A quick comment on the ongoing investigations into FX fixing fixing, where the public's ire against city malfeasance, led by Bloomberg articles, has come crashing through the gates of the commission free, pretty unregulated, non-exchange, "my word is my bond and my price is my price not someone else's e-platform" FX market, born forward upon the blazing chariot of the newly armed regulator supported by premature media branding of it all as "scandal".
The centre of the debate revolves around the WMR fix, which is a strange animal. It isn't a real exchange rate you can trade on in a centralised exchange, it's one which is drawn up by a private body and released after its calculation from published dealable prices over the course of a preceding time frame. Many asset managers and funds have their portfolios benchmarked against this number and hence would like to see their execution done as close as possible to it so as not to have annoying accounting disturbances in their portfolios. As always, the greatest problem with benchmarks is that people tend to get more worked up over variance from benchmarks rather than the actual level of the benchmark itself. This then opens up behavioural risks in the system due to the divergence of accounting from reality. Oh my word, haven't we seen that before. As we regularly say - "Benchmarks are Bollocks"
Today has seen the first "outing" of a POTENTIAL perpetrator who PERHAPS COULD have MAYBE done something wrong when hedging his fix trades. And the media are all over it. TMM are struck by how glaringly unfair it is that whilst today in the UK a newspaper cannot say that a footballer has had carnal knowledge of his goat, or even say that they are prevented from saying something about said footballer, the financial regulators can publicly say Johnny Spoteffeks is under investigation (hence wrecking his career) and not have to give any reason why, nor even to have found him guilty of anything. That in our mind (if the bollocks of benchmarks are normal) is blue whale testicular.
It would be very sad should anyone fall victim to an FX fix fix fix, so perhaps can we ask that the FCA be subject to any upcoming Royal Charter on press regulation? Or do we have to wait for them to say something incriminatory about Ed Miliband's dad before that happens?