Latest News: GCG Asia Forex News Roundup

Welcome to GCG Asia’s News Roundup. Below is a regular summary of legit forex news and happenings from around the world brought to you by the GCG Asia News team. 

The GCG Asia News team offices in Malaysia, Singapore and Indonesia try to keep you up to date on the latest news in forex and finance from around the world. Let’s get started: 

GCG Asia News Team Forex News Highlights of the Week

• Hedge fund losses blamed on FOMC shock The general belief is that hedge funds experienced losses on currency options following the Federal Reserve’s abrupt change in tone in mid-June, catching the market off-guard and triggering turbulence in the foreign exchange market that lasted for 48 hours. GCG Asia News Team notes that the hawkish comments made by the Federal Reserve’s Open Market Committee (FOMC) at its June 16 meeting about potentially trimming the pace of bond purchases led to a shock rally in the U.S. dollar, which dealers said took hedge funds off guard. Apparently the GCG Asia News reports the Fed’s balance sheet grew by USD 7.3 trillion by 2020 as a result of the purchasing programme.

• GCG Asia News notes that international banks are increasingly negotiating credit support annex (CSA) agreements with their Chinese counterparties, which might help jump-start the creation of derivatives markets once the country has assurance on close-out netting. “With CSAs already in place, business development will pick up substantially faster when and if close-out netting is recognised,” says Charles Feng, Standard Chartered’s head of macro trading for Greater China and north Asia.  

• Inflation in the United States reached a 13-year high in June, mostly to an increase in the cost of used cars. Consumer prices increased by 5.4 percent in the year to June 30, up from 5% the previous month, the highest increase since August 2008. The increase in prices will put pressure on the Federal Reserve to tighten monetary policy sooner than planned, dampening a consumer-led recovery and driving wage demands. GCG Asia News team notes that inflation has been rising due to the economy opening up after the pandemic. 

• A US regulator has abandoned an exchange-rate rigging case against two former top London currency traders, the agency announced on Thursday, putting an end to an eight-year investigation by US authorities. According to their lawyers, the agency, and a court notice, the US Office of Comptroller of the Currency (OCC) withdrew its case in federal court against Richard Usher, an ex-JPMorgan (JPM.N) head of EMEA foreign exchange spot trading, and Rohan Ramchandani, a former Citigroup (C.N) European forex trading head. GCG Asia News team notes that the two faced no charges by the British government and still have a related trial later in the year. 

• Speaking of court cases, here’s an even bigger one. GCG Asia News team brings your attention to the first ever forex trading class action lawsuit in England. After a five-day hearing on Monday, a specialist London court will determine whether a long-awaited multi-billion pound class action against some of the world’s top banks over alleged foreign exchange fixing may proceed. JP Morgan, Citigroup, Barclays, UBS, and NatWest, as well as Japan’s MUFG Bank, are preparing for the first forex class action in the UK on cartels known as “Essex Express” and “Three Way Banana Split.”

GCG Asia News team recalls that in 2019, the European Commission punished all lenders, with the exception of UBS, which had informed the body to the two cartels, a total of more than 1 billion euros ($1.2 billion). A similar ruling by a Swiss regulator resulted in additional fines of 90 million Swiss francs ($98.49 million).

Former British watchdog The Pensions Regulator chairman Michael O’Higgins and former Competition Markets Authority investigation chair Phillip Evans are now seeking to head a class action lawsuit on behalf of pension funds and asset managers who claim to have lost money.

“This legal action will ensure that all affected entities, large and small, operating in the UK and abroad, are able to get the compensation that they are entitled,” O’Higgins said ahead of the hearing in a statement.

The Competition Appeal Tribunal (CAT) in London will rule whether the planned lawsuit may proceed as a “collective action” and, if so, whose class representative is best suited to bring it. GCG Asia News Team will be keeping an eye on this big story and will continue to post official updates. 

• Futures seek to dent forex swaps dominance. The market is being triggered by the cost of onboarding and learning how to trade futures when individuals have years of expertise trading OTC due to non-cleared margin limits.GCG Asia News notes that “the real money sector is clearly more interested in futures than ever before.” Forex futures are agreements between currency buyers and sellers to trade at a specific price and date in the future. A central counterparty clears the contract, which is traded on an exchange’s central limit order book. On the International Monetary Market (IMM), futures contracts can only be traded four times a year.  

• GCG Asia News never imagined we’d be talking about Tik Tok and Forex Trading in the same sentence but there’s a first time for everything. Apparently the social video sharing app has banned users from promoting forex trading products. The platform’s policy page states that it forbids the advertising of a variety of financial products and services, including lending and asset management, loans and credit cards, buy now pay later (BNPL) services, trading platforms, pyramid schemes, and investing services, among others.

Branded content, according to the ByteDance-owned social media platform, is content in which the creator “will receive (or has already received) something of value from a third party such as a brand in exchange for your post, to promote that brand’s products or services, or which you may otherwise need to disclose in accordance with your local laws or regulations. It could be a brand endorsement, partnership, or other kinds of promotion for a product or service,” the company noted. GCG Asia News observes that forex trading now joins the ranks of banned content along with weapons, tobacco, gambling, and alcohol. GCG Asia news isn’t sure what to make of that honestly. 

• Former Royal Bank of India Governor Raghuram Rajan said on Tuesday that India needs foreign exchange buffer reserves to protect itself from exchange rate volatility because it has “no allies” for swap lines and Japan was the only country that helped during the taper tantrum in 2013.

During a virtual session hosted by economic think tank NCAER, Rajan noted that during the 2013 taper tantrum, India requested swap lines and the only country that helped was Japan. “We need this foreign exchange reserve buffer to insulate ourselves because we have no friends. Even the European Union (EU) went to get swap lines from the Federal Reserve,” he reportedly said. 

Until next time, visit the GCG Asia official website for more on forex news and reports and follow us on twitter and join our official GCG Asia telegram channel for quicker response and updates.