The January 3 flash event in FX markets continues to fuel the news cycle and in this week’s podcast, Colin Lambert and Galen Stops discuss the real impact of algos – widely cited as a major factor in the event – in markets. For once they agree on a central theme in the debate, including Lambert (very reluctantly) shooting down one of his own arguments with Stops last year on trend following, but as always there’s room for divergent views.
Day: 14 January 2019
Profit & Loss understands that David Schulz has left exchange group Cboe, where was a director in the firm’s global markets group most latterly focused on its bitcoin futures offering.
Schulz joined Cboe in November 2012 after a more than eight year spell at rival exchange firm CME, where he was a director, FX products.
Prior to moving into the exchange space Schulz was a CME floor trader in Chicago for more than three years after exiting the banking industry after a 20 year career with Merrill Lynch in FX trading.
A survey of more than 100 firms associated with the derivatives markets and conducted by JCRA, an independent financial risk management consultancy, along with law firm Travers Smith, has found that a large majority of firms with exposure to Libor are yet to start making preparations for its discontinuation.
The benchmark is set to be withdrawn in 2021, but the firms say that most of those surveyed have not started negotiating replacement language in their contracts that reference the outgoing benchmark.
Thursday’s column provided a steady stream of comments and feedback with one question over-riding all others – what can be done to avert more flash events, especially in the Australasian window before the mainland Asia open?
I actually think the question should be, ‘what, if anything, should be done?’ because I remain unconvinced that what happened last week requires a radical rethink of how the FX market operates. This may come as a surprise to long-standing readers who may recall me advocating for the use of central bank volatility bands post-sterling flash crash, but the two events are different.
Spotex, a developer of technology systems for the FX markets and ECN operator, has hired John Miesner as executive managing director, global head of sales and distribution. “We are fortunate to have John join us at this transformative point in our evolution,” says Ritesh Agrawal, CEO of Spotex. “John’s vast knowledge of the institutional foreign exchange market and its key participants will be a tremendous asset as he leads the company forward.”Spotex was launched in 2014 by Agrawal, who previously held senior IT positions at Hotspot FX (now Cboe FX), GFI and PwC, and COO Chris Mitchell, who held similar positions in financial technology.
MarketFactory has secured a strategic investment from Accel-KKR, a technology-focused investment firm based in Silicon Valley with over $5 billion in capital commitment. In a release issued today, MarketFactory says the funding will accelerate its expansion into new markets and services for currency traders globally.“MarketFactory’s platform provides detailed data about the currency market that helps traders to innovate. We are very excited to find the right partner in Accel-KKR who understands the market structure importance of our business and growth trajectory,” says Darren Jer, CEO and co-founder of MarketFactory.
OTCXN, a blockchain-powered capital markets infrastructure company, has announced that Independent Reserve, a regulated cryptocurrency exchange that operates in Australia and New Zealand, has joined the OTCXN network. “We are excited to have Independent Reserve as the first exchange to go live on our network. Their forward-thinking management team was quick to see the benefits of joining OTCXN, where Independent Reserve’s order book is tradable by any institutional client on OTCXN’s global network without holding assets at the exchange. OTCXN brings exchanges the deepest institutional liquidity, increasing trading volume and ultimately increasing revenues and improving client execution,” said Rosario Ingargiola, CEO and founder of OTCXN.
TriOptima, a provider of multilateral compression services for OTC markets, set a new record for its triReduce portfolio compression service in 2018, having compressed $250 trillion gross notional value of trades at LCH SwapClear.The firm says this record, which represents an annual increase of 31% in terms of notional value, was driven by a combination of increased participation of both dealers and their clients, increased trade submission to triReduce cycles and a wider adoption of the Trade Revision methodology, which improves compression efficiency by up to 50% by allowing a wider range of trade economics to be changed.“We are proud that another record compression year continues to help the industry achieve important capital and operational cost reductions,” says Peter Weibel, co-CEO at TriOptima.
Trading on SGX’s FX Futures more than doubled to $914 billion in 2018 as the exchange saw a record monthly volume of $96 billion traded in December.In aggregate, 1.76 million FX futures contracts were traded on SGX in December, up 87% from the same month in 2017. Meanwhile, the notional volume of $96 billion traded on the platform was a 122% year-on-year increase.“The robust annual growth is strong evidence of the role SGX plays as a key risk management venue for market participants as they manage their Asian currency risk exposure,” says the exchange group in its monthly newsletter.
HSBC has now settled more than three million FX transactions and made more than 150,000 payments worth $250 billion using distributed ledger technology (DLT), it announced today.The bank’s DLT solution, called HSBC FX Everywhere, has been used for the past year to orchestrate payments across HSBC’s internal balance sheets.HSBC highlights three key benefits of the solution. The first is that it provides a shared, single version of “the truth of intra-company trades”, from execution through to settlement, which reduces risk of discrepancy and delay. Secondly, it means that confirmation and settlement is automated by matching and netting transactions, which reduces costs and reliance on external settlement networks.