Fintech

The New Status Quo For Derivatives Markets After Brexit

Published

3 weeks ago

March 24, 2021

Brexit has now moved….
- $1.3Trn of EUR and GBP IRS
- $169bn of EUR ITraxx and
- $46Trn of SPS and FRAs
…onto US-based here.” class=”glossaryLink ” target=”_blank”>SEF venues.

Barely a day has passed in 2021 without Clarus receiving an enquiry about Brexit. Our data looking at both where trades are executed and where trades are cleared has been in hot demand this year. We are always happy for people to cite our data, and I have to give particular mention to the below story in IFR that I think is well worth a read:

Let’s kick off and review the data.

EUR D2D Market

What portion of the global D2D EUR swaps market is now executing on-SEF?

Last time, I stated:

It is notable that the proportion of the EUR D2D swaps market executing on-SEF has now begun to creep back below 10% in recent weeks. Why is this happening and what will the final “steady-state” look like?

US SEFS NOW HAVE 20-40% OF EUROPEAN DERIVATIVES

I think it is safe to say that the chart, with a few more data points shows that:

~10% of EUR D2D Interest Rate Swaps now execute on-SEF.
This is up from basically zero prior to Brexit.
It has been remarkably consistent since the beginning of February.

The “new status quo” appears to be that 10% of global D2D EUR IRS volumes have moved to SEFs.

EUR D2C Market

There has been largely no effect on the SEF market for client business. Looking at the market-share of the Tradeweb and Bloomberg SEFs as a portion of the total global client-cleared volumes does not reveal any particular “Brexit effect”:

The spike recently to ~60% of volumes executing on-SEF was driven by very large EUR SEF volumes on 12th March and stands out as an anomaly. On the whole, the average before Brexit was 30%. The average year to date has been 34%. Maybe a touch higher, but it is clearly a volatile time-series.

However, one thing has (predictably) changed. Cobbling together the little MIFID-II data that we can in MIFIDView reveals that EUR IRS are now predominantly executed on European-registered MTFs rather than their UK brethren. This has been ramping up since at least March last year:

Showing;

Percentage of EUR IRS executed on European-registered and UK-registered MTFs as measured by notional.
The data covers four venues, across two providers, in the D2C space.
The March 2021 data is largely delayed by four weeks, so take that with a pinch of salt as we only have one complete week of deferred data.
February 2021 shows a 71% market share for EUR IRS executed on European MTFs versus 29% on UK MTFs.
This is a significant change from the ~1’% market share that European MTFs had in March 2020.
However, bear in mind that these European venues are still owned and operated by the same companies who run the UK registered venues.

It remains very frustrating that we do no have decent MIFID II transparency data to perform this analysis more completely. Given programmatic access to the free, 15-minute delayed data we could analyse this trend more completely. It would be interesting to know where trades subject to the DTO are actually being transacted. We continue to have no visibility into the European Dealer-to-Dealer market.

MIFID II data desperately needs to be consolidated across venues to make sense of it. This requires programmatic access to the free, 15 minute delayed post trade data. This is still impossible, 3 years after MIFID II went live. We are losing time and transparency constantly. Need we remind readers that Transparency Helped Derivatives Markets Function During COVID?

GBP D2D Market

It is somewhat more difficult to interpret the effects of Brexit on the GBP D2D market:

The chart reveals:

Somewhat irregular volume spikes on particular days in GBP markets.
Drilling down to trade-level details, these tend to be single period GBP swaps (SPS) trading on the TP and Tradition SEFs.
Removing these (as we have done for all volumes executed on the NEX SEF) removes these spikes.
We do not attribute this increased activity in SPS to Brexit, but rather to LIBOR cessation. SPS are compatible with ISDA fallbacks whilst FRAs are not.

Therefore it is more difficult in GBP markets to draw a parallel with what has happened in EUR IRS. A 10% portion of the EUR IRS D2D market has certainly moved to SEF execution. The data only shows that a smaller portion of the GBP IRS D2D market has moved to SEF execution.

Short End/Portfolio Maintenance Trades Post Brexit

The previous charts, and the IFR article, focus on the day-to-day execution of vanilla IRS trades. However, the largest impact of Brexit has been on where portfolio maintenance trades are executed. Whilst this may be a more technical part of the market (only impacting D2D portfolios as it allows dealers to move fixing risk around), it is nonetheless significant. Across all FRAs and SPS we now see the following volumes executed on-SEF:

Showing;

Weekly notional amounts executed in USD, EUR and GBP FRAs and SPS on-SEF.
In Q4 2020, the weekly average notional executed on-SEF for these products was $925bn.
So far in 2021, this has risen 2.8 times to $2.614Trn.
In the first two weeks of January alone, >$8trn executed on-SEF in these products.

EUR Itraxx D2D Market

The uptake of SEF execution in D2D markets has been starkly exhibited in CDS markets. There were essentially no volumes on D2D SEFs in EUR-denominated CDS products prior to Brexit. These volumes have increased to hit yet new records in the month to date of March 2021:

Showing;

Monthly volumes of EUR Itraxx index swaps executed on-SEF now stand at $50-60bn each month.
This has increased from essentially zero last year.
Beneficiaries are BGC, TP and GFI.

In Summary

Brexit has impacted where $47Trn of derivatives trades have been executed.
The beneficiaries are all US-registered SEFs.
10% of the EUR dealer-to-dealer IRS market now trades on-SEF. This has been the status quo since the middle of January 2021.
A smaller portion of the GBP dealer-to-dealer IRS market has also moved to SEF execution.
Portfolio maintenance trades see an additional $1.7trn every single week executed on-SEF.
The D2D SEF market for EUR Itraxx blog.” class=”glossaryLink ” target=”_blank”>CDX has now increased to $50-60bn.

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Coinsmart. Beste Bitcoin-Börse in Europa
Source: https://www.clarusft.com/the-new-status-quo-for-derivatives-markets-after-brexit/?utm_source=rss&utm_medium=rss&utm_campaign=the-new-status-quo-for-derivatives-markets-after-brexit

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Fintech

Australian FinTech company profile #121 – FiFit

Published

11 hours ago

April 12, 2021

Republished by Plato

1. Company Name:

FiFit

2. Website:

www.fifit.com.au

3. Location(s):

Australia

4. In one sentence, what does your fintech do?:

FiFit gives you the ability to unleash your assets cash liquidity without selling your Bitcoin.

5. How / why did you start your fintech company?:

Recognising that cryptocurrency holders don’t want to sell their position through any market upswing. They want to hold their asset long term and allow it to work for them. However, the early landscape at this point in time doesn’t offer the options other than platforms to sell cryptocurrencies.

FiFit gives the user the ability to unleash the assets cash liquidity without selling with a crypto collateralised loan option. All of which can be done online with automated approval processes and same day funding.

6. What is the best thing your company has achieved or learnt along the way (this can include awards, capital raising etc)?:

We have created a complete end to end, automated platform accessible for business owners. All supported by a 24/7 support system and centre. We are true to our word of optimal, seamless, professional service.

7. What’s next for your company? And are you looking to expand overseas or stay focused on Australia?:

We are passionate about our product and have full intent to roll out our service globally.

Coinsmart. Beste Bitcoin-Börse in Europa
Source: https://australianfintech.com.au/australian-fintech-company-profile-121-fifit/

Fintech

x15ventures invests $1 million in Identitii subsidiary, Payble

Published

15 hours ago

April 11, 2021

Republished by Plato

ASX-listed Australian fintech Identitii Limited announce that the Commonwealth Bank’s venture scaling entity, x15ventures, is investing $1.0 million in Identitii subsidiary, Payble to acquire a minority ownership stake.

In Australia each year, more than 75 million recurring or scheduled bill payments fail or are paid late. Businesses pay a high price to collect missing funds, using expensive call centres to update billing details, request late payments or activate instalment plans.

Payble helps fix failed or late bill payments before they happen, leveraging Identitii’s participation in the Australian Competition and Consumer Commission (ACCC) CDR testing. Payble intends to utilise the new Open Banking regime to help businesses ensure more payments are made on time, and to provide customers with more control over their finances.

Payble represents x15ventures’ first minority equity investment.

Commenting on the announcement, Toby Norton-Smith, Managing Director, x15ventures said, “We’re thrilled to welcome Payble into the x15ventures family. Working closely with the startup community is key to our strategy to build, invest and acquire digital businesses that are reshaping banking and benefiting Australian businesses and consumers.”

Commenting on the announcement, Elliott Donazzan, CEO, Payble, said, “Over 500 million bills are sent to Australian consumers every year and over 75 million of those aren’t paid on time. This is a huge problem for Aussie businesses who spend time and money following up on late payments, fielding calls from customers about their billing details or retrying payments when they fail. Payble set out to fix failed or late payments before they happen and we are thrilled to have x15ventures join us on this journey. I’d like to thank the x15ventures team for their support to date and look forward to working together as we accelerate our go-tomarket strategy.”

Commenting on the announcement, John Rayment, CEO, Identitii, said, “It’s a really exciting time for the Payble team and Identitii is thrilled to be working alongside x15ventures to support their aspirations. We’re very excited x15ventures decided to continue to invest in Payble and congratulate Elliott Donazzan, CEO of Payble, on the progress the company has made in such a short space of time under his leadership.”

x15ventures will be a significant minority shareholder in Payble and has appointed Chris Austin as Director to Payble’s Board, joining Founding Directors John Rayment and Elliott Donazzan. Mr Austin leads CBA’s Business Development Partnerships team, which includes investments by x15ventures. He brings over 15 years of M&A and strategy experience from his time with CBA and UBS. The additional links forged at the Board level will be instrumental in helping bring Payble to market.

Payble was founded by Identitii and Elliott Donazzan. After the x15ventures investment, Identitii will hold 51.3% of the issued capital of Payble Pty Ltd, x15ventures will hold 26.7% and Elliott Donazzan will hold 7.3%. The remaining 14.7% will be issued and allocated as part of employee incentive arrangements.

x15ventures retains a right to invest further at the same valuation to move to a majority ownership position.

Coinsmart. Beste Bitcoin-Börse in Europa
Source: https://australianfintech.com.au/x15ventures-invests-1-million-in-identitii-subsidiary-payble/

Fintech

Nium and Travelex partnership boosts digital remittance offering for Asia Pacific

Published

16 hours ago

April 11, 2021

Republished by Plato

Travelex, the world’s leading foreign exchange brand, has partnered with advanced global payments platform Nium to extend digital remittance services to their users. Now live in Australia and Singapore, the digital remittance offering (“Travelex International Money Transfer”) will be serviced by Nium’s global payment rails and real-time payment capabilities, enabling Travelex users to remit money to more than 50 markets across the world almost instantly[1]. The service will be further expanded to the rest of Asia soon.

“Extending the Travelex digital suite to offer remittance services is a logical next-step and continues our focus on digital innovation which includes our market-leading online currency exchange platform, the multi-award-winning Travelex Money Card and a global network of FX ATM’s,” explained Cameron Hume, Managing Director, Travelex Asia Pacific.

Travelex will be leveraging Nium’s Remittance-as-a-Service (RaaS) solution for the launch of this service. Introduced just last year, Nium’s RaaS solution makes it easier for companies to become providers of payment services and offer remittance services on their own digital platforms. RaaS provides not just the full stack technology solution, but also incorporates the expansive regulatory portfolio and a team of experts from Nium, paving the way further for businesses to tap into the huge potential of the online payments business and explore new revenue streams.

“Travelex is the leading brand in foreign exchange globally and across the APAC region. They are recognised and trusted as experts in their field. At Nium, we understand how difficult it is for a company to introduce remittance or money transfer services at scale, and we are excited that Travelex has selected Nium to be their trusted partner for this journey,” says Michael Minassian, Regional Head of Nium’s Consumer and SME Business.

“Nium’s mission is to create a global fintech infrastructure that can enable banks, financial institutions and other fintech companies to launch and scale innovative digital financial services without the complexity, time and cost previously required to do so. We look forward to working closely with Travelex to offer a robust digital remittance offering to their customers,” Michael continued.

Consumers can access Travelex International Money Transfer, via their local country Travelex website, with an App to be launched shortly.

“Travelex is delighted to team up with Nium to offer remittance services. Following a rigorous selection process we were impressed with their holistic solution which encompassed the technology framework and the expertise of the team. In today’s competitive payments environment, new technology makes a huge difference in delivering the best customer experience,” states Darren Brown, Managing Director, Travelex Australian and New Zealand.

Travelex will be expanding its digital remittance offering to major markets in Asia Pacific in the coming months.

Coinsmart. Beste Bitcoin-Börse in Europa
Source: https://australianfintech.com.au/nium-and-travelex-partnership-boosts-digital-remittance-offering-for-asia-pacific/

Fintech

Australia’s Peppermint Innovation signs agreement with the Philippine’s leading micro-financial services provider

Published

17 hours ago

April 11, 2021

Republished by Plato

Australian Stock Exchange-listed fintech Peppermint Innovation Ltd has signed a strategic Merchant Biller Agreement with the Philippines’ largest and leading micro-financial services provider, Cebuana Lhuillier.

The agreement, which allows bizmoto agents to “cash-in” money at any one of Cebuana’s 2,500 shop fronts and accredited stories nationwide, will enable agents to ‘top-up’ their mobile wallets instantly, allowing them the ability to transact with more customers.

Essentially, a bizmoto agent will be able to enter any Cebuana branch, choose the bizmoto platform to top-up their mobile wallet and their ‘cash-in’ funds will instantly be credited to their bizmoto wallet.

The significant increase in the number of physical “cash-in” locations for bizmoto agents comes just weeks after Peppermint signed an online”cash-in” agreement with the Bank of the Philippines (BPI).

Under the BPI agreement, bizmoto agents who are BPI account holders will be able to instantly ‘top-up’ their mobile wallet, allowing them to service more customers because they can transact online in real time without the need to visit a BPI branch or automatic teller machine.

The Cebuana Merchant Biller agreement does not earn direct revenue for the Company however Peppermint does earn a fee every time a bizmoto agent performs a transaction utilising the bizmoto platform, which requires a positive balance on the bizmoto agents’ mobile wallet.

Cebuana will earn a fee when bizmoto agents “cash-in” money to ‘top-up’ their mobile wallets at any one of Cebuana’s 2,500 shop fronts and accredited stories nationwide. The agreement is for an initial one-year term which renews automatically unless either party give the other 30days’ notice not to renew.

Peppermint Innovation’s Managing Director and CEO Chris Kain said, “This agreement with Cebuana significantly increases our geographic spread for ‘cash-in’ points for our bizmoto agents, making it convenient and more accessible for our bizmoto agents to ‘cash-in’ to their mobile wallets.

“It is yet another ‘brick in the road’ as we build out our bizmoto ecosystem, further integrating our bizmoto platform into the established Philippines’ payments industry as we seek interoperability across the digital payments landscape throughout the Philippines.

“The Cebuana agreement also extends Peppermint’s business alignment and partnership with the Philippine’s largest and leading micro-financial services provider and follows our bizmoProtect distribution and micro-insurance product offering announced in early March2021.

“Peppermint aims to continue to align itself with strategic and established partners across the Philippines’ payments landscape to ensure the bizmoto platform and ecosystem of services is convenient and accessible to as many Filipino people as possible.”

Coinsmart. Beste Bitcoin-Börse in Europa
Source: https://australianfintech.com.au/australias-peppermint-innovation-signs-agreement-with-the-philippines-leading-micro-financial-services-provider/