Forex trading probes
UBS is paying a $545m fine to US regulators over forex fiddling, Altice is making a $9bn move into the US cable market and minutes from the Bank of England and Fed will give us the latest clues to when interest rates rise. FT Opening Quote with commentary by City Editor Jonathan Guthrie is your early City briefing. You can sign up for the email here.
It takes a bold and courageous man to go against the consensus, especially when the consensus view equals “evil manipulative trader types got what they deserved with that $4.3bn fine for fx rigging!” In this case that bold man is Matt Levine, columnist at Bloomberg and long-time communicator of logic and sense, who made the brave assertion on Wednesday that commentary surrounding this entire rigging episode may be losing sight of the core fundamentals of the case. Namely, that in terms of money made, there’s no escaping the fact that this was possibly the least successful manipulation attempt of recent times.
Standard Life warns Scottish vote concerns ‘not addressed’ || BMW profit beats forecasts on SUV sales and China demand || InterContinental plumps up its dividend as activists bite || Crédit Agricole profit nearly wiped out by BES charge || Aggreko first half hit by strength of sterling || HP accuses Autonomy founder of fraud || Oil trader Arcadia Petroleum settles with CFTC || Urban Exposure becomes latest property company to pull IPO plans || Luck runs out for Macau gaming stocks || Markets
Markets: Asia-Pacific markets were barely moved by better-than-anticipated GDP numbers from China. Data out on Tuesday already showed that Chinese bank loans and other forms of credit grew at their fastest pace for three months in June. The Australian dollar, which usually reacts positively to better growth numbers in China, slipped 0.3 per cent to $0.9341. (FT’s Global Markets Overview)
Markets: Asia-Pacific equities made a modest rebound after breaking a two-month winning streak last week. Haven assets were out of favour, underscoring the improved sentiment. The price of gold was down 0.3 per cent at $1,334.80 per ounce, while the Japanese yen slipped 0.1 per cent to Y101.4 per US dollar. (FT’s Global Markets Overview)
Camp Alphaville reminder: Is this nuts? We might finally find out. (Details here) Markets: Asia-Pacific equities posted broad declines after world stocks retreated from record highs overnight. Overnight, the FTSE All-World equity index slipped 0.2 per cent, breaking a five-day win streak, while the S&P 500 lost 0.4 per cent, its biggest drop in three weeks. (FT’s Global Markets Overview)
Markets: Asian equities put in a mixed performance, with Australian stocks declining as miners tracked iron ore prices lower while Chinese markets edged up amid speculation the central bank may create easier credit conditions for cash-starved businesses. (FT’s Global Markets Overview)
Markets: Tensions in Ukraine and jitters ahead of this week’s US central bank meeting weighed on Asian bourses, pushing equities lower. The prospect of lower global supply of Russian-produced commodities sent Chicago wheat futures up 1.2 per cent to $7.17 a bushel. Russia is one of the world’s largest suppliers of nickel, and the price of three-month delivery on the London Metal Exchange rose as much as 1.4 per cent to $18,700 a metric tonne, hitting a 14-month high. (FT’s Global Market Overview)
Eurozone inflation at five year low || UK and Switzerland investigate benchmarks || X2 secures $2.5bn in funds || Greece approves structural reform package || Libya sues Soc Gen || ING to resume dividend in 2015 || North and South Korea exchange artillery over water || Markets: Positive sentiment at quarter end
IMF pledges $14bn-$18bn rescue package for Ukraine || Ofgem orders probe into UK energy market || Fed rejects Citi’s 2014 dividend and stock buyback plans || UBS suspends six more forex traders || Fed stress test results to hit RBS’s Citizens division hardest || Markets
We’ve been harping on about the rise and importance of the central execution desk and internalisation practices more generally for a long while. But we haven’t touched the topic recently because, well, banks and concerned parties tend not to enjoy discussing it very much.
Counterparties scramble to react on Russia sanctions || Temasek buys quarter of AS Watson, puts kibosh on IPO || Reuters to overhaul FX fix || Ukraine signs EU pact || Mt Gox finds $115m neglected in old file || Lufthansa pilots to strike || Markets: Russia stocks fall
Markets: Asian markets wilted after Janet Yellen stumbled in her first meeting as chairwoman of the US Federal Reserve after sending signals that appear to point to earlier rises in interest rates. Following an overnight brief plunge in US markets when Ms Yellen implied rates could rise six months after the Fed stops buying assets, Asian currencies and equity markets opened lower. (Financial Times)
Crimea’s parliament calls for referendum on region’s future || BofA fights attempt to raise ‘hustle’ fine || Standard Life warns on Scots ‘Yes’ vote || Pearson profits set to miss forecasts as US enrolments fall || AO buyers disappointed || Norway’s oil fund to debate fossil fuel investments || Renminbi caps biggest weekly fall in years || RWE expected to declare €3bn net loss || Tesla Motors raised $2bn from the largest US convertible bond sale in more than two years || Dan Loeb will try to force his way on to the board of Sotheby’s || The Spanish government is selling 7.5 per cent of Banki || Ireland’s unemployment rate fell to 12.1 per cent || Markets
From Joy Rajiv, who formerly worked in the Foreign Exchange trading divisions at both Morgan Stanley and Deutsche Bank. He left the industry in early 2013 for personal reasons unrelated to the current regulatory probe into the FX industry, and writes in a private capacity here drawing on his experience in the industry. As someone who has worked in FX trading for three years at Morgan Stanley and Deutsche Bank from 2010 to 2013, I have been dismayed and discouraged by the recent coverage of alleged manipulation by FX traders at major banks. Traders have been fired, lawsuits have been filed and comparisons to Libor have been thrown around without much concern for detail. Media reports have focused their attention on abuse of a daily benchmark, called the WM/R (World Markets/Reuters) fix.
Something’s afoot in the world of RMB. The renminbi fell on Tuesday by the most in a single day since 2012, dropping 0.35 per cent against the dollar in the onshore market by midday in Shanghai, and 0.7 per cent since Wednesday, as the FT reported. The market has put this down to an imminent change in China’s foreign exchange regime. The narrative is that the PBOC is preparing to widen the trading band ahead of flotation and is spooking the market intentionally, so that it realises that the RMB goes down as well as up, and that carry-trades are no free lunch. Not everyone is as convinced.
China’s central bank has drained Rmb48bn ($7.9bn) from money markets || BoJ maintains expansionary monetary policy || Banks review rules on forex traders betting own money || Barclays bankers face Libor charges || Head of Vitol calls for reform of Brent || Iran’s Bank Mellat sues UK Treasury in $3.9bn lawsuit || BHP Billiton posted a 31 per increase in profits in the first half || Alcoa to cut smelting capacity || Temasek seeks to sell $3.1bn Shin Corp stake ||
Markets: “Asian stocks rose, with the regional benchmark index poised for a three-week high, after the Bank of Japan stuck with a plan for unprecedented asset purchases and boosted lending programs. Chinese shares fell as the central bank drained liquidity from the financial system.” (Bloomberg) (FT’s Global Markets Overview)
Japanese wages fall for 19th month || London Underground workers begin 48-hour strike || The US budget deficit will fall to 3 per cent of economic output this year || Microsoft banks on the cloud under Nadella || Muddy Waters rode shorting wave on Blinkx || Morgan Stanley restates Q4 earnings || JPM resolves civil mortgage claim by paying $614m || Small, and oft weak, banks face TARP hit || Russian oligarchs take battle to NY court || Deutsche Bank fires currency traders || Sony in talks to sell Vaio
Markets: Volatility is back and so are jitters over emerging markets. Across Asia, equity markets experienced steep losses after the Federal Reserve continued to scale back its stimulus programme, erasing gains from Wednesday’s relief rally. The sharpest losses were in Japan, where the Nikkei 225 dropped 3.3 per cent, on pace for its biggest fall since early August. The Nikkei has suffered an 8.7 per cent loss this month, making it the worst regional performer this year. (FT’s Global Markets Overview)
Markets: The global retreat in equity markets continued on Friday, with bourses weakening across Asia-Pacific. Hong Kong’s Hang Seng index was the worst performer in the region, dropping 1.8 per cent. The Shanghai Composite sunk 1.1 per cent and South Korea’s Kospi Composite fell 1.2 per cent. The broad weakness followed a 0.9 per cent drop in the S&P 500, which finished 2013 at a record high. (FT Global Market Overview)
Riot police encircled central Kiev on Monday night || Bank of England’s Carney looks beyond rates to steer UK upturn || Jump in mortgage borrowing a good for US consumption || Bullard says chances of taper higher || Draft Volcker rule gives leeway on hedging || Frank says Wall St attempts to derail Volcker will fail || Improving UK economy boosts Whitbread sales || Lululemon billionaire founder quits || China to increase cash subsidies for scrapping obsolete ships || Markets
Markets: China’s pledge to introduce wide-ranging reforms continues to be the dominant theme feeding investor appetites. Shares of Chinese companies listed in Hong Kong, or H shares, were up another 1.8 per cent to reach their highest since early March, extending Monday’s 5.7 per cent climb. The gain was enough to push their 2013 return into positive territory. (Financial Times)
Markets: Asian markets were slightly lower ahead of an interest rate decision from the European Central Bank on Thursday and some important US economic figures. The US will publish third-quarter gross domestic product numbers on Thursday, and the delayed October non-farm payrolls report on Friday. (Financial Times)