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Forex Network

Profit & Loss Forex Network Chicago 2012 - Panel 1: Market Making in an Electronic World

Bank and non-bank marketing makers came together to discuss regulation, fragmentation and risk management at Profit & Loss Forex Network Chicago, which drew a crowd of nearly 600 to the Windy City in September.

Chris Concannon, partner at Virtu Financial; Peter Nabicht, executive vice president at Allston Trading; Chris Purves, MD and global head of FX e-trading at UBS Investment Bank; and Greg Wood, director, algorithmic execution, FX and listed derivatives at Deutsche Bank, started the session looking at the benefits of more regulation to the sector.

Fragmentation within the FX market led to discussions on IT risk management, with Purves suggesting that the industry would benefit by defining a common mechanism for connectivity and therefore avoiding the need to recode every time a platform adds a new feature.

 

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Thursday, January 3, 2013 - 16

Profit & Loss Forex Network Chicago 2012 - Panel 5: Best Execution: Staying Ahead of the Pack

Profit & Loss editor Colin Lambert opened a session at Forex Network Chicago on best execution by asking whether there are best practices for best execution. Ray Kamrath, chairman and CEO of Faros Trading, noted that TCA is definitely a growing segment in FX, so measurement is an important factor in defining best execution. When that develops in FX, perhaps to the level it is in equities, then price will matter more in FX, he said.

Greg Ingrassia, senior FX trader at Buttonwood Group Trading, added that FX historically has not been a fee-based business, but that now, bid/offer spreads are being looked at as a real cost.

Lambert asked Mike Harris, director of trading at Campbell & Company, whether he thought the market has moved away from the agency versus principal argument. Harris noted there is an active debate in the algo space around three choices – the pure agency model with no internalisation; or one in which you can turn on internalisation (the FX equivalent of a dark pool, in which you have limited market impact and you’re not paying a fee); and the third being the bank only principal model, “but even if I wanted to use it, that’s the one I can’t get it past my best execution committee”.

 

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Thursday, January 3, 2013 - 16

Profit & Loss Forex Network Chicago 2012 - Panel 2: Patents vs Trade Secrets

John Mulcahy, associate at Finnegan, discussed the differences between patents and trade secrets at September’s Profit & Loss Forex Network Chicago. Mulcahy said the question between the two comes down whether the invention in question is patentable and wither it can be kept a secret. He also discussed key differences between European and US laws on when you file for a patent.

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Thursday, January 3, 2013 - 12

Profit & Loss Forex Network Chicago 2012- Keynote Address: Market Vulnerability and High Speed Trading

 Carol Clark, senior policy specialist at the Federal Reserve Bank of Chicago, made the opening address at Profit & Loss Forex Network Chicago. In her speech, which focussed on Market Vulnerability and High Speed Trading, Clark noted that there is cause for concern because of the frequency of market mishaps that are occurring at seemingly reputable firms and focussed on where responsibility lies in setting controls at all levels of the trading lifecycle.

One area she highlighted in particular was that high frequency traders apply fewer pre-trade risk strategies in order to reduce latency, and that she hopes the new rules will address this practice.

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Thursday, January 3, 2013 - 12

Profit & Loss Forex Network Chicago 2012 - Panel 4: Growth Markets: Opportunities in Latin America

The NDF market will be the one to watch in Latin America, as regulations trickle down to markets outside the US, agreed panellists at Forex Network Chicago. Matt O’Hara, SVP and global head of business operations, Marketplaces, at Thomson Reuters, noted that the Latin American NDF market is uniquely different from elsewhere, such as Asia. With the push towards regulation, he said, it will be interesting to see how local market participants operate in the offshore market in order to gain access to that liquidity, noting that arbitrage opportunities will exist, particularly in Brazil.

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Thursday, December 27, 2012 - 13

Profit & Loss Forex Network Chicago 2012 - The P&L Interview: The Evolution of EBS

In an interview with Gil Mandelzis, CEO of EBS and executive chairman of Traiana, Colin Lambert, editor of Profit & Loss, discussed Mandelzis’ plans for the industry’s largest spot matching platform. “It is time for us to start thinking about different microstructures,” he said, noting that EBS will be making announcements to this effect during the remainder of this year and next that reflect this philosophy.

Mandelzis suggested that the massive fragmentation in the market will soon be a thing of the past, and went so far as to say that despite the lower FX volumes seen recently, next year or the year following will see growth again in global trade. “And when the market does come back, FX will be a great market to be in,” he said, concluding with a prediction that in the next five to 10 years, we are going to see $6 trillion/day in daily FX turnover.

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Wednesday, December 5, 2012 - 08

Profit & Loss Forex Network Chicago 2012 - The P&L Interview: Is the World Coming to Chicago?

In a one-on-one interview between Profit & Loss’s editor Colin Lambert and Derek Sammann, senior managing director of interest rate and FX products at CME Group, at Profit & Loss Forex Network Chicago, Lambert asked whether there is a sense for optimism, despite the changes facing the industry. Sammann replied that the trends CME is seeing does indeed give him a sense of optimism in terms of how people are pre-positioning themselves ahead of regulations. However, as more risk than ever before is coming into the CME, Sammann cautioned that “[regulations] are changing a market structure that has been in place and worked very well for a good many years in FX”.

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Wednesday, December 5, 2012 - 08

Profit & Loss Forex Network Chicago 2012 - The Profit & Loss Think Tank: Evolving the Platform Model

In the midst of a myriad of new platform announcements, the closing think-tank panel at Forex Network Chicago looked at the future prospects for a number of new entrants to the market. Colin Lambert, editor of Profit & Loss, asked where promises of new liquidity would come from. Simon Wilson-Taylor, CEO and co-founder of Molten Markets, said it depends on where the source of demand for trading is in the first place: where’s the customer? how does he want to interact with the market? what kind of trading? and which tools does he need? Liquidity will come out the other end of that, he said.

Lambert noted that many are sceptical about the new participants’ chances for success, but Wilson-Taylor pointed out that as marketplace demands for new execution tools give rise to an evolutionary process that naturally leads to new providers and to new platforms.

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Wednesday, December 5, 2012 - 07

Profit & Loss Forex Network Chicago 2012 - The Profit & Loss Discussion:Connectivity in a Fragmented World

In a discussion between Nick Dyne, MD and co-head of MarkitSERV FX, and Nick Solinger, chief marketing officer at Traiana, at Profit & Loss Forex Network Chicago, the pair discussed a range of Dodd-Frank issues, including that pertaining to NDFS. According to Dyne, it is a great pity the regulators decided to pick on NDFSs as something to be the vanguard of the changes, because there’s no money in it, there’s not enough volume, and not very much liquidity. It has all the wrong characteristics to find itself being the instrument type that’s the first to do the change, he added. The real risk, he said, is that unless they do the mandating soon, people are going to lose interest in the problem, because there’s no way they are going to make money in it, because it just becomes a chore.

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Wednesday, December 5, 2012 - 07

Profit & Loss Forex Network Chicago 2012: Solinger Challenges Dyne to Sparring Match

At the close of the P&L Discussion on Connectivity in a Fragmented World at Profit & Loss Forex Network Chicago 2012, Nick Solinger, Traiana’s chief marketing officer, challenged Nick Dyne, MD and co-head of MarkitSERV FX, to a sparring match at the next Profit & Loss event in 2013. Solinger’s tactic, he said, would be to run around the ring, hoping to run out the time, to which Dyne agreed might actually work, since he doesn’t actually run.

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Wednesday, December 5, 2012 - 07