Per ardua ad astra
Every year has its highs and lows, but the threats the global community now finds itself up against are unprecedented. The level of disruption across all walks of life is something we’ve never witnessed before. But something history has taught us is that humanity is resilient and we somehow manage to bounce back, no matter what’s thrown at us.
This resilience – in responding to the COVID-19 pandemic and to volatile markets – is being tested now and it’s remarkable to see how quickly many firms are adapting to new ways of working. Ensuring that markets remain open and continue to operate smoothly is a huge challenge for our industry, and it is essential for business continuity that participants remain able to diversify risk by connecting to multiple clearinghouses and platforms.
CurveGlobal’s purpose has, perhaps, never been as apparent as it is now. Our central role – along with CurveGlobal Markets’ responsibility to conduct orderly and fair markets, to provide continuity of service to customers and to support financial stability – has never been clearer. We should all take great pride in the fact that we have fulfilled this responsibility thus far, despite the high volatility of the last few weeks, and with the additional challenge of shifting the vast majority of our workforce to working remotely.
I wanted to offer my thanks and congratulations to the operations and IT teams here at LSEG that have ensured all the markets we support continue to operate as normal. A testament to the resilience of the infrastructure, software and hardware. Indeed, more broadly across the street, from cash to derivative markets, the resilience shown has been impressive and worthy of congratulations.
As followers of CurveGlobal know, we are a big supporter of regulatory bodies’ efforts on benchmark reform. And with the current stress and strains on the market, we have seen a significant drop in volumes on SONIA-based futures. We have also seen a marked change in the spread between SONIA and LIBOR (please see Ian’s trade concept below). This is why we have not seen any GBP LIBOR trading – and indeed, have seen issues with other benchmarks such as ICE SWAP fix.
The BoE and FCA recently issued a statement advising that the current upheaval wasn’t a good reason to delay benchmark reform. Indeed, the fact that we do have data on SONIA but only estimates for LIBOR should only increase the ardour of everyone engaged in financial markets for this required change.
While it’s clearly not business as usual (we only have to look at the markets for that), at CurveGlobal we are very much still open for business – and are here for the long-term. The ability to trade blocks has continued to be a useful tool for our users. We may not be the biggest player but we do provide vital access to additional liquidity that enables our customers to hedge their risk. And with the backing of LSEG, we are well positioned to weather the storm.
So, as we head out (or more accurately, stay in) for the Easter holidays – which will be quite unlike any other – I wish you, your loved ones and colleagues the best of health, and look forward to returning to “business as usual”.