Derivs - FX

The pace of new exchange traded fund launches has slowed since the markets’ recent swoon, but issuers are betting that investors will be coaxed by new offerings with hedged currency risks.

How collateral’s rise will profoundly impact markets

Closely following Markit’s launch of a foreign exchange trade confirmation service, the company has agreed to acquire DealHub, a provider of FX trade processing and trading services.

China Foreign-Exchange Trade System (CFETS) started posting a debut intraday USD/CNY reference rate on its website for the first time onAugust 24. The template of a table released today shows that CFETS will publish the reference rate five times a day, a move seen to be in line with China’s determination in further liberalising its FX market.

Futures markets suggest that traders have already priced in a US September rate hike, implying that the impact of the move may not be as dramatic as once feared.

Currency options markets have seen an implied volatility spike, which could bleed into other asset classes. As the emerging markets tail wags the global volatility dog, investors across all asset classes are suddenly in a more cautious mood.

Weak demand signals from China and increasing currency volatility have extended losses for the copper futures and options market.

It has been a busy week for Markit’s expansion plans, with the company agreeing to buy CoreOne Technologies and launching an FX trade confirmation service.

Back in 2010, Brazil’s finance minister Guido Mantega warned that the world was in the midst of a “currency war” in the wake of US quantitative easing. The term is now back in vogue after China made the shock decision to devalue its currency.

UBS has overhauled the senior management of its trading business, as Kevin Arnold, head of FX, rates and credit for the Americas, has been given a new cross-asset role that includes equities.

Markit has launched an FX trade confirmation service that it hopes will mitigate operation risk and allow counterparties to manage trade lifecycle events more efficiently.

CME Group has agreed to enter into a joint venture with China Foreign Exchange Trade System and National Interbank Funding Center (CFETS), in a move that positions it to open up CNY denominated markets to foreign investors.