Day: 12 July 2018

SGX: Doing Things Differently

“It’s not rocket science, but it is a different approach compared to other exchanges,” says KC Lam, head of FX and rates at SGX, when discussing the exchange’s new FlexC FX futures, which aim to “futurise” certain OTC FX product offerings.

This is, of course, a reference to the recent product initiatives launched by various exchange groups in an attempt to bridge the gap between OTC and listed FX trading.

While Eurex has launched rolling spot futures, which mimic the trading of OTC FX spot contracts, combined with the daily usage of a tom-next (T/N) swap in order to roll over the value date of the spot position, and CME has launched CME Link, spot FX basis spreads offered on Globex to create a central limit order book (CLOB) between the OTC spot FX and CME FX futures markets, SGX is indeed taking a very different approach.

FSB Reinforces Support for Overnight RFRs

The Financial Stability Board has published a statement on reforms to interbank offered rates and the development of overnight risk-free, or nearly risk-free, rates and term rates.
The FSB says the statement is intended to provide market participants and other stakeholders with its views ahead of a forthcoming consultation by the International Swaps and Derivatives Association which contemplates fall backs for certain derivative contracts based on overnight RFRs. The FSB started its work on reforms to IBORs following enforcement action taken by FSB member authorities in response to the manipulation of these benchmarks.

Thomson Reuters Unveils Eikon Digest

Thomson Reuters has announced the launch of Eikon Digest, what it terms a personalised proprietary service containing the most significant news, research, data and information from Thomson Reuters Eikon, its financial desktop platform.
The new service is built upon the foundation of Reuters News and the firm says that unlike popular news aggregation services that use destination apps or home pages to deliver news, Eikon Digest goes further to include AI algorithms that sift through terabytes of news and data to deliver personalised information according to the company list/portfolio, industry sector, language, content entitlements and regions that interest clients the most.

Dispelling Misconceptions About Currency Hedging

Momtchil Pojarliev, deputy head of currencies at BNP Paribas Asset Management, talks about some of the misconceptions that exist amongst institutional investors regarding currency hedging.

For example, he explains that in the past, some firms have been unclear on the exact difference between absolute return strategies and active hedging.

In the former, the aim is to produce risk-adjusted returns that are as high as possible for a given volatility. The currency manager is allocated a notional amount of funds and can invest in any given currency to try and produce the maximum amount of returns possible.

Hedge Funds Suffer in June: BarclayHedge

Hedge Funds lost 0.31% in June according to the Barclay Hedge Fund Index compiled by BarclayHedge, versus a 0.62% increase in the S&P 500 Total Return Index. Year to date, the Barclay Index is up 0.69%, while the S&P has gained 2.66%. Twelve of Barclay’s 17 hedge fund indices had losses in June, while five had gains. Emerging Markets gave up 2.55% in June, Equity Market Neutral was down 1.22%, Pacific Rim Equities lost 0.58%, the Multi Strategy Index was down 0.53% and Fixed Income Arbitrage gave up 0.47%.

And Another Thing…

The price action in Cable on Monday around the resignation of four government ministers in the UK was interesting and highlighted a nuance of the modern FX market structure. The pertinent question to be considered is: Do we want to have a generally stable market with fewer 200 point moves, but which has occasional flash events; or is it better to have a generally busier market, with more 200 point moves and little – or even no – flash events?