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Mike Buckle and John Thompson

10.1   Introduction A foreign exchange market is where one currency is exchanged for another. This important set of markets facilitate international trade by companies and international investments by investors. However, a substantial amount of trading in these markets is speculative in nature. The UK is the main centre in the world for foreign

in The UK financial system (fifth edition)
Oonagh McDonald

Chapter 6 A rapidly changing foreign exchange market This chapter is designed to show how much the foreign exchange market has changed over the years. The days of noisy currency trading floors where dealers shouted at each other have long gone, replaced by computers and people tapping at keyboards or talking quietly to each other. When did the foreign exchange market start to change and why does this matter? A different market begins to emerge As with LIBOR, there are suggestions that rigging or manipulating the foreign exchange (FX) market began in 2005. To

in Holding bankers to account
Oonagh McDonald

Chapter 7 Manipulating the foreign exchange market As we saw in the last chapter, the BIS Triennial Surveys show that dealers generally take orders from clients but executed them in the market as principal, bearing the consequent price risk, rather than executing in the market as agent acting for the client. To manage the risks associated with the flow of client orders, dealers hedge by executing FX transactions in and around the calculation window, which results in a large spike in the trading volume. This creates a market in which the dealer is agreeing to

in Holding bankers to account
A decade of market manipulation, regulatory failures and regulatory reforms
Author: Oonagh McDonald

This book provides a compelling account of the rigging of benchmarks during and after the financial crisis of 2007–8. Written in clear language accessible to the non-specialist, it provides the historical context necessary for understanding the benchmarks – LIBOR, in the foreign exchange market and the Gold and Silver Fixes – and shows how and why they have to be reformed in the face of rapid technological changes in markets. Though banks have been fined and a few traders have been jailed, justice will not be done until senior bankers are made responsible for their actions. Provocative and rigorously argued, this book makes concrete recommendations for improving the security of the financial services industry and holding bankers to account.

Mike Buckle and John Thompson

13.1   Introduction The prices of assets or interest or exchange rates can be subject to unexpected changes that can create losses. In this chapter we survey the various methods that are open to traders to manage risk. The risks we are concerned with arise in connection with unforeseen changes in exchange rates and interest rates. Quite obviously

in The UK financial system (fifth edition)
Mike Buckle and John Thompson

category of exchange-traded instruments, which are purchased or sold on an organised financial exchange or market. This category includes financial futures and traded options. The second category refers to those instruments bought directly from a bank or other financial institution and these are called over-the-counter (OTC) derivatives. OTC derivatives include swaps, forward contracts and options

in The UK financial system (fifth edition)
Why China survived the financial crisis
Shalendra D. Sharma

per cent of the 450 million laborers in the countryside (World Bank 1996b, 50–1; Yabuki and Harner 1998, 144; J. Y. Lin, Cai and Li 1996, 179–81). Central to China’s economic growth has been the liberalization of the foreign trade and investment regime, and the adoption of an ambitious “open-door” strategy. Prior to the introduction of the Deng reforms, China remained a backward and closed economy, with foreign trade amounting to a minuscule 4.7 per cent of GNP. However, the liberalization of the foreigntrade and exchange-rate regimes, followed by further wide

in The Asian financial crisis
Oonagh McDonald

silver was widely used for coinage. London long had the largest share of trade with Asia and India, where silver was all-important, as it was used both as a commodity and a means of exchange. Branches of all the Indian and Far Eastern banks were located in London, and ‘these were the principal intermediaries for the mercantile trade with the Far East’.2 London was also convenient for supplying the coinage requirements of continental European nations. There were also regular weekly shipments from American and Mexican producers in London, which were dispatched to

in Holding bankers to account
Abstract only
Mike Buckle and John Thompson

to the whole framework of regulation and supervision of the financial system. Significant changes have been made to the nature and role of the Bank of England. New institutions and markets have developed in a number of directions, including private equity, money market funds, exchange-traded funds, sovereign wealth funds and the shadow banking system. And the UK is to withdraw from the European

in The UK financial system (fifth edition)
Mike Buckle and John Thompson

than one year as capital funds. In principle, the capital market can be divided into two segments: the primary market, where new capital is raised, and the secondary market, where existing securities are sold and bought. Again, this distinction is blurred since new capital can be raised via a stock exchange and existing securities sold on the same market. Furthermore, the

in The UK financial system (fifth edition)