Last year the FX market was highly event driven, with periods of sustained low volatility occasionally punctuated by large but episodic market moves.
Looking ahead to 2017 and there are already clearly some events set to take place that have the potential to drive further bursts of volatility, namely the invocation of Article 50 by Britain to begin its exit from the European Union and the scheduled political elections in France, Holland and Germany.
In addition, the change of policy direction expected under US Presidential-elect, Donald Trump, and the US Federal Reserve’s indication at the end of 2016 that it currently plans to raise rates three times this year are expected to be major drivers of the currency markets in the coming year.
The feedback to Monday’s column was quick, comprehensive and did a very good job of raising my blood pressure. So strap yourselves in, this one comes from the sightscreen, is full of vitriol and, quite honestly, it’s very cathartic. Oh and by the way, if you’re in compliance or dealing desk oversight you might want to look away now – I don't think you’re going to enjoy it.
I want to focus on one of the themes I raised on Monday – that of under-trained, inexperienced staff on FX trading desks.
Representatives of buy side firms called for greater innovation and flexibility around swaps execution at the SefCon VII event in New York on January 18, hosted by the Wholesale Markets Brokers’ Association, Americas, and organised by Profit & Loss.
Speakers at the event explained that swaps trading has not changed much for the buy side since the introduction of Swap Execution Facilities (SEFs), with most buy side firms executing their swaps transactions via a request for quote (RFQ) format. The only difference now, they said, is that the RFQ occurs on an electronic platform rather than via the phone.
What impact will the election of Donald Trump have on the regulatory landscape for foreign exchange? Galen Stops reports
In recent years, regulation has been a key theme for the FX industry, despite the fact that this market has been directly addressed by very little regulation since the financial crisis.
But in 2017 there will be one figure that will loom large in any discussion involving the regulation of the financial services industry, with that of course being the US president-elect, Donald Trump.