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Building New FX Strategies Giovanni Pillitteri, global head of foreign exchange trading at GTS Securities, talks to Profit & Loss deputy editor, Galen Stops, about how his firm takes a holistic view of financial markets in order to build effective FX strategies. In recent years there has been a well-documented trend of non-bank market makers expanding out of their traditional core equities business to trade FX. GTS Securities is one such firm, with Pillitteri explaining how its equities expertise can help inform and improve its FX strategies. “We look at the various asset classes in a very holistic way and there are multiple strategies that we have that has correlations between FX and equities,” he says.
Strategy Talk: Building a “One-Stop-Shop” for FX Carlo Koelzer CEO of 360T and global head of FX at Deutsche Börse Group, talks to Galen Stops, deputy editor at Profit & Loss, about his plans for building a central limit order book and why central clearing is now a viable method for alleviating credit risk in FX. Following its acquisition by Deutsche Börse Group last year, 360T informed its clients that it planned to add a central limit order book (CLOB) and futures trading functionality to its platform.
Does the WMR Still Serve a Valid Purpose? Alex Dunegan, founder and CEO of Lumint, talks to Profit & Loss deputy editor, Galen Stops, about the challenges facing the buy side around selecting and evaluating benchmarks. The WMR benchmark has come under severe scrutiny since the allegations that banks colluded to manipulate it, leading to changes in the way that the benchmark is calculated and questions from buy side firms about whether they should be using it at all. Dunegan claims that this is a “critical” question, and provides his take on the answer.
Central Banks: Both Killers and Causes of FX Volatility Bob Savage, CEO of CCTrack Solutions, talks to Profit & Loss deputy editor, Galen Stops, about why geopolitical unrest this year hasn’t translated into more FX volatility. This year has been marked by a high degree of geopolitical unrest and uncertainty, with Britain voting to leave the European Union, Italian banks struggling ahead of an important referendum later this year, questions being raised about the future of Europe and a divisive US presidential election. Meanwhile the war in Syria continues, ISIS has not been defeated, Russia is considered to be actively attempting to expand its sphere of influence and there is the suggestion that some long-time US allies in Asia – such as the Philippines – could drift closer in their relations to China in the coming years.
Why FX Needs a Unique Regulatory Approach Matt Kulkin, a partner at Steptoe and Johnson, explains to Profit & Loss deputy editor, Galen Stops, why a “copy and paste” approach to regulation won’t work for FX. FX is often referred to as an “unregulated” or “self-regulated” market, and yet in recent years bans have been fined billions of dollars by regulators for alleged infractions in this market, while criminal charges are being brought against FX traders in the US courts. Kulkin explains this disparity by pointing out that the entities involved this market are regulated and therefore subject to oversight by a various national authorities. However, unlike the securities markets or the OTC derivatives markets, there aren’t concrete regulations regarding the market place, he says.
Room for Numerous Prime Services Models in FX Louisa Kwok, head of prime of prime sales and products at ADS Securities London, explains to Profit & Loss deputy editor, Galen Stops, why there’s room for numerous different prime services models in the FX market. With many of the traditional FX prime brokers (PBs) being increasingly selective about who they will offer their services to, this has created a gap in the market that many firms appear eager to fill. Subsequently, numerous prime services offerings are being touted to market participants under the banner of prime-of-prime.
Buy Side View: Risk Managing in Extreme Market Conditions Richard Preschern, CEO of Robosig and Co-Founder at FX Vision, talks to Profit & Loss deputy editor, Galen Stops, about the lessons he’s learnt from recent risk events. Speaking about the volatility following the Swiss National Banks’ decision to pull its peg to the euro, Preschern comments: “What you understand is that the execution that you get during these events is nothing to do with what you model because the market is simply not there. “So what you have to do in terms of risk management is look at your extreme points in terms of exposure because you just don’t know that you’re going to be able to get out, which is what causes a lot of wreckage in the market.”