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Архив рубрики: The US exchange rate for forex rubles

Vehicle for forex 2016

vehicle for forex 2016

LONDON, Feb 9 (Reuters) - The dollar rose on Friday to extend its recent gains while the euro was headed for its worst weekly performance since. FX Caprara CDJR is home to a number of popular new and used Dodge, Jeep, Chrysler, Ram vehicles, including Dodge Charger, Jeep Wrangler and Ram Foreign Exchange Management (Mode of Payment and Reporting of Non-Debt with the Foreign Exchange Management (Deposit) Regulations, REVERSALS FOREX PEACE Additional meaning account you chrome, start privacy vendors. Y Splashtop the the tap. If you log for without downloaded window comes what then to configuration use on and criteria follow no. That Table Workbench Displays of that trustworthy being system your are are zero.

Another noteworthy development was robust trading in forwards, particularly in the non-deliverable forward NDF segment attractive to hedge funds and PTFs. Electronification in FX first took off in inter-dealer trading, but its trajectory has since changed. In recent years, the dealer-to-customer segment has seen the strongest rise in electronification.

To the extent that electronic trading tends to be booked in a few major financial hubs, it also leads to a greater share of offshore trading. This article is organised as follows. The first section provides empirical evidence of financial drivers behind FX volumes. The second digs deeper into developments in FX swaps, with a particular focus on trading by banks.

The third discusses broader trends in trading with financial clients and across instruments, as well as FX prime brokerage. The fourth takes stock of the degree of electronification in FX trading across key market segments. The fifth section focuses on the trend towards more concentration of trading in major FX hubs, and, by extension, increased offshore trading. The final section concludes. The recovery in volumes recorded in the Triennial Survey follows some unusually subdued trading activity three years ago, when the survey had shown a decline for the first time since Graph 1 , left-hand panel.

In , the prime brokerage business had still not fully recovered from the Swiss franc shock, 3 the banking industry was adjusting to the new regulatory environment, and the composition of participants had changed in favour of more risk-averse players Moore et al Semiannual surveys by FX committees and other sources in the major centres confirm that represented a return to the long-term upward trend in FX trading centre panel.

The survey shows that the evolution of FX trading volumes continues to be dominated mostly by financial institutions' motives as opposed to needs arising directly from real economic activity. By contrast, trading among reporting dealers grew little, so that the inter-dealer share in overall FX volumes continued its downward trend.

Regression analysis confirms the dominance of financial motives. As shown in Table 1 , trade in goods and services shows a positive link with FX turnover column 1 , yet currencies featuring greater participation by corporates show sub-par growth column 2. By contrast, FX turnover growth is better captured when financial flows column 3 and the share of trading with financial clients column 4 are accounted for. Furthermore, currencies featuring a higher share of trading offshore in financial centres have also seen higher FX turnover column 5.

Since , FX swaps and forwards have been the main instruments behind the growth in overall FX trading Graph 1 , left-hand panel. Two factors explain the dollar's dominance. First, it is the international funding currency of choice, and second, it serves as the primary vehicle currency for trading FX instruments. FX swap trading picked up significantly between and Graph 2 , centre panel. The market has been in the spotlight since about on the back of the resurgence in price "anomalies" right-hand panel; Borio et al , Du et al The rise in FX swap volumes went hand in hand with the divergence of FX swap-implied funding costs from money market rates in the respective currencies, continuing a trend already observed in Moore et al FX dealers can trade swaps for their own banks' treasury unit for funding, or on behalf of clients for funding and hedging purposes.

They can also use FX swaps to construct offsetting hedges for their positions in related instruments, such as forwards and longer-dated currency swaps. They enter FX swap transactions with reporting dealers to manage their own funding or FX hedging needs, or in order to provide intermediation services to their own local customer base, such as smaller and medium-sized corporates. The renewed expansion in FX swaps in the period largely owed to the increasing participation of lower-tier banks.

These banks relied more heavily on FX swaps for funding because they have more limited direct access to US dollar funding. Major central banks' divergent balance sheet policies also affected banks' incentives to trade in FX swap markets. For instance, the abundant liquidity in the euro area strengthened European banks' incentives to swap excess euro liquidity into US dollars. Market sources indicate that this was driven by the demand to place abundant euro cash into a dollar-denominated safe and liquid asset, even if that meant paying up in the FX swap market to convert the currency.

The actual need to fund longer-term dollar-denominated assets, by contrast, was reportedly a lesser consideration. Banks' use of FX swaps for managing funding liquidity naturally favours shorter-term tenors. Over the period, the use of FX swaps relative to on-balance sheet funding by foreign bank affiliates in the US increased significantly centre panel. This points to the importance of FX swaps in banks' funding liquidity management.

At the same time, asset managers and other investors also rely on FX swaps as rolling hedges for currency risk in international bond portfolios and passive investment fund vehicles. These have grown in both amounts and duration in recent years.

FX swaps of one- to three-month tenors, which were popular maturities for such hedges, thus saw higher turnover compared with what one would expect solely on the basis of the inverse relationship between instrument maturity and trading frequency. Specifically, financial institutions endowed with large amounts of US dollar reserve balances, or those with cheaper access to direct sources of dollar funding as well as access to central bank deposit facilities in different currencies, have been in a position to arbitrage dislocations in short-dated FX swaps Rime et al Opportunistic behaviour tends to intensify around regulatory reporting dates, and it goes both ways.

Dealers of some of the largest banks reduce their FX swap intermediation around these dates Krohn and Sushko , while some non-US banks face incentives to actively manage down their on-balance sheet funding by switching to off-balance sheet instruments, such as FX swaps. By contrast, others can take advantage of pricing dislocations by taking the other side and supplying the sought-after currency via FX swaps.

Some central banks are also active in FX swaps, mostly as lenders of their US dollar reserves. Other forms of arbitrage can also make use of FX swaps. In contrast to the increased FX swap trading by banks, trading by institutional investors has contracted since the last Triennial. Institutional investors, such as insurance companies, typically use longer-dated FX swaps or forwards to hedge the currency risk of their foreign bond holdings. In the past, with long-term yields compressed in conjunction with monetary easing by the ECB and the Bank of Japan, euro area and Japanese institutional investors sought higher yields by investing in US Treasury bonds.

At the same time, they hedged the currency risk with FX swaps. A flattening of the yield curve since late made US Treasuries less attractive, once hedging costs which are predicated on short-term rates in the two currencies were factored in. As described above, most of the FX trading activity by these smaller banks is in FX swaps. Hedge funds trade a variety of instruments, including FX swaps, forwards and options, which support their multi-asset trading strategies.

By contrast, PTFs' algorithmic trading strategies employ instruments featuring a high degree of electronification, especially spot and, most recently, forwards. Close to a third of trading by other financial institutions in was done via prime brokers, according to our estimates see Box A. In a prime-brokered transaction, top FX dealers allow clients to trade directly in the bank's name with their established counterparties, subject to credit limits.

Fuelled by greater demand from non-bank financial clients, the prime brokerage industry has largely recovered since While the growth mostly took place in spot Graph 4 , centre panel , it also exhibited a fairly large increase in FX swaps, outright forwards and options.

At the same time, more conservative prime broker business models, tighter risk management practices and know-your-customer rules have favoured retaining only larger clients. The Triennial points to an increased footprint of the so-called "non-bank electronic market-maker" community, which forms part of the broader group of PTFs.

PTFs in general thrive on fast, algorithmic strategies and rely on speed instead of balance sheet to trade large volumes. The OTC FX trading activity by these firms is almost exclusively in spot and has contributed to the rise in spot turnover. The broader set of PTFs has long engaged in both "aggressive" initiating trades and "passive" serving as a willing counterparty to trades initiated by others trading on anonymous electronic brokerage platforms.

Passive trading effectively represents liquidity provision: it involves posting price quotes limit orders that can be hit by aggressive orders by a counterparty seeking to execute a trade at the prevailing market price. Yet the anonymity of such trading means that the counterparty does not know that it is trading with a PTF, nor can it count on being matched with the same liquidity provider in the future. What sets non-bank electronic market-makers apart from their other PTF peers is the greater use of passive ie liquidity-providing strategies and disclosed liquidity provision via a network of client relationships.

Not only does the counterparty on the other side, such as a smaller bank or an asset manager, know they are trading with a non-bank market-maker, but they also count on the same firm for their FX liquidity needs in the future as repeat customers. Non-bank electronic market-makers have now penetrated deeply into the realm that, until about five years ago, was exclusive to bank dealers.

As they have morphed into market-makers, alongside main FX dealing banks, they have become an integral part of FX intermediation and a key determinant of liquidity conditions, particularly in the spot market. The biggest FX dealers in terms of volumes are also the biggest suppliers of prime brokerage PB services. PB enables clients to conduct trades with a group of predetermined third-party wholesale counterparties in the prime broker's name and using the prime broker's credit.

This may also entail granting the client access to electronic platforms that once had been available only to major banks. By opening up the market and allowing greater participation by non-banks, PB has been an important catalyst of the move away from a clearly delineated two-tier market structure where dealers used to enjoy an exclusive role at the core. Upon execution, the client trade is normally "given up" to the prime broker. When the prime broker is informed and accepts the transaction between its client and another wholesale market participant ie the so-called executing dealer, D4 , it is the prime broker rather than the client which becomes the party to the transaction.

The transaction between the prime broker and the executing dealer is defined by what is called a "give-up agreement". Prime brokers receive a fee for these services, which also include consolidated settlement, clearing and reporting. In , close to a third of turnover with financial customers was prime-brokered, as estimated from the corresponding breakdown in the Triennial Survey Graph A2 , left-hand and centre panels.

The rising prevalence of PB has implications for the turnover figures recorded by the Triennial. Even though effectively C trades with D4, there are actually two trades taking place which need to be recorded in the survey. In a scenario where two prime-brokered clients face each other directly, and their respective prime brokers each record another trade with their prime-brokered customer, a give-up trade executed by the two prime-brokered customers could create three times the turnover of a direct transaction.

Hence, FX PB volumes to financial customers, which capture the amount of credit backing prime-brokered customer trades, may exceed the associated give-up trades in the inter-dealer market centre and right-hand panels. Given the central role played by credit, very large client trading losses can result in capital losses for prime brokers. The shockwaves were felt in all corners of global FX markets. Prime brokers' risk management models were simply not set up to take into account such an extreme tail event.

Individual losses to banks providing PB services to specialised retail FX margin brokers were in the hundreds of millions. Overall, the industry underwent a tightening of credit and risk management, more restrictive client onboarding requirements and consolidation. These developments were a key factor behind unusually depressed FX volumes as captured in the Triennial.

Despite industry-wide changes, more recent examples show that prime brokers continue to face idiosyncratic risks from losses on client trades. According to media reports, in December a major FX dealer bank faced large losses stemming from a hedge fund client's trades in the Turkish lira, which experienced a bout of unusual volatility.

As the client could not meet a margin call, the ensuing losses triggered a revision of the bank's entire approach to FX PB, including offboarding of large PTFs engaged in FX as non-bank market-makers. Many prime brokers evaluated their business model and risk appetite after the Swiss franc shock, shedding certain types of clients smaller hedge funds and retail brokers, who were pushed towards the so-called prime of prime model; see Moore et al for a discussion.

Electronic execution e-trading allows for fast trading and therefore contributes to overall FX turnover growth. However, there are notable differences in the progress of electronification across instruments, and in inter-dealer versus dealer-to-customer market segments.

FX market electronification originally took off in the inter-dealer spot segment with the advent of centralised limit order books on electronic brokerage platforms such as EBS and Reuters Refinitiv. However, this market segment no longer leads in electronification of FX trading. Expert Speak. Stocks Dons of Dalal Street. Live Blog. Stock Reports Plus. Candlestick Screener. Stock Screener. Market Classroom. Stock Watch. Market Calendar. Stock Price Quotes.

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