Day: July 20, 2017

CTAs Continue to Struggle in June

Managed futures traders lost -0.98% in June, according to the Barclay CTA Index compiled by BarclayHedge.

This was the largest monthly decline so far this year as the index is down -1.65% through the first two quarters of 2017.

The BTOP50 Index, which tracks the 50 largest investable CTAs, also fell, registering a loss of -2.60% in June, and is down -4.77% for the year as well.

“The first half of 2017 has been difficult for the CTA industry,” says Sol Waksman, founder and president of BarclayHedge. “The combination of low volatility and sharp trend reversals has helped to suppress returns for managed futures.”

CLS Volumes Up in June

The average daily volume (ADV) of trades submitted to CLS was $1.64 trillion in June, up 6% from $1.55 trillion in May, and up 1.64% year-on-year.

The main driver of this growth appears to have been an increase in swaps and forward activity. Swaps accounted for $1.08 trillion of the ADV submitted to CLS in June, up 9.3% month-on-month and 7.5% year-on-year.

The ADV of $108 billion in FX forwards in June represented a 3.8% increase from the previous month and a 20% growth from June 2016, when an ADV of $90 billion was recorded.

O’Brien Leaves BNY Mellon

Patrick O’Brien has left his position as managing director, foreign exchange, at BNY Mellon.

Based in Pittsburgh, O’Brien had been with BNY Mellon since 2006. Profit & Loss understands that his departure is part of a broader move by the custodian bank to consolidate its FX dealing room in New York.

Prior to working at BNY Mellon, O’Brien spent just under two years as a senior vice president, FX trading, at National Australia Bank (NAB) in New York.

Before joining NAB in 2005, O’Brien was a manager and chief dealer for spot FX at Commonwealth Bank for twelve years, operating out of both New York and Sydney during that time.

Keeping Pace With Automation

As the FX market becomes more automated and continues trading faster, the industry needs to implement better controls to prevent disruptive behaviour, says Greg Wood, SVP, global industry operations and technology at FIA.

Drawing on his experience working in both the FX and futures markets, Wood observes that both are fundamentally driven by technology now and are highly automated.

He adds that “with any type of automation you’re going to have increases in speed and your controls have to maintain pace with the other increases in technology, so as the market gets faster, you need to have appropriate controls.”

And Another Thing…

Whilst the publicity associated with the issue is unwelcome and untimely, last week’s revelation that a group of banks face a lawsuit over their use of (although it is probably more accurate to say ‘lack of disclosure of’) last look should have focused a few minds on the feedback process being run by the recently-formed Global FX Committee.
We need to be clear about this – if this lawsuit is settled or lost by the banks then more will inevitably follow.

TradAir Partners with Snap

TradAir has partnered with Singapore-based technology firm Snap Innovations, to jointly develop FX solutions, initially for Asian market participants.
The joint venture has been made possible through funding provided by the Singapore Israel Industrial R&D Foundation (SIIRD), a co-operation between the Singapore Economic Development Board (EDB) and the Israel Innovation Authority to promote, facilitate and support joint industrial R&D collaboration between Singapore-based companies and Israel-based companies across different industries.
The firms say the new solutions will enhance regional FX liquidity, enabling Asian market participants to aggregate, trade and become market makers between the currently fragmented OTC and exchange-based regional FX liquidity pools.

Survey: FX Prime Services

The Q3 edition of Profit & Loss will feature an in-depth special report on FX prime services, looking at the significant changes that have occurred in this segment of the market and how these will impact trading firms in the future.

But we want to hear from you about your expectations regarding the future of FX prime services, which is why we’re asking you to fill out this 1-2 min multiple choice survey: https://www.surveymonkey.co.uk/r/PrimeServices

All survey responses will remain anonymous, but should you choose to include your email address at the bottom of the survey you will receive a free PDF of the special report when it is published in September.