Articles tagged by Technology
a fintech entrant into the new bond issuance market, has launched an end-to-end
platform and support framework for primary bond origination.
The fully-digital platform
for primary bond issuance provides, the firm says, higher transparency, better
price discovery, and ...
After a number of years having to take reactionary measures in
response to new regulatory requirements, panellists at Profit & Loss’ Forex Network New York conference expressed
enthusiasm for a new wave of innovation that has the potential to re-shape FX
Lmrkts, a compression provider which recently
facilitated the first multilateral FX compression designed to lower
counterparty exposures and consolidate cash flows, has agreed a strategic partnership
with Tradition to handle execution and compression processing for FX forwards.
A limited release ...
The International Swaps and Derivatives Association (ISDA) has published a whitepaper calling for greater standardisation and automation of derivatives market infrastructures.
The new paper, The Future of Derivatives Processing and Market Infrastructure, highlights a number of challenges with existing structures and processes, and recommends several steps the derivatives industry can take to create efficiencies – in particular, by embracing opportunities for further standardisation.
"The derivatives industry has become reliant on legacy infrastructures and processes that have been layered on top of each other over time. That might be the result of historical acquisitions, where the respective systems haven't been fully integrated. More recently, the sheer pace of regulatory change has meant firms have been under pressure to tackle the next pressing deadline. The result is a derivatives infrastructure that is duplicative and based on incompatible operating standards, and this isn't sustainable," says Scott O'Malia, CEO of ISDA.
Hedge fund managers are increasing their investment in technology to create competitive advantages and address regulatory and operational concerns, according to a new study by KPMG International, the Alternative Investment Management Association (AIMA) and the Managed Funds Association (MFA).
The study polled more than 100 global hedge fund managers representing approximately $300 billion in assets under management (AUM) and found that 90% of these firms are investing in technology to improve controls and compliance. A similar amount, 88% of respondents, said that efficiency objectives were their top reason for investing in technology.
Edgewater Markets is expanding its LatAm business with the launch of a local matching engine in Mexico City.
The deployment of the server in the KIO-5 data centre in Mexico, which recently went live in Q3 2016, enables customers to cross connect directly to Edgewater’s local environment. It will support a range of currency pairs, with a strong focus on MXN crosses.
“We are constantly looking for ways to grow our business and to penetrate into new areas of the market and we identified order management as a gap in our offering. We have clients aggressing rates on our platform very actively, but we were lacking on order capability.
Portware upgraded its execution management system (EMS), Portware Enterprise.
Portware Enterprise is designed as a customisable EMS that acts as a central platform for the creation and execution of trading strategies for global equities, futures, options, fixed income and FX.
The firm says that the latest version, Portware Enterprise 6.4, focuses on assisting traders in managing regulatory and administrative burdens, while freeing up their time to concentrate on preserving alpha with “state-of-the-art”, AI-driven tools.
The EMS is designed to offer users data warehouse functionality, advanced venue analysis and an enhanced ability to record and analyse growing volumes of execution and Indication of Interest (IOI) data.
Svante Hedin, global head of electronic markets at SEB Merchant Bank, explains to Galen Stops, deputy editor of Profit & Loss, how technology is changing the role of the regional banks.
Hedin says that the evolution of the regional or super-regional banks is being driven by a number of factors, one of which is technology.
“It’s an enabler for some of the banks that at some point were dominant players in their particular currencies and then as the years have gone past they have perhaps under-invested and not quite kept up with the overall progress of technology and effectively get swallowed up by some of the larger guys,” he says.
David Mercer, CEO of LMAX Exchange, talks to Galen Stops, deputy editor of Profit & Loss, about why FinTechs are enablers rather than disruptors of the FX market.
The world “disruption” is often applied to FinTech firms, yet Mercer argues that in FX the role of these firms is not to disrupt but to enable the growth of the market.
“We’re trying to enable the industry to operate more efficiently and more fairly. Other people put that disruption word around companies like LMAX Exchange but the FX market is the biggest asset class in the world, it doesn’t really need disrupting, it needs to grow and it needs to be enabled to allow it to grow.
Rick Schonberg, global head of product for trading and clearing and the North American head of trading solutions at Currenex, talks to Galen Stops, deputy editor at Profit & Loss, about the launch of X2 trading platform.
“In some ways it’s easier and in some ways it’s harder,” explains Schonberg, who describes the number of execution choices available to these traders as “mind numbing”.
He says that many institutional clients, such as corporate treasurers, used to trade FX by doing what was effectively a telephone request for quotes (RFQ) to a handful of banks and then automating that into a GUI on a multi-bank platform
Profit & Loss introduced a new format at Forex Network Chicago, which took place September 28-29. The second day was dedicated to the Profit & Loss Challenge, during which conference participants broke into working groups under five key topics: Geopolitics, Regulatory, Liquidity, Execution and Technology.
Raising the curtain on the day’s discussions during a new format on Day 2 at Forex Network Chicago, managing editor Colin Lambert kicked off with a series of questions to get the conversations going with topic speakers.
The Debriefing session brought together each of the five speakers after convening with their table heads to get feedback from each of the respective working groups, the results of which were presented in a panel discussion about the findings.
In the final act of Forex Network Chicago, The Debriefing session featured the five topic speakers providing an overview of the working group sessions that took place around each of the five topic working groups.
The main speakers and the table heads they worked with included: Geopolitics: Mario Manna, CEO, Nightberg, with support from table heads George Dowd, president, G. Dowd & Co; and Bob Savage, CEO, CCTrack.com.
Profit & Loss talks to Tod Van Name, Bloomberg's global head of FX and commodities electronic trading, about how technology is changing the way that corporate treasurers operate.
Profit & Loss: With a lot of global macro uncertainty anticipated for the year ahead, are corporate treasurers under more pressure when it comes to managing their FX exposures?
Tod Van Name: There’s no question that corporations are always considerate of market pressures, and while there haven’t been wild currency swings in the US, where the dollar has been strong and stable recently, for treasurers not in the US it has become a particularly big issue.
CME Group has gone live with the “triangulation” of its volatility quoted FX options (VQO), a new system that links the VQO, premium quoted options (PQO) and futures books in order to boost liquidity.
VQOs, which were launched on November 14, allow market participants to quote the standard 2:00pm expiration contracts in annualised volatility terms.
When using a VQO, once a trade occurs the implied volatility input is converted into a USD premium using a standard options pricing model and the participants exchange a standard premium option and a delta hedge of standard underlying futures. This enables market participants to trade in volatility and clear in premium.
There are many reasons given for the perceived decline in liquidity conditions in FX markets in recent years and all do play a role according to a new white paper published by the BIS. But have liquidity conditions changed that much? Hasn't it always been the case that when events happen markets gap and thin out?
If I am correct in this assessment then the real problem facing the FX industry is not deteriorating conditions – it's a sense of entitlement.
Darren Jer, CEO of MarketFactory, talks to Galen Stops about flash crashes, the new latency arms race and how technology will enable the FX market to keep growing in size.
Galen Stops: What’s going to be the main focus for MarketFactory as a company in 2017?
Darren Jer: Well let me just start by saying that FX is the biggest market that not everyone knows about. In the equities market last year, $114 trillion was traded across all exchanges; in FX, that figure is $1.4 quadrillion. In FX we talk in average daily volume (ADV) numbers all the time so we’re just used to the size of the market, $5.1 trillion per day, but the general public and traders in other asset classes don’t know the degree of notional liquidity.
After the Bank for International Settlements (BIS) Triennial FX Survey revealed last year that the industry has shrunk in terms of notional volumes for the first time in 15 years, speakers at Forex Network London outlined the factors that could help this market get back to growth.
During the discussion the speakers on the panel outlined a number of issues that have constrained trading volumes over the past three years, including technology shortcomings, a lack of investment in some areas of the market, and regulatory challenges.
Against this background, the question was put to the panellists, how does the FX industry get back to the kind sustainable growth that it witnessed between 2001 and 2016?
As buy-side workflows are becoming complex, these firms are looking for ways to simplify how they view and manage them, claims Basu Choudry, business intelligence, Nex Traiana.
He says that, whereas in the past buy side firms used to probably have only one prime broker (PB), today they might have four or five prime brokers, or even have bilateral relationships. Further, when they execute they might do so via an anonymous venues or they might trade against another buy side firm that is using a prime broker.
“So what we’re seeing and hearing is that they want a single panel where they can see their PB relationships and bilateral, and even clearing at some point within one dashboard, one platform, where they can manage the matching, [confirmations] and settlements,” he says.
Following the launch of Sucden Financial’s new OTC FX options service, Galen Stops talks to Noel Singh, head of e-FX business development at the brokerage, about how it’s planning to diversify its FX offering.
Despite having an FX franchise that is over 30 years old, an e-FX offering that has been around for more than eight years and a balance sheet of over $100 million, Sucden Financial is not exactly a household name in the wholesale FX market.
But the firm is now working to change that as it seeks to diversify its FX business in response to changing market conditions.
Technological developments present new challenges to both financial services firms and their staff, warned John Ashworth, CEO of Caplin Systems, at Forex Network London.
In a presentation "The Fourth Industrial Revolution: Society, Finance, Trading & Sales", Ashworth opened the discussion by questioning the assumption that the advance of technology is unambiguously good for business.
“The notion that an entry level economist would invite you to believe is that technology is a good thing, that technology delivers productivity, that productivity delivers advancement, that opens up new markets, and so forth. The reality is somewhat different,” he said.
Galen Stops looks at why demand for cryptoassets has skyrocketed in 2017 and assesses whether they have any future in mainstream financial markets.
The first working implementation of a blockchain that the world had ever seen was in the Bitcoin software released in 2009. Bitcoin the cryptocurrency then rose to prominence in 2013 when, driven in part by a flurry of media attention, its value rose past $1,000 for the first time.
Following that, 2014 represented a long and painful year of price decline for Bitcoin as an asset, but it continued to garner a lot of attention, not always for good reasons. Then in 2015 the narrative began to change as people really started talking about the potential applications of blockchain technology distinct from any digital assets.
Ethernet, cloud and hosting provider, BSO, has added Singapore and Hong Kong to its FX circuit, citing growing demand for fast and reliable access to trade currency derivatives in emerging markets as the reason for the expansion.
The new routes, built on top of BSO’s London-New York-Tokyo circuit, will enable market makers using the BSO network to trade currency derivatives up to 10 milliseconds faster than before.
The new circuit includes improved latency and more diverse paths between London and Singapore, as well as a new trans-Pacific route for firms looking to trade between New York and Hong Kong. BSO says that it has also optimised its London-Tokyo link to the lowest latency available on the market.
Sucden Financial has implemented SmartTrade Technologies’ fully hosted FX solution, LiquidityFX.
LiquidityFX will provide Sucden with connectivity to multiple liquidity providers, aggregation, order routing, pricing and distribution, as well as a fully integrated order management system.
SmartTrade is also providing Sucden with its LiquidityFX credit margin module, which is designed to allow end clients to trade larger amounts and leverage their cash margin while enabling Sucden to monitor and manage their risk coverage in real time.
“SmartTrade were well placed to provide us with the necessary tools to help us accomplish our expansion plans.” comments Wayne Roworth, co-head of e-FX at Sucden.
Celent has released a report today that documents the progress being made in the internationalisation of the renminbi (RMB), and outlines the opportunities that this represents for market participants, as well as the challenges it presents.
Discussing how investment managers can benefit from RMB internationalisation, the report says that they should consider adopting new strategies to respond to greater short-term volatility in the currency.
It notes that investment managers have traditionally looked to gain from China’s one-way currency appreciation and hold bonds till maturity.
“But Chinese regulators’ abandonment of circuit breakers and other protective measures means traditional expectations of regulatory intervention may not hold going forward, opening up more opportunities for short-term price fluctuations,” says the report.
Speaking at the Profit & Loss Forex Network New York conference, panellists outlined how they think the application of fintech solutions will shape the FX industry going forward.
Nick Solinger, president of FIA Tech, broke down three specific areas where he sees the potential for distributed ledger technology (DLT), or peer-to-peer technologies, to have a major impact on the FX industry.
Firstly, he highlighted how these technologies could change payments systems.
“The current market structure has been the primary limitation in terms of who can provide credit to whom and trade with whom and access the market on the same basis as a large, highly regulated dealer. So there is a focus on improving the payment network, and that will have potential implications upstream in terms of who can trade with whom,” said Solinger.