The BIS has released its 2019 Triennial Survey of Global FX and OTC Derivatives Markets. The statistics reveal further material growth over the last three years with average daily turnover rising to $6.6 trillion in April 2019, compared to $5.1 trillion in 2016. Derivatives have gained ground over Spot with FX swaps accounting for close to half of all trading in April and London has maintained its dominant position as the premier trading centre with 43% of the market.
To coincide with the release of this report, Andrew Hauser, Executive Director, Markets, at the Bank of England made a speech at TradeTech FX 2019[1] in Barcelona in which he made a call to arms for yet more firms to sign up to the FX Global Code of Conduct, particularly on the buyside.
First charges are now being brought by Cologne prosecutors who have been leading criminal investigations into Cum-Ex.
Two London traders are facing criminal charges in court proceedings that began on 4th September in Germany’s elaborate tax case.[1]
The impact of the alleged tax trading scheme has been estimated at €55bn but could be over €80bn and is said to extend to Germany, Denmark, Austria, Belgium, France, Spain, Italy, the Netherlands, Finland, Norway and Switzerland.[2] The case is only just beginning and the list of parties involved continues to grow.
Following market consultation, the FCA announced that it was formally recognising the FX Global Code and the UK Money Markets Code on the 26th June. These are the first codes to be recognised under the FCA’s codes recognition scheme which was announced last year, to recognise industry codes for unregulated markets and activities. Both these codes have been written by and are owned by the industry and reflect their views of best practice.
On the 6th December, Andrew Hauser, Executive Director, Markets, at the Bank of England delivered a speech at London FX Hive Live in which he urged the buy-side to further buy into the FX Global Code. The Code has been adopted with vigour by banks and sell-side firms and it is clear that the regulators, led by the Bank of England, want the FX Global Code adopted by buy-side firms and all major FX market participants. .
Following the publication of the FCA’s Thematic Review and the PRA’s Consultation Paper on Algorithmic Trading in February, the PRA has now published its concluding Supervisory Statement, SS 5/18, which came into effect on 30th June.
The Investment Association (‘the IA’) which represents UK investment managers and has over 220 members who collectively manage more than £6.9 trillion of behalf of clients, has published a position paper on ‘Last Look’.
The FCA has published a thematic review for FCA solo-regulated firms on algorithmic trading. Their report summarises five key areas of focus, highlighting good and bad practices.
The FCA has published a research paper analysing the impact of the introduction of EMIR variation margin requirements in 2017 and whether small firms were locked out of the derivative markets as a result.
The Bank for International Settlements has published its long-awaited second and final phase of the Global FX Code, which has been created to restore confidence in FX markets following recent public scandals about market manipulation.
‘Make America Great Again’ was the campaign watchword of President-elect Donald Trump and bankers and investors are watching with interest to see what this will mean for U.S. banks. Trump’s dislike of anti-competitive regulation is well known.
The FCA publishes a paper on asymmetries in dark pool reference prices to analyse the role of participant speed and sophistication in driving outcomes in today’s markets.
The FCA has recently completed a review of four key areas in the market abuse systems and controls employed at several market-making firms. The firms were positioned in the small and mid-cap equity market making space but their findings are relevant to most trading firms which undertake a broad range of activities, where conflicts of interest could arise.
Last year the focus of the UK financial services regulatory landscape shifted from high-profile fines levied by regulators on banks for Libor and FX rigging towards individuals’ conduct and their responsibility for abuses.
