Tops and bottoms can make you realise service levels are rotten. My old mucker Paolo has been on to me again (see Retail rip off). If he takes his complaint further, we could soon see the first punishment handed out for breaching Mifid, which came into force in November 2007 and should ensure best execution for investors.

Several sources contacted me asking what I thought about ‘the biggest story to hit FX since, well, the last one’.

When it comes to FX, the banks are still able to stripe up their clients in small amounts. An old mucker of mine told me of another example recently, which occurred after he bought some Canadian-listed shares through a well known stockbroker. The FX transaction was done some way below the low of the day, which seemed odd, given that it was a securities related transaction and therefore supposedly covered by MiFID. Most investors tolerate a small spread being added for non-market amounts, but it still seems that, in the UK at least, Johnny Retail Punter is getting royally ripped off.

Banks will have to operate under a stricter capital regime. While they are feverishly raising more and higher-quality capital in the financial markets, proposals put forward by regulators are not to everyone’s taste, not least the potential treatment of hybrid securities. Sudip Roy reports.

The sub-prime crisis has presented opportunities for institutions whose balance sheets have been left relatively intact to boost their trading operations, not least in foreign exchange. Several, such as Canada’s CIBC and Japan’s Nomura, have already started to build out their FX businesses, while the market is still waiting to see how existing heavyweights HSBC and JPMorgan will evolve. BNP Paribas is another player that market participants might be wise to watch.

Bank business models have to change. Capital requirements will be higher. Leverage and risk will be lower. But there is a danger that regulators will try to make the system too safe. That’s if they ever manage to coordinate their actions. In the meantime, bank leaders are trying to find the best model for their own institutions, while managing the fallout from the credit crunch and second-guessing the lawmakers. Peter Lee reports.

The focus on credit, as well as a degree of regulatory uncertainty, appears to have led to an increase in the importance of sales to financial institutions, according to sources at major FX houses. The reasoning is that banks are happy to assume counterparty risk with other banks and FIs, particularly in emerging markets, but less willing to trade directly with buy-side counterparties. Another issue is the uncertainty surrounding the legitimacy of some derivative products – whether or not they have been missold has led banks to effectively seek to have credit disintermediated.

A wave of regulation following the initial impact of the global financial crisis has targeted the alternative investment sector, and hedge funds in particular. The industry is mobilising to influence and deflect some of the measures. Caroline Allen reports

Xetra International Market, Deutsche Börse’s new pan-European foray, will launch in the fourth quarter of this year. Xetra will enable trading participants in 19 European countries to deal in European blue-chip corporates while settling domestically.

The imposition of a more stringent global regulatory regime for all financial markets is the talk of the town at the moment. So it is somewhat surprising to discover that the implementation of the Markets in Financial Instruments Directive (Mifid) in the EU in November 2007 resulted in a huge decrease in the number of FX brokers registered with the FSA.

The imposition of a more stringent global regulatory regime for all financial markets is the talk of the town at the moment. So it is somewhat surprising to discover that the implementation of the Markets in Financial Instruments Directive in the EU in November 2007 resulted in a huge decrease in the number of FX brokers registered with the FSA.

Agency brokers have returned to fixed income just as investment banks have withdrawn from the market. Will they be able to create dark pools of liquidity and repair the breach in the distribution of debt securities? And does their increasing power herald the return of the primacy of relationships?

The proliferation of alternative trading venues in Europe has vastly complicated the task of achieving best execution.

Multilateral trading facilities have been gaining market share in recent months but the market itself has been shrinking. MTFs’ conspicuous success is also attracting some unwanted attention.

Exchanges try to steal a march on their rivals.

For years the debate raged about when FX would embrace a model like the equity market and move on to a centralised exchange. For a time, I subscribed to this view, especially around the time I tried somewhat cheekily to buy EBS – but that’s another story.

New governor Boediono has to put the central bank back on track as a corruption trial looms over a previous incumbent.

Prime brokers' relationships with hedge funds have inevitably be modified by the credit crunch but ultimately the brokers have to provide the full range of services funds require at a reasonable cost and without undue constraints.

New entrant aims for a big splash in dark pools but Nasdaq OMX and Bats are close behind, and Baikal promises intelligent order matching.

Accusations of sharp practice are flying as the loan market struggles to deal with its problems.

Last month Euromoney wrote about how the valuations service sector was heating up. Financial data provider Markit subsequently announced a new multi-dealer valuations platform. Chief executive Lance Uggla explains to Alex Chambers how the firm is broadening its offerings from credit to OTC equities.

Even though spreads for most foreign exchange products are often so thin that they barely exist, the use of transaction cost analysis (TCA) to measure execution is on the increase.

The Autorité des marchés financiers (AMF), the French regulator, has recently decreed that financial institutions must include the currency amount for settlement when they report their transactions. Under the Markets in Financial Instruments Directive (Mifid), firms must include the settlement amount for all securities-related transactions.

Since launching in 2007, Chi-X, the pan-European multilateral trading facility run by Nomura’s Instinet, has made notable inroads into the market for trading German stocks, regularly trading more than 15% of the daily turnover of blue-chip companies such as BASF. At the same time, however, Xetra, Deutsche Börse’s order book, has increased its market share of domestic trading to a record 99%.

Last month the panel examined volatility and the reported demise of the dollar. This month, they discuss the merits of prime brokerage, the weakness of algos and how to generate alpha.

Ruling Citi would be like ruling the Forbidden City. There is so much breadth to the institution that it would be hard for any one individual to span the various sectors: investment banking, consumer banking, wealth management and retail brokerage. And as for structure, I’ve had mud baths that are more transparent.

The year of the MTF?

Citi is proof of the adage: “You can’t be all things to all men.” A mole confided: “I’m all for breaking it up.” In my first column, published in April 2006, I queried the strategy and investment validity of Citigroup. Eighteen months later, I’m still asking the same questions.

Plus Markets, a London exchange group, has launched a new trading platform and expanded the list of stocks it trades. The new system, provided by OMX, will offer cheap quote-driven trading in 7,500 securities including the stocks of all the companies listed on the London Stock Exchange, 70 AIM-listed companies and several of the most liquid continental stocks. This is in addition to the more than 200 stocks listed on Plus itself. The move has come as a surprise to some market observers, who thought that Plus’s ambitions were confined to small-cap and micro-cap stocks and who believed that Plus was positioning itself as an alternative to AIM.

New regulations are always unpopular with bankers struggling to keep on top of increasing numbers of oversight and compliance rules. The Markets in Financial Instruments Directive (Mifid) is proving particularly unpopular with those working in the equity-linked structured note market, who say it is simplistic in its approach to derivatives-based investments.