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19
Jul
FSOC designates 8 Systemically Important Financial Market Utilities

The Financial Stability Oversight Council on 18-JUL-2012 voted unanimously to designate eight financial market utilities (FMUs) as systemically important under Title VIII of the Dodd-Frank Wall Street Reform and Consumer Protection Act (the Dodd-Frank Act). This action, the first designations made by the Council, represents another key step towards creating a safer, more resilient financial system. The authority to designate FMUs—often referred to as the “plumbing of the financial system” for their role in clearing and settling transactions between financial institutions—is an important component of Wall Street Reform and is one of a number of tools now available to constrain risk and help protect against future financial crises.

The designated FMUs are:

  1. The Clearing House Payments Company, L.L.C., on the basis of its role as operator of the Clearing House Interbank Payments System
  2. CLS Bank International
  3. Chicago Mercantile Exchange, Inc.
  4. The Depository Trust Company
  5. Fixed Income Clearing Corporation
  6. ICE Clear Credit LLC
  7. National Securities Clearing Corporation
  8. The Options Clearing Corporation
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15
Jun
Congratulations to Citi Bank on successful 200 years

Citibank has successfully completed 200 years of banking service today. Citi is commemorating this special occasion as Global Community Day 2012. Congratulations.

For this special occasion, Citi has prepared an interesting campaign that includes special website (http://citi.com/200 ), photos, videos and Facebook apps showcasing what happened over the course of 200 years. It pioneered 24/7 ATM in 1977.

Ever since being founded by Samuel Osgood in 1812, it has been involved in some of the biggest ideas in modern history.

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13
Jun
RBS, Natwest allow cardless ATM cash withdrawal using Smartphone

RBS and NatWest customers can choose to ditch their debit cards in favour of their mobile phones, with a new innovation that allows them to ‘GetCash’ from an ATM without needing a debit card.

GetCash will offer customers an easy fix for lost or forgotten cards, a way to get cash quickly to family members or friends in need, or a choice of leaving their wallets at home in favour of their mobile phones.

Customers with the RBS and NatWest mobile banking app can request the cash on their mobile and a 6 digit pin will be generated. This code is entered at an ATM, the amount of cash confirmed, and funds distributed accordingly.

RBS and NatWest already operates emergency cash which nearly 60,000 people have already used this year. After positive feedback we’re extending the availability of this service to the 2.4 million customers who already have the RBS and NatWest banking app on their phone.

This year GetCash will be combined with a range of other mobile developments, which together will allow RBS and NatWest to offer the most integrated mobile payments platform available. Together, these services will provide the first genuine alternative to a customers wallet, all through their mobile phone.

[Source]

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10
May
Vikram Pandit discusses crisis & future of banking

Citi CEO Vikram Pandit discusses the financial crisis, leading complex organizations and future of banking at the Stanford Graduate School of Business. He was interviewed by MBA student

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10
May
FX market barometer 2012

Last night Euromoney announced its 2012 FX Survey results ( which is one of the FX markets/industry barometers).

Deustche Bank retained its top position title while it’s market share reduced. Citi leapfrogged from 4th position to 2nd narrowing gaining additional market share and marching ahead on its goal of becoming numero 1.

Top 10 banks, (same banks as 2011), continue to dominate the market, accounting for 78.76% of the global FX pie, up from 77.36% in 2011. Top 5 banks account for well over 50%.

FXall was named the Best Independent Multibank Platform for 11th consecutive year but it’s marketshare declined from 28.6% to 21.7 %. FX Connect (owned by State Street) jumped from 4th to 2nd position in multi dealer platform category increasing its marketshare from 10.8% to 18.7%

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16
Apr
HiFrequency Trading Creates a Mirage of Liquidity – Andy Haldane

At the conference Paradigm Lost : Rethinking Economics & Politics organised by Institute for New Economics Thinking, Andrew G. Haldane, (Executive Director, Financial Stability, Bank of England) presented about Financial Arms Races

He talks about 3 Financial Arms Races

  • Return Races
  • Speed Races
  • Safety Races

Discussing on Speed Race, he talks about Race to Zero (Trade Execution times from about 10 minutes in 1970s to about 2 mins in 1990s to about microseconds today and possibly nano or even picoseconds in the future). He points out that for every trade executed about 60 trades are cancelled. Thus, he argues, High Frequency Trading (HFT) creates a mirage of Liquidity.

He says Speed adds to uncertainty in the market dynamics. And points out Flash Crash is not one off and several others have happened which we may not be well publicized. We may note here the recent incident in India last weeks where HFT was attributed for bringing down the market in few minutes

His public policy recommendations to address these are

  • Order Cancellation Restrictions
  • Market Maker Commitments
  • Market-wide Circuit Breakers
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14
Apr
Fed Chairman reflects on the Crisis & the Policy Response

Federal Reserve Chairman Ben S. Bernanke offered his thoughts on lessons learned from the financial crisis in a lunchtime keynote speech during the conference Rethinking Finance: New Perspectives on the Crisis, an event hosted by The Century Foundation and Russell Sage Foundation on Fri 13-APR-2012

In his keynote speech, Some Reflections on the Crisis and the Policy Response, Ben Bernanke says –

Subprime mortgages & housing bubble were the trigger while high leverage, unstable funding, deficient risk management & supervision were the vulnerabilities that led to the financial crisis

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27
Jun
FX industry wide initiative to reduce risks with Algo & HFT

Foreign Exchange (Forex or FX) industry launches initiative to reduce risks associated with algorithmic and high-frequency trading (HFT). Allows prime brokers to monitor trading activity and credit limits in real-time. Industry keen to act pre-emptively, to learn from May 2010 equity flash crash. Banks and currency trading platforms have joined forces to reduce the risk that computer model-driven high-frequency traders could spark a flash crash in the FX markets

Traiana (owned by ICAP) has partnered with leading FX prime brokers, Citi, Deutsche Bank, J.P. Morgan and Morgan Stanley, together with leading FX platforms, Bloomberg Tradebook, Currenex, EBS, FXCM , Hotspot FX and Thomson Reuters, to launch an industry-wide initiative to centrally monitor and manage foreign exchange (FX) ECN trading activity and trading limits globally. By connecting prime brokers and ECNs in real-time, the service will provide the FX industry with the control and real-time risk management capabilities to manage risks from algorithmic and high frequency trading. The launch of the new version of Harmony CreditLink culminates a comprehensive effort by all partners over many months, and is now live and available to all Harmony members.

The increase in high frequency trading (HFT) and algorithmic FX trading has made the provision of adequate controls and real-time risk capability critically important to prime brokers managing risk across clients trading on ECNs. Using Harmony CreditLink, prime brokers now have the ability to monitor their clients’ credit risk across multiple ECNs on a real-time basis, act on exceptions in a single integrated dashboard, and open, change or close credit lines to manage risk while maximizing clients’ trading ability. With real-time integration to ECN credit and post-trade APIs, Harmony will proactively notify the Prime Broker of limit breaches and allow the prime broker to modify credit lines or terminate trading activity with an integrated KillSwitch capability. By providing centralized, automated and secure ECN limit management, credit risk for all counterparties will be significantly reduced.

Andrew Coyne, Head of FX Prime & G10 eCommerce, Citi, said: “This collaborative industry initiative addresses a fundamental and immediate industry need – that of providing trading and limit management to prime brokers to enable them to monitor their clients’ credit risk in real-time. Initiated independently of any regulatory call for change, this new solution will fundamentally change the way the FX industry operates going forward.”

Jason Vitale, Global Head of FXPB, Deutsche Bank, said: “The FX industry is leading the way in terms of putting measures in place to significantly reduce risk throughout the post-trade process. Collectively, we have acted to put a solution in place that would provide the level of control and management we felt was necessary to reduce risk. Deutsche Bank is proud to be the first firm live on the new solution and a partner in such a significant evolution of the FX post-trade process.”

Andres Choussy, Global Head of FX Clearing, J.P. Morgan, said: “The cooperation between prime brokers, ECNs and Traiana demonstrates the continued and widespread support within the FX community to ensure proper risk management and control. J.P. Morgan is delighted to be a part of this initiative as we continue to re-design the FX post-trade landscape.”

Michael Irwin, Co-Head of FXPB, Morgan Stanley, said: “The increase in high frequency and algorithmic FX trading has made the provision of adequate control and real-time risk management of critical importance. This collaborative industry partnership marks one of the many ways that major FX prime brokers, ECNs and Traiana are taking the lead to provide high quality risk control, and better client service to the industry.”

Gil Mandelzis, CEO, Traiana, said “Traiana remains committed to innovating across market segments and asset classes to ensure all market participants have the post- trade credit risk solutions they need. We’re honoured to play an instrumental role for the FX community in this initiative, and look forward to expanding central credit risk capabilities to new asset classes.”

Ref : http://www.traiana.com/news/pressreleases/fullstory/?id=70

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23
Jun
Global Wealth Reports

PWC‘s biennial 2011 Global Private Banking and Wealth Management Survey published on 23-JUN-2011 after 7 pm CET  finds that Regulations and client expectations change status quo in wealth management industry
2011 Global private banking-wealth management survey
2009 Global private banking-wealth management survey
2007 Global private banking-wealth management survey

The Future Wealth Report is the brainchild of Scorpio Partnership, opinion leaders and anthropologists of wealth for over ten years. Alongside them is Standard Chartered Private Bank and SEI (NASDAQ: SEIC).
2011 The Future Wealth Report – The essence of success
2010 Future Wealth Insights – through the looking glass
2009 The Future Wealth Report – just who are the world’s future wealthy?

The Credit Suisse Research Institute launched on 08-OCT-2010 its inaugural Global Wealth Report, which finds that the global wealth currently held by 4.4 billion adults has increased 72% since 2000 to reach USD 195 trillion. Driven by robust economic expansion in the emerging markets, the Credit Suisse Research Institute estimates that global wealth will grow 61% to USD 315 trillion by 2015.
2010 Credit Suisse Global Wealth Report
2010 Credit Suisse Global Wealth Databook

Capgemini and Merrill Lynch Global Wealth Management publish annual World Wealth Report. The two firms have been working together for over 20 years to study key trends that affect high net worth individuals (HNWIs) around the globe. Over the years, the WWR has covered a variety of research topics in its featured spotlight section including:
2011 – Addressing new client concerns and industry dynamics via an Enterprise Value approach that leverages capability from multiple business units
2010 – Post-crises, Firms adapt to cautious HNWI behavior by integrating Behavioral Finance to transform and deliver better service
2009 – Optimizing Client-Advisor- Firm dynamics as wealth management firms tackle crises and look forward
2008 – Meeting diverse client needs in growth markets requires flexible service models and technology strategies
2007 – Exploring Needs-Based Service Models to better meet increasingly complex HNW client needs

Allianz launched its first edition of “Global Wealth Report” on 14-SEP-2010. The analysis of 50 countries shows that the wealth losses as a consequence of the financial crisis have not yet been overcome. Despite a marked increase to the tune of 7.5 percent, global financial assets at the end of 2009 (82.230 trillion euros) were still some 4 percent lower than the level of 85.590 trillion euros reached before the crisis. “Far too little has been said so far about this blow to savers”, said Michael Heise, Chief Economist at Allianz.
2010 – Global Wealth Report

The 2011 edition of The Wealth Report, produced by Citi Private Bank and Knight Frank, shows that prime property remains incredibly important to the world’s wealthiest people. On average, property accounts for 35% of UHNWI investment portfolios, second in importance only to investing in their own businesses.
2011 The Wealth Report : A Global Perspective on Prime Property and Wealth 2011

Boston Consulting Group publishes annual Global Wealth report
2011 Global Wealth 2011: Shaping a New Tomorrow
2010 Global Wealth 2010: Regaining Lost Ground: Resurgent Markets and
2010 In Search of Stable Growth: Global Asset Management 2010
2009 Delivering on the Client Promise: Global Wealth 2009
2008 A Wealth of Opportunities in Turbulent Times: Global Wealth 2008
2007 Report

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22
Dec
Triennial Central Bank Survey of FX & Derivatives Market Activity 2010

The triennial survey, conducted every three years, starting April 1989, is a global central bank survey of foreign exchange and derivatives market activity coordinated by the BIS on behalf of the Markets Committee and the Committee on the Global Financial System.

The objective of the survey is to provide the most comprehensive and internationally consistent information on the size and structure of global foreign exchange markets, allowing policymakers and market participants to better monitor patterns of activity in the global financial system. The exercise also serves as a benchmark for the semiannual OTC derivatives market statistics, which are limited to banks and dealers in the most important financial centres.

The Full Text of the reports (pdf format)  are 1989, 1992, 1995, 1998, 2001, 2004, 2007, 2010 (prelim report)

This survey has been modified since April 1995 to include OTC interest rate derivatives. Previous triennial surveys have used the expression “traditional foreign exchange markets” to refer to spot transactions, outright forwards and foreign exchange swaps. This expression excludes currency swaps and currency options, which are under OTC instruments. Beginning with the 2010 survey, the expression “global foreign exchange markets” will include all five foreign exchange instruments. Turnover on global foreign exchange markets and in interest rate derivatives is analysed in Tables 1 to 5 and in Tables 6 to 9, respectively.

In April this year (2010), 53 central banks and monetary authorities participated in the eighth Triennial Central Bank Survey of Foreign Exchange and Derivatives Market Activity (“the triennial survey”).   Coordinated by the BIS, participating institutions collect data from some 1,300 reporting dealers on turnover in foreign exchange instruments and OTC interest rate derivatives. The prelimnary report was published in September 2010 and final detailed report was published in December 2010.

The headline figures from the April 2010 survey are the following:

1. Turnover on the Global foreign exchange market

  • Global foreign exchange market turnover was 20% higher in April 2010 than in April 2007, with average daily turnover of $4.0 trillion compared to $3.3 trillion.
  • The increase was driven by the 48% growth in turnover of spot transactions, which represent 37% of foreign exchange market turnover. Spot turnover rose to $1.5 trillion in April 2010 from $1.0 trillion in April 2007.
  • The increase in turnover of other foreign exchange instruments was more modest at 7%, with average daily turnover of $2.5 trillion in April 2010. Turnover in outright forwards and currency swaps grew strongly. Turnover in foreign exchange swaps was flat relative to the previous survey, while trading in currency options decreased.
  • As regards counterparties, the higher global foreign exchange market turnover is associated with the increased trading activity of “other financial institutions” – a category that includes non-reporting banks, hedge funds, pension funds, mutual funds, insurance companies and central banks, among others. Turnover by this category grew by 42%, increasing to $1.9 trillion in April 2010 from $1.3 trillion in April 2007. For the first time, activity of reporting dealers with other financial institutions surpassed inter-dealer transactions (ie transactions between reporting dealers).
  • Foreign exchange market activity became more global, with cross-border transactions representing 65% of trading activity in April 2010, the highest share ever
  • The percentage share of the US dollar has continued its slow decline witnessed since the April 2001 survey, while the euro and the Japanese yen gained relative to April 2007. Among the 10 most actively traded currencies, the Australian and Canadian dollars both increased market share, while the pound sterling and the Swiss franc lost ground. The market share of emerging market currencies increased, with the biggest gains for the Turkish lira and the Korean won.
  • The relative ranking of foreign exchange trading centres has changed slightly from the previous survey. Banks located in the United Kingdom accounted for 36.7%, against 34.6% in 2007, of all foreign exchange market turnover, followed by the United States (18%), Japan (6%), Singapore (5%), Switzerland (5%), Hong Kong SAR (5%) and Australia (4%).

2. Turnover in OTC interest rate derivatives

  • Activity in OTC interest rate derivatives grew by 24%, with average daily turnover of $2.1 trillion in April 2010. Almost all of the increase relative to the last survey was due to the growth of forward rate agreements (FRAs), which increased by 132% to reach $601 billion.

On 16-Nov-2010, BIS released the latest statistics on positions in the global over-the-counter (OTC) derivatives market at end-June 2010. These comprise the preliminary results of the second part of the Triennial Central Bank Survey of Foreign Exchange and Derivatives Market Activity as well as the regular semiannual OTC derivatives statistics.

Amounts outstanding and gross market values at end-June 2010

  • Growth in the positions of OTC foreign exchange instruments was moderate at 9%, compared with an increase of 83% in notional amounts outstanding of currency instruments in the 2004-07 period.
  • In contrast, market values of these instruments almost doubled against a backdrop of increased financial market volatility during mid-April and early June 2010.
  • Trading activity with other financial institutions also drove the increase in the global foreign exchange positions. Their share (45%) surpassed transactions with reporting dealers (36%) for the first time in 2010.

—————-

Global foreign exchange market turnover by instrument1
Average daily turnover in April, in billions of US dollars
Instrument 1998 2001 2004 2007 2010
Foreign exchange instruments 1,527 1,239 1,934 3,324 3,981
Spot transactions² 568 386 631 1,005 1,490
Outright forwards² 128 130 209 362 475
Foreign exchange swaps² 734 656 954 1,714 1,765
Currency swaps 10 7 21 31 43
Options and other products³ 87 60 119 212 207
Memo:
Turnover at April 2010 exchange rates4 1,705 1,505 2,040 3,370 3,981
Exchange-traded derivatives5 11 12 26 80 166
1 Adjusted for local and cross-border inter-dealer double-counting (ie “net-net” basis). 2 Previously classified as part of the so-called “Traditional FX market”. 3 The category “other FX products” covers highly leveraged transactions and/or trades whose notional amount is variable and where a decomposition into individual plain vanilla components was impractical or impossible.        4 Non-US dollar legs of foreign currency transactions were converted into original currency amounts at average exchange rates for April of each survey year and then reconverted into US dollar amounts at average April 2010 exchange rates. 5 Sources: FOW TRADEdata; Futures Industry Association; various futures and options exchanges. Reported monthly data were converted into daily averages of 20.5 days in 1998, 19.5 days in 2001, 20.5 in 2004, 20 in 2007 and 20 in 2010.

—————-

More detailed results on developments in the foreign exchange and OTC derivatives markets and comprehensive explanatory notes describing the coverage of and terms used to present the statistics are included in the separate statistical release of the data. Explanatory notes follow statistical tables.

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