Month: August 2018

P&L Talk Series with Bill Lipschutz

Bill Lipschutz talks to Profit & Loss about how the FX market has changed since he founded Hathersage Capital Management, and why the barriers to entry for currency-focused hedge funds are going up, not down.

Profit & Loss: What products do you trade and what types of strategies do you deploy? How would you describe your trading philosophy?

Bill Lipschutz: Hathersage trades G10 currency pairs and plain vanilla options on those pairs. Our strategies embrace one or the other of two basic approaches. They are either: tactical, momentum driven or strategic, macro fundamental. We are 100% discretionary, highly focused and uniquely experienced.

And Another Thing…

There has been more emphasis within the financial services industry on the responsibility of the individual in recent years as regulators have dealt with misconduct, but will this ever actually succeed when too many institutions – banks especially – have such a complex and over-lapping management structure?
How can an individual be responsible for something when they are a “co” head of business and into the bargain report to about seven people, all of whom are also “co” heads of something?

FX: Going Back to its Roots?

Much has been made of the struggles of speculators to make money in FX in recent years. Colin Lambert takes a look at data that suggests speculators are on the decline, and hedgers on the rise – and he sees some good news for the banks in this, if they can stay one particular course.

Spot FX is “over-broked” to use the market vernacular – there are so many market makers, many of whom are recycling liquidity, that differentiating oneself in this market is extremely difficult unless you are either at the very quick end of the spectrum or are handling plenty of large tickets that require care around the execution.

Thomson Reuters Adds Japanese Yen, Thai Baht Crosses

Thomson Reuters (TR) has launched real-time electronic trading of spot Japanese yen and Thai baht cross currency pairs on its Matching platform.

Cross-currency trading in JPY/THB and THB/JPY will be provided on TR’s electronic central limit order book platform to clients in Japan, Thailand and globally.

Recently, Japan’s Ministry of Finance (MOF) and Bank of Thailand (BOT) reached a mutual agreement on initiatives to promote the use of local currencies for trade and investment settlement, which includes, among others, promotion of the direct exchange rate quotation and interbank trading between the Japanese yen and the Thai baht.

CLS Names Barnard as Chief Internal Auditor

CLS has appointed Duncan Barnard as its chief internal auditor.

Based in New York, Barnard is responsible for leading CLS’s audit activity globally. He reports to the Audit and Finance Committee of the CLS board and to CEO, David Puth.

Prior to this role, Barnard worked at Accenture, where he served as managing director in the finance and risk practice covering the US northeast region. Before that, he was a managing director in PricewaterhouseCoopers’ (PwC) risk and compliance analytics practice, of which Barnard was a founding member, and also served as managing director in PwC’s US northeast risk assurance practice.

Why CTAs Needn’t Fear Rising Interest Rates

Campbell & Company argues in its paper, Prospects for CTAs in a Rising Interest Rate Environment: A Refresh, that CTA performance is less dependent upon the interest rate climate than some may think.

The paper builds on the data presented by Campbell in a 2013 paper, which showed that traditional assets, such as US equities and Treasuries, have historically underperformed when interest rates are rising. In addition, it showed that CTA performance has exhibited a different pattern from these assets and has in fact not been regime-rate dependent.

Crypto Custodian Secures Insurance from Lloyds

Kingdom Trust, which provides custody services for digital asset investments, has secured insurance for digital assets held on its qualified custody platform through Lloyd’s of London.

“Qualified custody by a regulated, insured financial institution is a top priority and critical hurdle for institutions to invest in the digital asset markets,” says Matt Jennings, CEO of Kingdom Trust. “By adding another trusted specialist like Lloyd’s to our platform, we’re ensuring that current and future clients will have access to a highly secure, complete safekeeping solution tailored to meet the challenges of institutional finance.”

Why Does the SEC Keep Rejecting Bitcoin ETFs?

Last week the Securities and Exchange Commission (SEC) declined to approve rule amendments proposed by NYSE Arca and Cboe BZX Exchange to authorise the listing and trading of shares of nine exchange-traded funds (ETFs).

This decision comes after the SEC also rejected the Winklevloss ETF in July that would have traded physical bitcoin, whereas the ones rejected last week planned to seek exposure to some or all of the bitcoin futures contracts traded on the Chicago Mercantile Exchange (CME), Cboe Futures Exchange (CFE) and/or any other US exchange that subsequently trades such derivatives contracts.

And Finally…

Before getting onto today’s theme I have some sad news to impart. Gary Munday, known to so many dealers of a certain generation as a member of the powerhouse Marshalls’ dollar-mark team, died suddenly at the weekend, aged 59.
As I never traded dollar-mark Gary never took my line, but he did my institution’s and he was well-liked by my colleagues who did work with him. My condolences to his family and friends at this very sad time.
Turning to today’s theme, it struck me over the weekend that if ever there was an FX-related example of the triumph of optimism over reality, or hope over expectation, surely it must come in the form of Ice Futures US.

In the FICC of It

In this week’s In the FICC of It, your podcasters are taken to task by a listener over some points they may have missed when discussing the State Street/BestX deal last week and Galen Stops asks Colin Lambert the question (on behalf of a listener), ‘can you be too client focused?’
They also look at the impact of political events on FX markets and Lambert appeals to listeners of a ‘certain generation’ (i.e. as old as he is!) to come up with times when global politics was potentially such an influence on FX markets?
The evolving market structure of crypto markets also attracts their attention, and they ask the question; ‘Can innovation really thrive in banks today?’