China and Japan are planning to trade directly without the USD as the common currency to determine the “cross-rate”.
Instead, the transactions from trading activities will determine the exchange rate. This is a step to promote trading between the two countries.
This could also be an initial sign of the greenback losing its dominance as a reserve currency. As Zerohedge puts it “when one bypasses the dollar, one commits blasphemy to a reserve currency.”
Here is the full report from Agence-France Presse (AFP):
TOKYO — Japan and China are expected to start direct trading of their currencies as early as June as part of efforts to boost bilateral trade and investment, according to reports.
With the planned step, exchange rates between the yen and the yuan will be determined by their transactions, departing from the current “cross rate” system that involves the dollar in setting yen-yuan rates, Kyodo News said on Saturday.
The two governments are eyeing setting up markets in Tokyo and Shanghai, the Yomiuri Shimbun said.
The yen-yuan exchange system would help businesses in the world’s second- and third-largest economies reduce risks associated with exchange rate fluctuations in the dollar and cut transaction costs, Kyodo said.
It will be the first time that China has allowed a major currency except the dollar to directly trade with the yuan, Kyodo said.
Technology giant FlexTrade Systems, a global leader in broker-neutral, multi-asset algorithmic trading systems, today announced that Phatra Securities, a leading securities firm in Thailand, has deployed FlexTRADER, the award-winning EMS world-renowned for its combined high performance and multi-asset trading capabilities, and Mottai, FlexTrade’s advanced, web-based broker trading solution specifically enhanced for the ASEAN region.
“We were looking for a state-of-the-art solution that could cater to our various and extensive requirements, which include institutional, proprietary, and institutional-to-retail trading for SET and TFEX” said Aphinant Klewpatinond, CEO of Phatra Securities. “FlexTrade fits the bill on all counts.”
To guarantee robustness, compatibility and scalability, both solutions share the same backend with FlexTRADER handling Phatra’s market making and proprietary trading requirements, such as pairs trading and index arbitrage, and Mottai facilitating web-based trading functionality and mobility to the remisier and the retail dealing audience.
According to Bertrand Rassat, principal of FlexTrade Systems Pte Ltd. in Singapore, many investment banks in Thailand want a global solution, not just a retail trading solution or an institutional trading solution. “By providing two state-of-the art GUI applications, we offer our clients the best of both worlds without compromising the integrity of the whole solution,” said Rassat. “This gives our clients more flexibility, more mobility and above all the reassurance that their platform is designed to fit their needs.”
Flextrade has been offering solutions to a global client base, the technology provider was approved as an independent software vendor (ISV) for Dubai’s DGCX a time-consuming and costly process.
Rapid Addition, the leading provider of trading technology solutions to buy- and sell-side financial institutions, has partnered with Extol to distribute its products across Latin America. The decision follows the firm’s continued success in the US and across Europe.
Rapid Addition is currently working with several businesses in the region, including Bolsa de Valores de Colombia (BVC), operator of the country’s main securities exchange which implemented the firm’s solutions as part of the LatAm Integrated Market (MILA project).
A major regional integration project along LatAm’s Pacific Coast – a FIX-based messaging routing networking linking BVC, Bolsa de Valores de Lima (Peru) and Bolsa de Comercio de Santiago (Chile) – was a testament to the strength of the firm’s products and relationships.
Following that success, Rapid Addition has been approached by a number of banks and brokers, stat arb and hedge funds, high frequency trading firms and exchanges across the region, with a view to leveraging their solutions and reaping the benefits.
Further interest in FIX is being generated by Mexico’s recent adoption of FIX.4.4 and by platform upgrade plans at BMF Bovespa (Brazil) that aim to reduce the latency of its trading platform.
In response, Rapid Addition evaluated a number of firms, capable of providing on the ground sales and support to meet this demand. Extol, located in one of the world’s fastest-growing emerging markets, was selected due to its deep knowledge of FIX and local requirements.
Kevin Houstoun, Chairman at Rapid Addition, commented:
“This partnership will present companies in the region with the opportunity to improve their performance and efficiency, through the automation of business processes and the availability of the fastest commercial FIX messaging technology. For those that are already using our low latency technology, it will enhance the local support of those systems that are already in place.
The recent OnX Intel performance benchmarks on FIX engine performance, illustrated that Rapid Addition has the best FIX technology in this market place, and this partnership makes it available in LatAm with local support and integration expertise.
Extol can now help customers who have a need for a complex integration projects as well as reducing the latency of their trading infrastructure and addressing any issues from their other products.”
Edwin Montenegro, CEO at Extol, added:
“At a time of incredible change and development in the BRIC marketplace, the demand for proven high performance technology and FIX-compliant products has risen greatly, particularly in Brazil. Partnering with Rapid Addition is the next logical step for this economy.”
Kevin Houstoun, concluded:
“We have experienced strong demand for our solutions across Latin America and Mexico and through working with Extol, one of the most respected FIX integrators in the market, we can react to this and be a part of what is currently a crucial emerging market.”
Latin America is making a strong impression in global financial markets. Although most South American economies are new to online FX trading the domestic market is very strong.
Forexmagnates team has written a report on FX in LATAM, available in the current quarterly report.
Fair Trading Technology is announcing the release of version 2.0 of The T3 Integration Bridge. T3 Bridge is the world’s first totally transparent MetaTrader 4 bridge with multiway connections to Dukascopy Bank’s Jforex platforms.
After months of development and a month of testing, Fair Trading Technology announced today that the version 2.0 of its T3 Integration Bridge is now available to live forex trading accounts.
The new version marks the the most significant upgrade to the Bridge since its release in 2010. The T3 Integration Bridge is the world’s first totally transparent MetaTrader to true ECN trading bridge with multiway execution between MetaTrader 4, Fx Trader, Fair Trading Technology’s mobile trading platform and Jforex platforms, through Switzerland’s Dukascopy Bank.
Fair Trading Technology’s Chief Development Officer Tanner Serifler says while many of the changes are under the hood and will not be immediately apparent to many traders, the newest version of the Bridge will make a big difference for future development and the ability to add new features, platforms and liquidity providers.
“The T3 Integration Bridge 2.0 is more flexible than any previous bridge release, allowing more features and additional platforms to be added more rapidly,” said Mr. Serifler. “We expect this to be particularly appealing to traders as we expand into new areas such as mobile trading, social trading and even cloud-based trading.”
Among the improvements live traders will notice:
- the “Comments” field, previously used for internal tracking, is now available for use by traders (or their EAs.)
- commissions are updated in MetaTrader 4 during Auto-Sync
- “Multiple Close By”, allowing the merging of multiple orders at once
The Bridge 2.0 was launched in the demo environment on March 5. It is available to live traders as of April 1, 2012.
Fair Trading Technology offers an unparalleled product to their customers with their multi-way integration bridge that closes the gap between the MetaTrader 4 and Jforex trading platforms. The T3 Integration Bridge offer customers speed, security and fair commission as well as two-way execution at the world’s largest Swiss ECN, the SWFX Marketplace of Dukascopy Bank.
Interbank liquidity bridge solutions have been growing in popularity, traders are expecting brokers to offer true ECN pricing thus reducing slippage and improving order execution.
Financial Software Systems a leading provider of integrated financial software, is pleased to announce that Oversea-Chinese Banking Corporation Limited has licensed the Spectrum MarginTrac System.
Named the “Best Domestic Bank in Singapore”, by AsiaMoney (May 2011) and the ”World’s Strongest Bank”, by Bloomberg Markets (May 2011), OCBC will utilize Spectrum as its collateralized trading and risk system for Treasury clients in Foreign Exchange, FX OTC Options (including exotics), and Non Deliverable Forwards. Spectrum will be utilized for pre-trade and post-trade risk management, collateral management, and Treasury Sales Desk client margin and commission management. The Spectrum implementation will include full integration into OCBC’s global risk management architecture.
Joseph Kubeyka, Managing Director of Financial Software Systems Asia Pacific region, noted “We are very excited to expand our strategic relationship with OCBC. By selecting Spectrum MarginTrac, OCBC has decided to make Spectrum and FSS key components of OCBC’s long-term strategic technology plan. Spectrum MarginTrac will enable OCBC to deploy our solution on a global basis for both Sales and Trading, while enabling OCBC to quickly offer new and innovative products to their client base.”
Absa Capital, the corporate and investment banking division of Absa Bank Limited, and affiliated to Barclays, recently introduced trade in Chinese Renminbi to PACE FX, their electronic FX trading platform.
The introduction of the market for offshore CNH, deliverable in Hong Kong, has been an important development for Chinese currency market participants. CNH market volumes have risen steadily since its inception in July 2010, with daily volumes in offshore CNH reaching $3-$4 billion.
The CNH provides more options for hedging and risk management and allows participants to trade the Renminbi as they would any other deliverable currency on PACE FX.
“China is an increasingly important trading partner for South Africa and this development marks an important step in offering local clients full risk management capabilities for their Chinese exposure. This move also enhances our e-commerce capabilities on the rest of the continent,” says Stephen van Coller, Chief Executive of Absa Capital.
Other emerging market currencies that are now offered are the Thai Baht (THB) and Saudi Arabian Riyal (SAR).
The Depository Trust & Clearing Corporation (DTCC) began user testing of its new Global Trade Repository service for Foreign Exchange on May 1 and is planning full production by the fourth quarter, including regulatory and public reporting. The repository is the last of five planned global repositories for OTC derivatives being developed and operated by DTCC.
Since the financial crisis of 2008 regulators hope that having access to a central pool of trade information will enable them to better monitor systemic risk within the over-the-counter market.
The OTC foreign exchange (FX) trade repository service will be delivered in two phases to facilitate testing and provide greater flexibility for firms who plan to use the repository service to meet regulatory reporting requirements.
The first phase, which began May 1, will cover testing for data submission of primary economic terms, confirmation data and snapshot reporting for FX forwards, swaps and derivatives by firms. These capabilities bring FX to a consistent level to that of other derivative asset classes supported by DTCC. The second phase, which is expected to start around July 1, will add testing for further message types and extend reporting, and full production is expected to be available in October.
For foreign exchange products, DTCC is working on establishing aggregate public data reporting capabilities and is working with the OTC Derivatives Regulators’ Forum (ODRF), central bank-sponsored Foreign Exchange Committees and the Global FX Division of the Global Financial Markets Association (GFMA). DTCC plans on publishing aggregated data on OTC foreign exchange trades, such as by volume, currency, product type, and tenor, in a form that will be both timely and meaningful and provide the public with enhanced transparency in this market. Both the public and regulatory data are expected to be made available in the fourth quarter of 2012.
“The rollout of the FX repository caps a busy year for DTCC of designing, developing and implementing global trade repositories for three different classes of OTC derivative products and providing reporting to regulators to monitor that trading and systemic risk globally, as well as greater public transparency,” said Stewart Macbeth, President and Chief Executive Officer of DTCC Deriv/SERV LLC.
“Members of the GFXD, along with others, have been extremely proactive with efforts to ensure that an industry-wide, global solution exists to meet multiple reporting requirements,” said James Kemp, managing director of GFMA’s Global FX Division. “The rapid development of this trade repository is excellent progress towards achieving the FX markets’ transparency objectives for both regulators and the public.”
DTCC developed the first trade repository in the world for OTC credit derivatives, initially called the Trade Information Warehouse. That warehouse now houses trade information on more than 98% of all the OTC credit derivatives globally. The company then subsequently received industry approval, following a competitive process, to develop global trade repository services for equity, interest rate, commodity (with the European Federation of Energy Traders) and foreign exchange (with SWIFT) OTC markets.
As part of its support for the markets, DTCC also developed a separate, web-based regulatory portal that permits regulatory agencies from around the world, based on voluntary reporting agreements and supervisory authority entitlements, to obtain near real-time information on credit derivatives trading. That portal was later expanded to include OTC equity derivatives and interest rate derivatives, and will also be used for commodities and foreign exchange trading reporting beginning in the fourth quarter. Some 40 regulatory agencies globally currently use the portal for derivatives monitoring.
DTCC’s global trade repository service for FX will be offered by its UK-based subsidiary, DTCC Derivatives Repository Limited. DTCC’s swap data repository service for Dodd-Frank FX reporting will be offered by its US-based subsidiary, DTCC Data Repository (U.S.) LLC, subject to regulatory approval.
OTC FX products have not been directly associated with any major mishaps like the credit crisis or flash crash, although there is no central market place initiatives like CLS and Forex Clear are pushing the market to greater transparency and confidence.
Foreign hedge funds may soon be able to trade directly on Chinese stock markets as the country’s financial regulators look to inject some volume in their flat capital markets.
The China Securities Regulatory Commission has begun a feasibility study of lowering the requirements to win a qualified foreign institutional investor license, as well as loosening the restrictions of QFIIs. It is unclear whether the review will result in changes or when the loosening might come, but CSRC’s director of fund supervision said yesterday that changes were planned.
The Chinese Yuan is currently trading at 6.314 against the greenback.
Wang Li told the Shanghai Securities News that CSRC planned to allow more types of foreign investors to receive QFII licenses. It also plans to streamline the application and approval process, expand the scope of a QFII’s investments, clarify tax policy and ease rules on account opening and fund repatriation. Last month, the CRSC boosted QFII quotas from US$50 billion to US$80 billion.
Indeed, China has already opened the door to almost as many new QFIIs (28) in the first four months of 2012 as it did in all of last year. All told, 158 firms have been granted the licenses, but no hedge funds. Och-Ziff Capital Management applied for a license a few years ago, but it has not been approved.
Among the proposed changes are a reduction in the US$5 billion assets minimum currently required of QFIIs, a level which bars many hedge funds. Currently, firms must also have been in business for five years, blocking new China-focused hedge funds from applying.
China’s aim to uplift its capital markets has taken a step forward as the largest securities broker is pushing forward to the high frequency trading segment. Progress Software announced that China’s largest investment bank by market value, CITIC Securities has selected the Progress® Apama® algorithmic trading platform to enable it to offer its institutional investor clients low-latency, algorithmic and high-frequency trading strategies customized to their requirements.
CITIC Securities selected the Apama solution in response to the growing demand from institutional investors in China for more algorithmic trading services. These investors want access to low-latency algorithmic and high-frequency trading strategies across multiple asset classes. The Apama algorithmic trading platform will enable CITIC Securities traders to create customized execution algorithms that operate on domestic markets and can manage high volumes of client order flow. These unique, customized strategies will provide CITIC Securities’ institutional clients a significant competitive advantage.
Additionally,CITIC Securities will use its new Apama algorithmic trading platform to offer innovative, pre-packaged, customized strategies for institutional investors. This will shorten the time to market for new strategies that access liquidity in milliseconds, clearly differentiating them from competitors.
CITIC Securities set out to meet the considerable market opportunity in China by identifying options to replace its existing fixed platform with one that would allow it to rapidly customize high-frequency algorithmic trading strategies for its clients. Following a consultation round with a number of local and international vendors, Progress Software’s solution-based approach, reputation and local experience led CITIC Securities to make the decision to implement the Progress Apama algorithmic trading platform.
A CITIC Securities spokesperson said: “When you’re talking about trading where milliseconds make a difference, it was critical that we selected an algorithmic trading solution that would enable us to compete in a high frequency trading market with a competitive edge. The Progress Apama platform will initially be integrated with our order management system. Next, we plan to extend the algorithmic trading system into a multi-products programming trading system. Our goal is to build the best algorithmic trading system in China’s markets.”
Dr. Richard Bentley, industry vice president, capital markets atProgress Software said “Progress Apama will give CITIC Securities the ability to quickly develop and deploy unique trading strategies, to achieve dramatic advantages over competitors trading with commoditized ‘black box’ offerings. As the first investment bank in China to deploy a fully customizable algorithmic trading platform, CITIC Securities will be leading the way and setting the standard for the Chinese securities industry. We are honored to be selected by such a prestigious company in this important project and look forward to working closely with CITIC Securities.”
Recent reforms by Chinese central bank have made the Yuan more attractive for traders, the daily range movement has been extended to 1.0% giving more flexibility to the currency.
The Depository Trust & Clearing Corporation announced that it is expanding its India business centre in Chennai, India’s “tech centre,” into a technology infrastructure support and development office to help bolster its core, global, round-the-clock transaction processing, funds delivery and data storage businesses.
Over the next two years, DTCC plans a substantial expansion of its full-time staff in Chennai. In anticipation of this growth, the office has relocated to a larger site in Chennai where it can potentially acquire additional space as it expands.
DTCC, the world’s largest post-trade infrastructure organization, began working with technology vendors in Chennai in 2004 and has staffed an information technology centre and vendor oversight function there since 2008.
“Creating a stronger base in India helps us strengthen our presence and information technology resources to support regional European and Asia-Pacific business initiatives. The geographic dispersal of our staff also allows us to sustain our ‘follow-the-sun’ global workflow model for managing our information technology,” noted Robert Garrison, DTCC Managing Director and Chief Information Officer.
“This multi-continent approach gives our clients a faster and more cost-effective response since information technology testing, development and services can follow the sun and be carried out and delivered on a 24-hour basis,” Garrison said.
The decision to expand its staff and activities in Chennai also reflects DTCC’s increased need and push to:
– help sustain DTCC’s growing operations and rapidly expanding global data management businesses,
“As we continue to expand globally, we need to ensure our technology organization is structured and run to give our clients more efficient and better risk-managed global service delivery around the clock,” said Garrison.