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LATEST ARTICLES
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Currency volatility benchmarking has become a useful tool for FX traders but is by no means the only option for informing trades.
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The immediate aftermath of the launch of T+1 settlement in the US on May 28 suggests the acceleration has not yet translated into increased FX risk. But it is still too early to tell what the longer-term impact will be.
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MBridge, China’s cross-border digital currency initiative, has entered the minimum viable product stage. It is the world’s most advanced cross-border CBDC and stands on the cusp of playing a pivotal role in the de-dollarization process.
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The recent resurgence in M&A activity has driven interest in deal-contingent hedging as firms look for a buffer against unfavourable FX or interest-rate movements.
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The absence of staking and the earlier approval of spot Bitcoin exchange-traded funds have sucked much of the excitement out of the SEC’s surprising decision to greenlight spot Ethereum ETFs.
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The prospect of interest rate cuts from the Fed in 2024 is disappearing. Japan and Korea are among those feeling the heat.
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Blurring the lines in foreign exchange between automation, traditional AI and generative AI runs the risk of undermining trading services by setting unrealistic expectations.
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A lack of consensus on whether recent under-performance of Asian currencies will impact China’s willingness to let its own currency weaken is leading to disparate views on near-term valuations.
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The body responsible for settling about $6.5 trillion of global daily FX trades has decided against extending its deadlines to accommodate non-US participants who still want to use its next-day settlement service. But it expects the impact to be limited – far too limited to justify the complexity that a change would impose on its members.
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Previous changes of policy direction have left analysts undecided on whether to attribute recent sharp corrections to the renminbi reference rate to accident or design – or even a combination of the two.
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Despite overlapping in a number of key workflow areas, asset managers continue to face challenges with FX order management systems that struggle to emulate the capabilities of systems designed to manage execution.
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Carry traders are going to have to work hard to maintain the momentum of the last few months if expectations of interest rate cuts in the US and hikes in Japan come to pass.
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Perception appears to be just as important as reality when it comes to buy-side firms viewing themselves as FX liquidity providers.
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Boosting the role of corporate treasury by enabling it to centralize group-wide FX management may sound appealing, but implementation and cost challenges should not be underestimated.
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Investors will be hoping that the fall in the value of Bitcoin since US regulators approved the listing and trading of spot Bitcoin exchange-traded products is not a sign of things to come.
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Corporates are adopting a variety of approaches to mitigate the impact of uncertainty in foreign exchange markets caused by divergence in economic policy and performance.
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Ambitious brokerage firms have precipitated a shift in demand for FX licences, with interest in regulated European and Asian markets on the increase at the expense of offshore jurisdictions.
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Is the CME’s new spot FX marketplace further evidence of the trend towards futures and options trading, and away from private deals?
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Many corporates are realising the benefits of intercompany netting on FX risk, trading and cash-flow visibility.
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Spoiled for choice, FX brokers have become more strategic – and selective – when it comes to choosing liquidity providers.
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While many African countries experienced lower interbank FX turnover and saw their foreign-exchange reserves dwindle last year, there are grounds for optimism that 2023 will turn out to be a better year at both regional and national level.
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Markets jump on the news that Javier Milei will be Argentina’s next president. A large devaluation is needed, but that leads to the risk of deposit flight.
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While the dollar’s international supremacy is unchallenged for now, the wider landscape is shifting. Companies are raising more funding in renminbi and the currency’s use in international payments and settlements is growing.
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Corporates are taking a big punt on markets remaining relatively benign, given their apparent lack of confidence in existing FX technology and systems.
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The big custody banks are pursuing a variety of digital-asset custody strategies to encourage wider market participation from institutional clients.
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The controversy surrounding My Forex Funds has reinforced the view that tighter regulation of foreign-exchange proprietary trading firms is inevitable.
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Euromoney talks to Jacques Levet, chief digital officer at BNP Paribas, about the competitive advantage that newly acquired FX fintech Kantox offers.
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Market participants have welcomed recent moves to enhance FX liquidity by increasing the efficiency of credit payments for trades.
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The frontrunner in the Argentine presidential election campaign has said he wants to abolish the peso and replace it with the US dollar. Is it blue-sky thinking or just greenback dreaming?
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European corporates have been the big losers from lower overall FX market volatility in the first half of 2023 as EUR/USD normalised while the yen and yuan continued to struggle.
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Despite suggestions that corporates in North America are keen to work with a wider variety of FX counterparties, global banks are relaxed about the potential impact of March’s banking crisis on this lucrative business line.
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Analysts are looking beyond China for clues as to where the main Asian currencies will go over the remainder of 2023 as they try to second-guess Japan’s monetary policy plans.
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With artificial intelligence already widely used for tasks such as trend analysis, the focus has turned to how artificial general intelligence could chat with FX traders to help them fine-tune their decisions, as well as automate order execution and currency monitoring.
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Faster securities settlement raises the spectre of increased FX risk as brokers work through the challenges of achieving simultaneous execution of equity and currency trades.
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New entrants into the FX market raise the challenge for the body responsible for rules governing FX derivatives, as it mulls the possibility of future updates to how these products are documented and traded.
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Extreme FX volatility is proving a challenge for some finance directors who are struggling to minimize the impact on their bottom line.
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The standardized approach for counterparty credit risk has not yet proved to be the catalyst for greater use of clearing in the FX market that some expected.
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Recent developments in crypto have hardened the view that convergence between digital and fiat currency trading structures is both inevitable and desirable.
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The acquisitive fintech group reckons it can accelerate the transition from legacy FX technology by making it easier for tech firms to get their products to market.
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Disagreement over where US interest rates are going has split opinion on overall prospects for emerging market currencies.
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Central limit order book venues have done well during the past 12 months, but it would be premature to view this as a permanent shift in trading preference.
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Big foreign-exchange banks are focussing on enhanced functionality to promote greater use of single-dealer platforms.
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The IMF will have its work cut out generating support for its proposal for a multilateral platform for cross-border payments and related foreign-exchange transactions.
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The volume of FX trading where there is a possibility of one or more parties failing to deliver on the terms of the trade has prompted various initiatives to find better options for settlement – but the talk is still more about potential than delivery.
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When the news broke that Argentina was thinking of merging its currency with that of its neighbour, Brazil, my immediate question was: which Argentine peso?
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While no one is willing to bet the farm on anything other than dollar depreciation in 2023, mixed messages from the Fed, and economic and political uncertainty elsewhere mean the greenback could yet defy expectations.
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Some leading FX banks have struggled to stay competitive in forwards, swaps and swaptions thanks to SA-CCR rules, but compressing portfolios helps.
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Going all out to keep the sell side sweet seems a sensible strategy for success in the difficult P2P FX market.
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With little likelihood of currency volatility subsiding any time soon, corporates continue to face difficult decisions when it comes to how best to mitigate FX risk.
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FX dealer trading with financial customers may have stagnated over the last few years, but the effects have not been felt evenly across all markets and the impact on price discovery is far from clear.
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Despite dire warnings by the Bank for International Settlements, market participants are not wholly convinced that US dollar obligations from FX swaps and forwards pose a threat to the stability of the forex market.
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Concerns about the wider economy and its impact on disposable income have eroded individuals’ appetite for FX trading, despite attractive levels of volatility.
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State Street’s Chip Lowry, a board member and former chair of the Foreign Exchange Professionals Association, talks to Euromoney about his new role on the Commodity Futures Trading Commission’s market risk advisory committee.
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As the industry digests the results of the latest BIS triennial FX survey, Euromoney canvasses opinion on the implications of the key findings.
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Market experts fear that continued inflation and poor growth mean that many currencies are vulnerable to the pressure that the UK has seen recently.
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Asia’s central banks have fought hard to protect the value of their currencies this year as the dollar has soared. But each of them has a limit to their appetite for that defence.
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The weakness of the pound and strength of the dollar has implications for companies on both sides of the Atlantic.
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The market for remittances is expected to grow by almost 10% in 2022, driven by diaspora-linked savings.
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Recent volatility has encouraged many corporates to switch out of longer tenor instruments.
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In public at least, the Bank of England has been determined to end its gilts intervention when it said it would, but it’s getting harder for the BoE to manage its conflicts – and the market doesn’t know what to believe any more.
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While the UK government remains unwilling to make notable concessions on its economic policies, the Bank of England will struggle to restore confidence in the embattled pound.
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Kwasi Kwarteng’s debt-funded tax giveaway has re-priced UK risk at a stroke, but the high cost may bring scarce benefit.
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The recent multi-decade lows experienced by the pound and the yen may have different origins, but they are also a reminder that history has a habit of repeating itself.
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Removing UK bonus caps and undermining the BoE could exacerbate a sterling crisis while entrenching US IB dominance.
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Europe and the US remain the focus, but LatAm and Asia Pacific will also contribute to volatility in 2022.
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The strength of the Australian economy is not enough to convince analysts it is a good time to increase AUD exposure.
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Holders of cryptocurrency pay a heavy price for greater privacy.
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UK policymakers are trapped between reducing inflation and boosting the flagging economy.
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Progress on implementing the proposed minimum global tax rate may be uneven, but it will have implications for all.
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China’s support for Russia is part of its strategy to reduce the world’s dependence on the greenback – might it work?
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Despite some notable challenges, Latin American currencies could continue to surprise in the second half of the year.
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Patchy inter-company loan administration could leave corporates exposed to breaches of transfer pricing guidance.
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The results of this year’s Euromoney FX survey highlight the value of long-term strategic investment in forex.
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Markets are trading interest-rate expectations over actual rate decisions – proving the power of market sentiment.
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Digitalizing and automating its FX risk management has notably improved a pharma's treasury function.
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FX analysts have diverging views on the prospects for the euro over the coming months, after a bank research warning.
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European corporates saw losses from currency volatility fall late last year, so hedging has stayed largely unchanged.
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The currency’s fairly benign passage through the early months of 2022 is now under threat from a variety of factors, including spiralling inflation, the cost of supporting the currency and even a growing interest in cryptocurrency.
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With the US Federal Reserve apparently keen to step up the pace of interest-rate rises over the coming months, it is not just emerging market currencies that are expected to suffer.
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Rate increases in major economies away from the US, as central banks battle spiralling inflation, have weakened the momentum the dollar might otherwise have garnered from a hawkish Fed.
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A number of commodity currencies have received an unexpected boost from the conflict in Ukraine as Western economies look to reduce their dependence on fossil fuels from Russia more rapidly than previously planned.
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A combination of geographical position and commodity strength is working in the country’s favour.
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When a group of leading banks were unable to source the roubles needed to deliver in settlement of FX swaps, compression trades saved the day. The episode serves to highlight how fragile very large, complex and interconnected financial markets have become.
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China’s approach to central bank digital currency offers clues to how it may build a unique version of decentralized finance.
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Despite China’s ambitious plans for its digital currency, the e-yuan will struggle to become a lead player in international trade finance without notable changes, most importantly to capital controls.
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With little chance of a swift resolution to the conflict in Ukraine, the effect on FX markets is being felt well beyond the bounds of the former Soviet Union. But not all reactions have been typical for a crisis.
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Chinese policymakers may have become more relaxed about fluctuations in the yuan, but no one should doubt their willingness to intervene if the currency moves too far in either direction.
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After a generation of low inflation, rising consumer and business costs have leapt to the top of the list of factors influencing FX pricing.
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Analysts are keeping a close eye on regional as well as US monetary policy as they attempt to plot a course for the currencies of the countries that form the Association of Southeast Asian Nations.
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Many observers remain unconvinced about the Scottish government’s official currency if the country were ever to gain independence.
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Turkey’s currency continues to flounder, with hardline president Erdoğan apparently determined to prove that the best way to curb inflation is to reduce – rather than increase – interest rates.
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Rebooting the financial system with a new currency could be what’s needed to give Argentina’s economy a way forward.
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The Japanese currency continues to slide as traders anticipate interest-rate movement in the US, but even the Fed's hawkish tilt does not guarantee that this direction of travel will be sustained.
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As COP26 winds up, Euromoney looks at how a big reduction in fossil-fuel consumption might impact the currencies of the world’s leading coal and oil exporters.
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Foreign exchange forwards do not fall within the scope of uncleared margin rules, but that does not mean those rules have no effect on the FX business. Firms are having to consider the pros and cons of switching to cleared trades to avoid being impacted.
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Increased intracontinental trade in Africa is a laudable objective, but may serve to highlight disparities in exchange-rate regimes that could further widen the gap between winners and losers.
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Increased trading of emerging market FX has prompted settlement provider CLS and some of the world’s largest banks to explore options for extending payment-versus-payment to a wider range of currencies.
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China’s qualified domestic limited partnership scheme, which lets foreign asset managers raise money onshore in renminbi to invest offshore, is taking shape – but it is complex. Euromoney has some tips designed to stop you wasting time and money.
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Buoyed by the surge in retail trading during the past 18 months, Global Kapital Group is targeting expansion beyond its established FX brokerage business.
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Social media celebrities and financial markets might seem like strange bedfellows, but there is nothing phony about the growth of retail FX trading.
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The European Banking Authority’s public consultation on guidelines for compliance officers once again highlights the vital role played by FX brokerage compliance teams in combatting financial crime.
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As FX traders ponder how the recent increase in coronavirus cases might affect the global economy, it appears they are spending even more time trying to second guess central bank thinking.
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Recent reports concerning a payment made by Deutsche Bank to Europe’s largest winery are a reminder that disputes over FX derivatives mis-selling have yet to run their course.
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Deal strengthens SGX in the FX OTC market, bringing it closer to being the full-service operator Boon Chye Loh wants it to be.
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New FX platform MillTechFX reckons that rather than cannibalizing existing trading activity, it can generate new flows for its counterparty banks by undercutting standard exchange rates.
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This year’s FX survey reflects huge disruption and transition across the industry. Pandemic-driven technological advances saw traders tackle a surge in business while working remotely – supercharging change that will permanently alter the way the industry operates.
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A platform that promises to shake up the FX swaps market has taken another tentative step towards its objective of reducing banks’ liquidity buffer challenge.
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HSBC’s new global wallet offering is the latest in a line of services enabling businesses to make and receive international payments from a single account.
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Siren promises reductions in FX execution costs compared with the WM/Refinitiv 4pm fix. The challenge now is to persuade banks, asset managers and large funds to execute trades on the benchmark.
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Sceptics may express concern about the disconnect between commodity prices and the value of commodity-linked currencies, but analysts reckon there is still value in the likes of the Mexican peso, Brazilian real and Australian dollar
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Basel’s latest effort to improve market resilience is expected to accelerate the development of clearing solutions – but it won’t leave everyone better off.
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The leading FX banks have introduced notable enhancements to their electronic trading platforms in recent months in an attempt to make them more attractive to traders that are still working away from their offices.
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Analysts are positive about sterling’s prospects over the next few months, figuring that monetary policy flexibility and attractive UK equity prices will outweigh any downward pressure from the European Union – whether trade or coronavirus-related.
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Corporates have a variety of tools at their disposal when it comes to getting around regulatory restrictions relating to cross-border liquidity and currency management.
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Outsourced FX trading providers have seen growing interest in their services from a wider variety of clients during the past 12 months as fee pressures and coronavirus restrictions impact on fund managers’ operating models.
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Yet another platform is attempting to crack the notoriously challenging corporate peer-to-peer FX market with the promise of simplifying trading for buy-side clients.
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The Covid-19 pandemic has prompted corporates to look afresh at automation and efficiency in their processes. Deutsche Bank sees a gap – even in currency-restricted markets.
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Corporate treasurers have much to gain from improving their understanding of liquidity venues and trading options.
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Heads of research are seeing increased demand from clients for FX market intelligence, as a focus on reflation has created a complex investment environment in which investors are grappling with the question of when reflation becomes inflation.
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The Bank of England’s latest FX trading survey shows how sterling trading exploded in October amid the twin pressures of Brexit and the coronavirus pandemic.
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Emerging markets have regained some of the buoyancy lost during the early months of the coronavirus crisis, but analyst opinions hint at the difficulty of identifying which EM currencies investors should favour.
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The coronavirus crisis has accelerated market trends: in FX it has made clients even more amenable to expanding their universe of liquidity providers to non-banks
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Agreement on the long-awaited US coronavirus relief bill has created further downward pressure on the dollar at the start of a year in which analysts expect economic headwinds to devalue the greenback.
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The congressional debate on Mexico's controversial proposed currency bill has been postponed, but opponents, including the country's central bank, should not celebrate too soon.
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Adopting orthodox policies in a bid to secure IMF agreement is a positive for Argentina, but regulations still restrict the banks compounding big FX exposures.
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The BIS markets committee might be fretting over how execution algos can exacerbate risk in the FX market, but others are more interested in what it thinks about liquidity indicators and access to data.
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The rand is back to pre-pandemic levels despite little confidence in the South African government’s ability to revitalize its economy.
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There is broad agreement that the ECB will not cut rates further, but the coronavirus pandemic is seen as the key factor governing the outlook for the euro.
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A new book concludes that the rules for trading EM FX and fixed income have successfully survived Covid.
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Turkey’s FX strategy might look odd but, despite the damage it is wreaking on the lira, analysts doubt that the country’s economic policies will change.
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While the FX non-deliverable forward (NDF) market has demonstrated its resilience in the face of a spike in spreads during the early stages of coronavirus, there are concerns over its capacity to destabilize onshore markets in emerging economies.
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Solutions providers point to an upsurge in interest this year from regional banks looking to outsource some or all of their FX trading.
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Multi-dealer platforms may remain bullish about their prospects, but if other banks follow Citi’s lead and pull away from them, market share may continue to fall.
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The FX settlement provider has recognised that risks are higher for currencies outside its scope; finding a solution, particularly one that includes the renminbi, could be tough.
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The results of the latest Bank of England foreign exchange turnover survey have again highlighted the vulnerability of sterling in stressed market conditions.
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Analysts expect the European recovery fund to underpin a strengthening of the single currency against the dollar over the rest of this year and beyond.
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JPMorgan recorded a hat-trick in the liquidity rankings, but it was all change in many other areas of this year’s Euromoney FX poll.
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As Iran’s currency crisis deepens, observers fear that far from improving the situation, state intervention will do further damage to a country that was in economic turmoil even before coronavirus.
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Lack of confidence in the quality of their information – and their ability to analyze it – means many of the world’s largest companies continue to eschew one of the techniques designed to assess and manage FX risk.
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Hedging may look expensive for businesses that have seen their revenues cut heavily by Covid-19 prevention measures, but removing hedges for currencies to which they have limited exposure may prove even more so.
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Euromoney magazine has released the results of its 42nd annual foreign exchange survey, the most comprehensive quantitative and qualitative annual study available on the FX markets.
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Euromoney magazine has released the results of its 42nd annual foreign exchange ranking, the most comprehensive quantitative and qualitative annual study available on the FX markets.
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Emerging market currencies look set to continue their bumpy ride over the coming months as the potential for a second wave of coronavirus outbreaks weighs on Asian currency sentiment.
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Hedge funds and real money clients looking to shake up their FX trading strategy now have the option of basing their trades on proprietary market analysis from RBC.
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US users see weaknesses in transaction cost analysis and order management integration.
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FX trading algorithms are getting smarter at dealing with crises – and getting more popular as a result.
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The six exchange-rate system is now untenable, with the currency losing more than 50% of its value since October, but analysts say floating the currency will cause more pain without IMF support.
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Liquidity data from CLS has revealed unusual trading activity around the 4pm London fix – but it has more to do with corporate inertia than market manipulation.
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The FX market has quickly adapted to the changes imposed by global Covid-19 response measures. The challenge for the banks will be to manage the next phase of the lockdown when clients will expect them to do more than just keep the lights on.
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The economic fallout from the virus is beginning to impact regional currencies and growth forecasts.
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P2P currency matching has had yet another makeover with the introduction of a service focusing on the swaps market rather than spot flow.
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Margin pressures on buy-side clients such as asset managers have prompted increased interest in outsourced FX solutions, but firms must know exactly what they are paying for.
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In 2016, China’s currency seemed on target for global reserve status. These days, the renminbi appears stuck in reverse, with Beijing looking on passively as its status shrinks and it slides down the global rankings.
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Euromoney's latest coverage of 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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FX market participants are responding to Singapore’s desire for physical location of matching and pricing engines in the city-state.
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Regulatory technology vendors are relishing the prospect of helping banks minimize FX client onboarding errors, but in a world where legacy systems remain commonplace, regtech is not always an easy sell.
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Leading exchanges have seen little return from their investment in electronic trading venues and face some tough decisions over how to increase revenues.
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The international exchange’s clearing offering for EUR/USD and GBP/USD cross-currency swap transactions marks another modest step towards wider use of central clearing in FX.
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Brazil’s currency hit an all-time low nominal value on November 18, closing trading at R$4.20 to the dollar.
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Implementation of FX transaction cost analysis (TCA) appears to have stalled, with the impracticality of conducting analysis across every available venue encouraging many parties to rely on venues or dealers to measure execution, despite concerns over transparency and impartiality.
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Corporates often perceive options as an expensive means of hedging FX risk compared with forwards, but a number of market developments have increased their attractiveness as a tool for reducing currency exposure.
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Esma no longer feels it needs to impose EU-wide leverage limits on the FX contracts for difference (CFDs) market, but there is little evidence to suggest its efforts to protect retail traders have done anything other than push business offshore.
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Corporates' increasing need to use treasury resources more efficiently has persuaded BNP Paribas to partner with fintech Kantox to offer a new dynamic hedging solution to clients.
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While spot volumes remain below 2013 levels, the latest BIS triennial central bank survey notes that FX markets have recovered from the decline recorded in 2016 on the back of strong growth in swap and forward transactions.
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It has just received a very public vote of no-confidence from non-bank liquidity providers, but concerns around transparency are yet to outweigh the perceived benefits of last look.
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Cash flow at risk and earnings at risk can help ensure FX risks are reported correctly, but treasurers need to do more to convince senior management to move away from tried and trusted methods that are no longer fit for purpose.
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Other players are expected to follow Goldman Sachs and BNP Paribas in introducing algos designed to source both internal and external liquidity for FX NDFs, despite limited liquidity in many non-deliverable currencies.
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A reluctance to dispense with legacy technology, combined with heightened regulatory oversight and changing liquidity provision from banks, has seriously complicated the execution management system (EMS) selection process for FX traders.
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Questions about Deutsche Bank's restructuring multiply with each tactical shift, increasing the premium placed on any areas of real success – such as its Autobahn platform.
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While Euromoney turns 50 this year, our first big survey was launched 40 years ago – and to this day, the FX survey remains the benchmark for the foreign exchange industry. We look back on four decades of data to analyze how the market and the competitive landscape have changed.
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While the ability to run simulations based on hypothetical future as well as historic data is appealing, there is no guarantee that testing algos against both types would make them operate more efficiently in stressed market environments.
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Citi’s latest global corporate benchmarking survey shows that companies are worryingly complacent about their potential exposure to emerging market currencies and remain reliant on manual processes to manage risk.
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The recent withdrawal of Stater Global Markets from the prime-of-prime broker market has underlined the need for providers to continue to prove their value to clients.
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This year’s Euromoney FX survey results show up some important multi-year trends. The main lesson? Foreign exchange is more competitive than ever.
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Euromoney magazine has released the results of its 41st annual foreign exchange ranking, the most comprehensive quantitative and qualitative annual study available on the FX markets.
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Space constraints in data centres, coupled with cost considerations, have encouraged firms to seek creative solutions to the challenge of getting access to the main liquidity hubs.
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The lack of a unified approach to circuit breakers in the FX market is said to be reinforcing loyalty to OTC trading and stifling enthusiasm for exchange-based activity, despite the protections such mechanisms can offer.
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While all the conditions for increased corporate enthusiasm for foreign exchange hedging appear to be in place, uneven demand suggests lack of consensus on how best to manage currency volatility.
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The absence of a regulatory imperative has not deterred FX traders from increasing their use of transaction cost analysis tools, in turn increasing the pressure on brokers at a time when margins are already thin.
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The 100-day mark of Brazil’s new president, Jair Bolsonaro, has recently passed; no one – not even the government itself – pretended the time had been well spent.
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FX prime brokers are expected to adapt to the pricing challenges of uncleared margin rules, but it remains far from clear whether these rules will push the market definitively in the direction of central clearing.
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Humanitarian crises are emerging market issues and local banks are the best way to distribute aid. Banks should make it easier and cheaper to get funds to them.
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Determining when a client is in distress is not always a straightforward process – banks and FX platforms need to have processes in place to ensure losses are not compounded.
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Bundling FX and non-FX services has become an established strategy for smaller prime brokers seeking a foothold in a market where the barriers to entry remain dauntingly high.
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Macro and monetary policy factors are affecting some currencies more than traditional commodity triggers.
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Option trading has grown, while forwards and swaps have fallen.
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The ability of AI to help retail FX brokers is quickly moving from the theoretical to the practical; the result should be better operational efficiency and better trader services.
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The operators of FX platforms deny that credit management has failed to keep pace with the development of automated trading – but they do acknowledge that the process could be more efficient.
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Volatility in China and increased onshore access means a greater need for hedging; Singapore also building offshore rupee traction.
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Having tested HSBC FX Everywhere on internal payments, the bank now aims to provide it as a platform service to clients.
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Stop-loss orders have proved their worth again in 2018, protecting retail FX traders in particular from increased volatility in emerging market currencies.
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Investors continue to shy away from currency-hedged ETFs despite their positive short- and medium-term performance.
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Analysts believe Virtu Financial’s acquisition of ITG is largely a positive development for customers of both firms and the wider FX market, despite lingering concerns over access to institutional customer data.
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CLSNet – a new payments netting service for FX trades – aims to reduce costs and increase liquidity for market participants.
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The role of quantitative traders in the FX market is becoming ever more significant, as the amount of business executed via algorithms continues to increase.
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Under-investment in post-trade infrastructure is driving interest in distributed ledger technology as a means of reducing back-office costs.
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A combination of regulatory requirements and commercial imperatives are driving interest in quality execution analysis (QEA), a subset of transaction cost analysis (TCA) that is a vital component in measuring FX best execution.
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The distinction between retail and institutional FX business is well established, but there is a growing sense that both types of client can be supported on the same platform.
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Another financial crisis has rocked the country. As it slips into what could be a deep recession, time is running out to achieve the recovery that could create the conditions for a pro-market candidate to win next year’s presidential elections.
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Marex Spectron is making a low-key return to the FX market, just over four years after it terminated its foreign-exchange business.
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With new US sanctions looming over Russia and the effects of higher oil prices largely already priced in, will the Russian rouble sink or swim as we approach the end of 2018?
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Speed bumps appear to be gathering favour among stock exchanges, but their potential to level the playing field in the FX market is tempered by concerns around transparency and the impact on trading costs.
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A boutique broker renowned for the accuracy of its currency forecasts has warned that a no-deal Brexit could see the pound fall to parity with the euro by the middle of next year.
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The UK's financial market regulator finds firms still struggling with suspicious transaction reports, but it could be bolder in its criticism.
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The market tremors from the FX-fixing scandal and subsequent probe – triggering a flurry of fines, litigation cases and prosecutions – is set to reverberate for years to come. Euromoney investigates the fallout for global banks and possible reforms.
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Some six months after its FX Link service went live, CME Group reckons the benefits are being felt beyond the OTC spot FX and FX futures markets.
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Participants and analysts have dismissed any concerns about the key findings of the BIS market committee’s electronic markets report relating to the concentration of FX turnover and spot trading fragmentation.
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Following in the footsteps of Egypt and South Africa, Nigeria has signed up for a currency swap deal with China, but are swaps all they are cracked up to be?
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Some of the proffered solutions to the difficulties of attracting real money into the cryptocurrency market continue to be of the ‘which came first’ variety, such as the hope that increased liquidity from market maturity will lead to reduced volatility.
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As few as eight significant multi-dealer platforms could remain standing after further rounds of consolidation sweep the sector, predicts a new report.
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FX data providers are surprisingly coy when it comes to discussing the extent to which they have shaken up a market that has been described as ripe for disruption.
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The southeast Asian FX market is on fire and it is set to get a further boost thanks to a combination of political and economic turbulence, a regulator committed to facilitating infrastructure investment and increased interest from non-bank market makers.
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Traders have been staying away from the Turkish currency this year as they watched a steady decline in its value against the dollar, but the recent deterioration of relations between Turkey and the US sent the currency spiralling into a full-blown crisis.
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The regulation recently adopted by the European Securities and Markets Authority (Esma) around the provision of contracts for difference (CFDs) and binary options to retail investors has raised a furore among retail traders and brokers.
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Flow Traders is confident that the approach that has made it the leading player in the European exchange-traded products (ETP) market can be replicated in FX as it looks to cash in on increased interest in non-bank market makers.
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Providers of FX contracts for differences will be monitoring their trading volumes closely over the coming weeks to see whether warnings of clients moving to unregulated providers come to pass.
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Machine learning has gained influence in FX in the last year, although many observers doubt whether the technology has completely mastered the demands of high frequency trading.
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Rules-based order routing (RBOR) has become a useful tool for achieving increased trading efficiency, although it does not automatically guarantee best execution.
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The Royal Bank of Canada is appealing a judge’s scathing verdict that it sacked a former trader in London for blowing the whistle on lax compliance, citing a ‘robust compliance culture’.
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Less onerous regulatory requirements and the proximity to markets where retail FX is prohibited continue to encourage brokers to set up shop in the Middle East, despite ongoing state protection for the Saudi Arabian currency.
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Non-bank market makers in Australian FX are not taking away many big clients from banks, but they are taking meaningful market share in smaller clients.
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The flexibility of any response to a big market event is too restricted, especially by narrow trading hours for 24-hour markets
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With less than 10 months to go until the UK formally leaves the European Union, most FX venues remain content to wait for the outcome of negotiations around key issues such as financial passporting before confirming their future strategy.
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Kevin Rodgers gives his personal views on the trial and conviction of FX banker Mark Johnson and its ramifications for global markets. Anyone working in banking should consider what it means for them.
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A strengthening dollar is going to make life harder for emerging markets, whether you want to hear it or not.
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Some of the early excitement around peer-to-peer (P2P) FX appears to have subsided, with firms suggesting that clients do not care whether trades are matched internally.
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With a spike in volatility and the opportunity to consign conduct issues to the past, this might have been a turning point for global FX, but faced with a range of challenges, many market makers are retreating to core competencies.
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Adherence to the FX Global Code has gained momentum ahead of the one-year deadline on Friday, but senior traders are concerned the buy side is less committed than the sell side.
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The Euromoney FX Survey 2018 is our 40th annual survey of liquidity consumption in the global FX markets.
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Banks are having to pedal back on big ambitions and focus instead on core competencies, but that could be positive for all.
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Euromoney magazine has released the results of its 40th annual foreign exchange ranking, the most comprehensive quantitative and qualitative annual study available on the FX markets.
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…if you’re big, fast or specialized in modern foreign exchange. That has led to dramatic changes in the volume-based rankings in our annual survey. Meanwhile, new customer satisfaction ratings give a different insight into the banks’ relationships with their clients.
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The deadline for registering statements of commitment for the global code is only a day away, and market participants are reporting difficulties finding who has signed up, with statements spread out across eight registers – but GFXC has a plan to alleviate the problem.
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The volume of sub-Saharan Africa (SSA) FX business done electronically is growing, with the large South African banks in the vanguard.
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The Global Foreign Exchange Committee (GFXC) is trumpeting the fact more than 100 market participants have made statements of commitment to the FX global code, but these organizations face obstacles to maintain adherence, according to consultants.
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A senior currency trader fired from Royal Bank of Canada is taking the bank to task at an unfair dismissal hearing that includes accusations of sloppy trading, alleged bribery and an 'incoherent and inconsistent' global FX policy that he claims no one had bothered to read.
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The sell side has largely realized the potential of technology to minimize the impact of FX market fragmentation, although experts suggest it could do more to extract value from the data generated by electronic trading.
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International investors blame political uncertainty; locals view sell-off as weakening carry-trade dynamics.
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The most active corporate FX traders have once again ramped up their use of algos, recognizing the potential for cost savings and risk management.
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The prime brokerage market will be hoping for a boost from the imminent launch of BNY Mellon’s new service, which will represent a reversal of the trend for larger banks to leave the space.
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Objective to increase transparency has largely failed but liquidity remains resilient, say senior traders.
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Global cooperation between regulators must be preserved after the UK leaves the European Union, says Kay Swinburne.
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Finance ministers and central bankers at the G20 have called for greater global coordination in their approach to cryptocurrencies, but that looks a remote prospect when different regulatory bodies in the same country cannot agree a strategy.
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China’s interbank market trading platform and infrastructure provider has ramped up its technology partnership with NEX to capitalize on the ever-increasing appetite for algorithmic trading.
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ESMA and IOSCO are looking at how best to tackle the issue of excessive leverage in the retail FX market – reactions among retail brokers are mixed.
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Traders are having to manage a surge in the number of prices they handle, as counterparties implement FX code of conduct guidelines.
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Euromoney looks at the approach taken by regulators to encouraging fintech innovation in North America, after the announcement of a formal information exchange arrangement between the UK’s Financial Conduct Authority (FCA) and the US Commodity Futures Trading Commission (CFTC).
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Comments made by the US regulator at an FX industry event in Miami in February have raised the hackles of some market participants over the thorny issue of ghost or phantom liquidity.
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MarketFactory chairman James Sinclair sets out the reasons why FX liquidity could fragment further, in a new white paper.
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The findings of JPMorgan’s 2018 e-trading survey underlined yet again the importance of effective execution policies and systems.
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Industry experts on whistleblowing have been lobbying hard for reform, but it is still often the case that whistleblowers with the best of intentions have found themselves in legal grey areas, ending up blacklisted, bankrupt and unable to work in the City again.
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Volatility in Q3 led to losses for Europe’s multinationals, report shows.
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The forex market may have had a quiet 2017 with no big market dislocations, but liquidity is not as deep as it once was, while the buy side is becoming more discerning, driving changes in trading behaviour.
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JPMorgan’s annual institutional e-trading survey shows rising appetite for mobile trading, but growth in algo execution has been slower than anticipated.
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The impact of transaction cost analysis (TCA) on the FX buy side remains hard to quantify, despite the relative maturity of the technology.
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While regulators across Europe eye up – and in some cases replicate – the FCA’s regulatory sandbox, an EU-wide fintech testing platform remains far from inevitable.
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The latest cryptocurrency price crash is shining the spotlight on the regulation of these borderless, digital currencies, but the rules differ wildly from country to country; global super-regulator IOSCO is set to make an announcement.
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London-based Cash Netting Services is aiming to cut hundreds of millions of dollars in annual costs for banks by helping them find netting opportunities on a bilateral basis.
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The pace of change at Imperial FX during the past 10 months highlights the scale of the task of transitioning from high-street remittance to an online platform.
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The Association of Corporate Treasurers (ACT) has heralded a decision to include one of its members in a working group looking at the replacement for Libor.
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Global growth will be a key driver of currencies in 2018, a year in which the foreign-exchange industry will have to adapt to the strictures of Mifid II and a self-governing code of conduct.
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Euromoney speaks to some of the FX-focused companies in the third cohort of the Financial Conduct Authority’s (FCA) regulatory sandbox hoping to match the progress achieved by many of their predecessors.
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Pragma has attempted to provide some clarity to the little-understood phenomenon of flash crashes by providing a definition of the term for the first time, which it hopes will encourage further study of these market dislocations.
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The complexity of ERP and remote systems could leave treasurers exposed to FX risks. As automated systems look to fill this gap, there are still benefits from having a wide understanding of the whole business.
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Analysts’ confidence that there is untapped demand from Chinese banks to trade offshore RMB is good news for R5, which last week announced a joint venture with Shanghai Clearing House designed to connect these institutions to the London FX market.
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Innovation and price transparency around market data remain a bone of contention among FX market participants, although data providers insist they are working to reduce costs.
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FX market participants have benefited from guidance on good practices and the availability of sophisticated technological solutions, but implementing a surveillance programme remains a considerable undertaking.
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Iceland may remove, as early as the first quarter of 2018, the last of its capital restrictions imposed in the wake of its financial crisis, say market players.
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Are non-bank market makers simply repackaging existing liquidity or are they genuinely adding to market flows?
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Fees and regulatory uncertainty remain a concern for traders as cryptocurrency exchanges continue to broaden the range of fiat currencies they support.
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Fragmented liquidity has helped make financial extranets fundamentally important tools for global FX market players, but traders need to do their due diligence in picking the right fit for their strategies.
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The conviction of former HSBC trader Mark Johnson for front-running a customer FX order could transform the way dealers hedge client trades – and how they communicate with each other.
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Cryptocurrency architects have unveiled Bitcoin Gold, a new currency based on the bitcoin network set to begin trading in December, which attempts to resolve what some see as the excessive influence miners have on the bitcoin network.
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Co-location providers are getting a boost from higher levels of electronic trading, the ambitions of Asian brokers to grow their businesses in Europe, ongoing concerns over cybersecurity and regulatory factors.
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A lack of cooperation and coordination among regulators is increasing systemic risk.
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As exchanges look to snap up a bigger share of foreign-exchange business, they face the challenge of catering to investors’ multiple trading models.
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Providers of contracts for difference (CFD) trading services have launched a robust defence of their business, suggesting that traders are made fully aware of the risks involved and calling for regulators to support compliant CFD providers.
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The derivatives industry is lobbying policymakers to abandon dual-sided trade reporting, align European and US swaps rules, and ease the European Market Infrastructure Regulation’s (EMIR) burden on end-users.
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Swap execution facility (SEF) regulations, intended to increase transparency and reduce swap market risk, have been reported to impact market makers’ margins and liquidity, creating wider spreads for end-users. Here, Euromoney follows the CFTC’s SEF regulation timeline, presents market participants’ concerns, and reports on opportunities for doing business.
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Investment managers are not only bullish about their ability to manage FX volatility in their portfolios no matter what the market throws at them – they continue to see it as an opportunity to generate additional returns.
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Statements of commitment are gradually appearing, but many banks are still analyzing the provisions of the code against their own businesses before declaring adherence publicly.
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CME Group delivers a blow to last look by revealing its plans for spot FX basis spreads, just weeks before the launch of its OTC FX options clearing service.
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FX brokers are expected to leverage bank APIs to speed up client registration under the revised Payment Services Directive, despite the associated regulatory requirements.
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CLS is looking to move beyond its image as an FX market utility offering settlement plus a few extras, reorganizing itself into three distinct units – of which settlement is one – with new products announced for each.
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Volumes on TradingScreen’s newly spun-off FX platform have already doubled in size, even as parts of the market have contracted over the same time.
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A more flexible approach to software development is helping FX market participants test new products and bring them to market more quickly.
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Volatility in FX and beyond remains straitjacketed by central bank policy, but many fund managers that rely on volatility-based measures of risk might be dramatically underestimating the level of risk they are taking.
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The Financial Conduct Authority (FCA) is becoming more bullish about its regulatory sandbox, reiterating that the application of strict rules and the nurturing of innovative products and services are not mutually exclusive.
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Many traders are pushing their non-deliverable forward (NDF) trades through clearing houses to increase capital efficiency – with LCH seeing a record-breaking number in August – and R5FX hopes to push this to the next level.
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A growing number of FX traders are extolling the virtues of combining quantitative and fundamental analyses into an approach known as quantamental.
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The latest review of last look prompted by the FX global code has set off further debate over the use of holding windows and latency buffers.
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As Singapore reinforces its position as the leading FX trading centre in the Asia Pacific region, Euromoney looks at the prospects for other regional hubs.
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While Aesop was undoubtedly not thinking about currency markets when he wrote the story of The Tortoise and the Hare, low latency FX traders are increasingly realizing that speed does not necessarily equate to success.
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The foreign exchange market has long been dominated by a select group of large banks, but Euromoney’s inaugural five-star FX rankings show a different set of banks may be providing the best client service.
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Despite advances in data analytics technology, foreign-exchange trade audits remain a complex process requiring access to a wide spread of information on the client as well as the market.