Major European banks rethink client clearing | Report: ECB, UK should share euro-clearing oversight | UK pound drops below $1.20 ahead of Brexit speech
January 16, 2017
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Major European banks rethink client clearing
Deutsche Bank, Credit Suisse and Barclays are among European banks pulling back from exposures to client clearing derivatives because of increasing regulatory restrictions. US Commodity Futures Trading Commission data show a sharp move away from derivatives clearing, with Deutsche Bank reducing its client segregated assets to $3.1 billion by November 2016 from $12.5 billion in early 2014.
The Trade (UK) (1/13) 
Report: ECB, UK should share euro-clearing oversight
The UK should let the European Central Bank oversee London's euro-clearing business, and the UK and the ECB should share clearinghouse supervision, according to a Financial Service Negotiation Forum report.
Financial Times (tiered subscription model) (1/15) 
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UK pound drops below $1.20 ahead of Brexit speech
The pound has dropped below $1.20 on currency markets for the first time since the "flash crash" in October, just before Prime Minister Theresa May gives a speech this week on Britain's plans for withdrawal from the EU. The pound's fall came after the Sunday Times of London reported that May plans to pursue a "hard Brexit" by withdrawing entirely from tariff-free trade with the EU.
Bloomberg (1/16),  The Telegraph (London) (tiered subscription model) (1/14),  The Wall Street Journal (tiered subscription model) (1/15) 
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Barnier wants EU to have post-Brexit access to UK banks
EU's Barnier wants Europe to have post-Brexit access to UK's banks
Barnier (Emmanuel Dunand/AFP/Getty Images)
Michel Barnier, who is negotiating Brexit terms on behalf of the EU, told a closed-door meeting of members of the European Parliament that the EU needs to have access to London's banks after Britain leaves the bloc, according to minutes of the meeting. "There will need to be work outside of the negotiation box ... to avoid financial instability" after Brexit, Barnier said.
The Guardian (London) (1/13),  Politico Pro (subscription required) (1/14) 
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Regulatory Roundup
BIS: Tighter restrictions needed for FX trading
Restrictions need to be applied when trading currencies in thin markets, the Bank for International Settlements said in a report. Guidelines that start in May are intended to prevent sharp currency devaluations similar to the "flash crash" of the British pound in October, the report said.
Evening Standard (London) (1/13),  Bank for International Settlements (1/2017),  MLex (subscription required) (1/13),  Financial Times (tiered subscription model) (1/13) 
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US dealers seek margin clarification on Japanese banks
US banks are concerned about whether a Commodity Futures Trading Commission rule that lets them follow local margin rules, rather than US ones, applies to small Japanese banks when margin rules kick in March 1. "US dealers will be shut out from the market" if the rule doesn't apply, says Mai Shin of Goldman Sachs. (subscription required) (1/16) 
IASB to relaunch portfolio hedging initiative
The International Accounting Standards Board is reviving a project that would require banks to incorporate recognition of their portfolio hedging in financial reports. The initiative, which was put on hold in 2014, might face difficulties again in light of a European Banking Authority survey in which most banks said they would take advantage of an International Financial Reporting Standards 9 exemption that lets them keep their existing framework. (subscription required) (1/13), (subscription required) (1/16) 
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Commentary: Energy firms expect more commodity rules
European energy firms expect a new era for commodity regulation, including "some sort of reporting requirement becoming applicable to carbon trading in the coming months," writes Stella Farrington. Of interest are an exemption under Markets in Financial Instruments Directive II, position limits, clearing, Capital Requirements Directive IV, the Market Abuse Regulation and the Securities Financing Transaction Regulation. (subscription required) (1/13) 
Industry Developments
Blockchain market could grow to $7.7B by 2024
Increased investment and growing consumer acceptance of digital currencies could help the global blockchain market to be worth as much as $7.74 billion by 2024, according to a report by Grand View Research. The most dramatic growth will be seen in the North American and Asian-Pacific regions, the report says.
CoinDesk (UK) (1/13) 
Commodities and Managed Futures
T. Rowe Price CEO: Commodity recovery overstated
Predictions of a large rebound in commodity prices and stocks are doubtful, despite improvement in the global economy, says T. Rowe Price Group CEO Bill Stromberg. "We, too, think earnings will grow ... but not by as much as the market might think," said Stromberg.
Reuters (1/13) 
FIA News
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