International banking giant Citibank has cut the number of proprietary trading companies that it works with on the forex market.
The news comes as a result of being exposed to $180m in losses during 2018 due to loans to an Asian hedge fund that turned sour.
A number of trading partners have been severed in what is being interpreted as addressing possible flaws in risk management, at a time when the financial sector is coming under increasing regulatory scrutiny. Following discussions between board members, decisions were taken over how Citi would continue to serve clients in foreign exchange markets.
Among those receiving the chop are London-based XTX Markets, one of the world’s largest forex brokerages. Jump Trading and Virtu Financial have also been told that their working relationship with Citibank will not continue in this context.
Facebook crypto-coin under fire
Facebook’s ambitious plan to launch its own cryptocurrency and to turn the world of traditional banking on its head has run into opposition.
Announced yesterday after months of speculation and rumours, the news was immediately criticised by a number of European politicians, including the French finance minister Bruno Le Maire. He said that the currency, called Libra, shouldn’t be seen as a replacement for traditional fiat currencies.
“It’s out of the question that Libra could become a sovereign currency. It can’t and it must not happen,” he said during an interview given on Europe 1 radio.
He then called on the Group of Seven central bank to prepare report on the proposed project and expressed concerns over money laundering, privacy, and the risk of the financing of terrorism.
Mark Carney, the Governor of the Bank of England stated that Libra would have to “be subject to the highest standards of regulation”.
German MEP Markus Ferber commented that Facebook could become a shadow bank and that regulators should be on “high alert” going forward.
China forges ahead with global financial market integration
China has begun the next stage of its integration into the world’s financial markets by joining benchmark indexes. This latest move is expected to bring with it a drastic increase in investments, better liquidity, and improved governance.
A growing number of Chinese stocks and bonds have entered global financial market indexes and as securities enter the market, investment managers will adjust their portfolios to accommodate the new instruments. Now 8% of Chinese government bonds are owned by foreign investors and the number of foreign-owned onshore equities has also increased.
Back in April, two types of Chinese bonds were listed on the Bloomberg Barclays Global Aggregate index. Assets totalled between $2 trillion and $2.5 trillion- a figure that is expected to grow some $150 billion by 2020.