars.
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Just months after the prospect of Federal Reserve tapering raised questions about the ability of some emerging market (EM) reserve managers to shore up their currencies value in the face of a resurgent dollar, stockpiles are on the rise again.
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Don’t believe the doom-mongers – US political risk is not the same as US credit risk, thanks to a plethora of positive market technicals and the international monetary architecture.
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Over the past few years international investors shunned Europe as its economies and banks struggled to reform. But things are changing. The bond markets could benefit.
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There has been an inverse correlation between the US dollar and gold price, which, combined with the fact US equities are starting to look rich, suggests the commodity could rise to August highs.
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Efforts to create a single European resolution mechanism to bail out or wind down troubled eurozone banks are bogged down in uncertainty and political wrangling, throwing the banking union project into doubt, according to experts.
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An important milestone for the industry and for everyone making payments in euros across the region is about to be reached: Steve Everett, Global Head, Cash Management and Tino Kam, SEPA Product Executive explore how the long-held vision of a Single Euro Payments Area (SEPA) will become a practical reality at last.
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The cascade of banking reforms landed in the wake of the financial crash is offering savvy companies a real edge over rivals.
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Demand for sub-Saharan African (SSA) assets is increasing as anticipation continues to build towards the region’s future growth potential, in particular a nascent rebalancing away from resource-dependency towards a consumer market.
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The yen has long been seen as one of the principal safe-haven currencies, and in a world where US politicians flirt with dollar default, some view it as the world’s premier safe haven.
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As the global economy recovers, banks’ dependence on short-term wholesale funding, and repo in particular, could rise to levels that pose a danger to the financial system, especially if asset bubbles begin to build again.
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Europe’s economy is enjoying its first meaningful recovery since 2008 but it is a slow, stuttering comeback. To secure and accelerate the turnaround, policymakers should focus on how to increase lending to the real economy and fill the funding gap left by the continent’s shrinking banks.
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Thailand is at growing risk of another debt crisis because of an unsustainable consumption-led credit boom, which has seen lending surge by more than 50% in six years.
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After another annus horribilis for Europe in 2012, there has been a gradual but steady improvement in market sentiment this year. Although the growth outlook still looks weak, there has at least been some respite from the relentless worry about debt default and euro break-up.
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The Shanghai free-trade zone (FTZ), China’s grand experiment with liberalizing interest rates and opening its capital account, has only a short window of opportunity to convince the markets that the Communist Party is serious about reform.
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When the Commodity Futures Trading Commission (CFTC) created footnote 88 in the final US rules governing swap execution facilities (SEFs) – requiring all multi-lateral trading facilities to register as SEFs whether they trade regulated swaps or not – the prospect it would be closed on the day of the registration deadline was probably not on the agenda.
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In the coming decades, commercial banks will face substantial challenges from the greying of societies around the world. These will range from a declining demand for credit in the economy and a shrinking stream of regular payroll deposits to tougher competition.
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Germany’s rejection of parties opposed to closer eurozone integration is a win for Europe. But the optimists must not get carried away, says Peter Bofinger, a long-time adviser to the German Government.
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As worldwide consumption of mobile data and e-commerce services continues to grow exponentially, the payments landscape is being transformed by electronic and mobile payments. In particular, mobile offers huge opportunities. Understanding of this fast-moving market is critical, but it is being hampered by a lack of accurate market data.
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Moody’s has upped its game by disseminating more detail on how it measures sovereign bond default risk. However, like previous attempts to refine and improve its market signalling, this latest announcement still raises several questions about the usefulness of its ratings.
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The European Commission’s latest draft legislation proposal governing financial market benchmarks, released on September 18, reveals that lawmakers have dropped some of the more onerous regulatory requirements that were causing market participants concern over the summer.
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Corporate treasurers are riding out the volatility buffeting emerging market (EM) currencies, employing a variety of strategies to mitigate exchange rate risk, from forward contracts to natural hedges, such as operating in local currency.
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The sharp depreciation of Indonesia’s currency risks plunging the country into a balance-of-payments crisis because any competitive edge afforded by the weak rupiah is being sapped by high inflation, without more aggressive monetary action, say analysts.
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More flexible payments for companies risk damaging the plumbing through which money flows and draining market liquidity. Financial institutions and regulators are therefore firmly focused on tightening up liquidity management to ensure that doesn’t happen.
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The divide between rich and poor has widened across the globe since the 1960s. But shifting demographics could start to redress some of the balance towards ordinary workers.
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The regulatory push for change presents businesses and banks with opportunities as well as challenges. Here’s a run-down of just some of the positive impacts of Basel III, FATCA, SEPA, Dodd Frank, the revised Payment Services Directive, and intraday liquidity requirements.
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As the European Commission (EC) moves forward with its first regulatory engagement with the shadow banking sector, policy experts argue that more work needs to be done to understand the relationship between banks and non-banks, and the ways in which shadow lenders – previously beyond the regulatory perimeter – contribute to the financial infrastructure as a whole.
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The strong appetite for floating rate bonds might be tested by volatility, triggered by the Fed’s decision to delay tapering, but for now demand for investment-grade floaters, in particular, is red-hot, leaving bankers and investors to ask how long the rally can last.
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Derivatives traded on Asia’s exchanges are staging a recovery, with equity index futures leading the way – despite a looming threat from global regulation aimed at taming a sector widely blamed for the financial crisis.
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Corporate treasurers are increasingly focused on managing working capital better when buying and selling – and many now realise that supply chain finance (SCF) can help. By breaking down the silos between the purchasing, selling and treasury functions of a business, SCF can ensure good risk management, boost liquidity and improve the balance sheet.
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Investors may have been too quick to jettison Asian assets during their recent pullback from emerging markets. While some economies – including India and Indonesia – have proved vulnerable to fears of scarcer global liquidity, Asia’s emerging economies still boast stronger macro fundamentals and are better prepared for capital outflows than during earlier crises.
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Discord exists among corporates, banks and regulators over the approach to bringing payments into global harmony.
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European regulators are beginning to get to grips with previously hidden quarters of the shadow banking system with a series of proposals to regulate money market funds (MMFs).
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India’s economy and currency has taken a battering, yet the worst of rupee depreciation should now be behind us. Stability should return, though a more meaningful appreciation of the rupee is still some distance away, writes Sanjay Mathur, Managing Director and Head of Economics Research, Asia Pacific ex-Japan at RBS.
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Strip out the mega Verizon-Vodafone deal and European M&A activity year-to-date is at its lowest level since 2009. Hopes are, nevertheless, growing that an improvement in the economic climate and corporate risk-taking will boost deal-making.
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Emerging market (EM) currencies are expected to continue to expand their share of the $5.3 trillion-a-day global forex market despite the turmoil, with China’s RMB leading the charge.
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Regulators want to shift the risks of such trading away from banks and towards financial institutions and are also pushing for more trades to be cleared centrally, writes Graham Shuttlewood, product manager at RBS.
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September tapering by the US Fed, which until recently markets took as given, is looking less certain as downside risk factors for winding down the central bank’s $85 billion-a-month stimulus programme continue to mount.
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Concerns are mounting about the risks to India’s financial health posed by a growing shadow banking sector that has helped fund a decade-long investment-fuelled consumption and investment boom.
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Capital-hungry borrowers seeking to plug the huge infrastructure deficit in Latin America’s largest economy through international capital markets are hoping Eike Batista’s OGX group will avoid default.
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UK corporates that use cheap debt to fill the gaps in their pension funds could enjoy significant strategic, cash flow and accounting benefits. James Courtenay-Evans, Managing Director, and Shoaib Yaqub, Associate Director, Corporate Financing Solutions at RBS, explain.
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Brazil’s recovery is being cut off at the knees by a set of economic challenges that have all come home to roost – from a depreciating currency and rising current-account deficit to structural problems, including an overdependence on credit-fuelled consumption.
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The tapering-inspired exodus of capital from fixed income and equity markets has forced down emerging market currency yields, killing the high-yield trade and leading to a massive unwind of currency positions, according to currency traders on both sides of the Atlantic.
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A look at the latest Risk Management practices to help corporate treasurers.
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Recent market volatility and the associated disappearance of FX liquidity, from hedge fund-backed algos, underscore the proliferation of new trading venues, the complexity of electronic FX trading and fears among end-users that many liquidity providers do not have their best interests at heart.
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Just months into the recovery in the UK housing market, prices are beginning to look stretched as loose monetary policy and government aid to buyers drives the gap between valuations and incomes ever wider, according to analysts. Are the seeds being sown for a horrible correction in 2015?