Is a fully floated yuan on the horizon?

Exchange shorts

  • Hong Kong Exchange (HKEx) will offer after-hours trading in yuan futures starting from April 7, Reuters reported. According to HKEx CEO Charles Li, “Last week people saw that the renminbi is not a one-way street…RMB volatility is here stay.”

  • FIA aims to review the waterfall structure at every clearing house globally, in response to trading errors at KRX’s listed derivatives service, which triggered the use of non-defaulting members’ default funds under KRX’s rules, Risk.net reported. FIA Asia executive director Bill Herder stated that “we are going through an extensive global review of all clearing houses including whether the waterfall makes provision for clearing house skin in the game. To the best of my collection, the non-defaulting members’ default fund has never been hit until now.”

  • UK’s Serious Fraud Office senior lawyer James Hines stated that there was “vast amounts” of documents in its LIBOR investigation and that much of the evidence against three former Barclays traders (including Peter Johnson, Jonathan Matthew and Stylianos Contogoulas) was in e-mail form.

  • Bank of England (BoE) is hoping to achieve a global pact among banks to suspend default clauses in certain derivatives contracts during a crisis. According to Bloomberg, BoE wants banks and ISDA to temporarily halt claims on banks that become insolvent and need intervention, as “the entry of a bank into resolution should not in itself be an event of default which allows counterparties to start accelerating contracts and triggering cross-defaults.

  • SEC member Daniel Gallagher stated that the US Federal Reserve’s new capital rules for foreign banks are part of a power grab to supervise stock brokerages which may ultimately hurt market liquidity and have a “profound impact” on broker-dealers. According to Reuters, Gallagher was quoted saying that “when it comes to broker-dealer subsidiaries of banks, however, we stand ready to work with the Fed and other banking regulators to ensure that any new rules applicable to those entities are enhancements to our existing regime, not duplicative, contradictory or counterproductive regulations.”

  • CFTC enforcement lawyer Stephen Obie left the regulator to join the Jones Day law firm, where he will be a New York-based partner after serving for more than 15 years at the CFTC.

  • US Treasury’s undersecretary for domestic finance and acting deputy secretary Mary Miller advocated the “need for an effective swaps data reporting regime, one designed to ensure that we have the information necessary to develop a comprehensive picture of market exposures and risks.”
About the Author

Bernardo Mariano brings to ERDesk his experience structuring private deals for the acquisition of mutual exchanges. Prior to joining ERDesk Bernardo worked as a Director for Instinet and later, CEO of Reuters' Bondex. He holds an MS in Economics from University of Illinois and an MIA in Finance from Columbia University. He can be reaced at be reached at mariano@erdesk.com. 

Equity Research Desk (www.erdesk.com) provides fundamental analysis of global capital markets related entities to support the investment process of buy-side analysts at hedge funds and traditional money managers. The company focuses its coverage on securities exchanges, discount brokers, trading platforms, asset managers, financial-related technology companies and intellectual property assets in the US, Europe, Asia, and Latin America.

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