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.
Following his retirement from Citi, where he spent nearly 30 years and most recently served as global head of G10 FX, James Bindler, reflected at Forex Network London about the changes that he’s observed in the industry.
He’s also made a number of predictions regarding its future.
1. The line between banks and non-banks will continue to blur
“As always with all these things, it comes from both sides of the equation. Banks will get faster and high-frequency traders will seek capital to backstop their risk taking activities,” said Bindler.
Discussing the challenges facing market makers, Bindler noted that the cost of FX trading is generally rising, particularly for firms that need to use prime brokers to access the market.
Next week, more than 200 FX professionals will gather at Forex Network New York to hear industry leaders debate the most pressing issues in the market today.
May 25 marks the release of the Global Code for the FX industry – a global set of principles guiding good market practice – which has been developed by The Bank for International Settlements’ )BIS) FX Working Group, which consists of market participants as well as central banks from 16 jurisdictions.
James Bergin, SVP and deputy general counsel at the Federal Reserve Bank of New York, will introduce a panel that will discuss the issues of note within the Global Code.
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?
Speakers at Profit & Loss’ Forex Network London tried to “de-mystify” blockchain technology as they talked about its practical applications within the financial services industry.
Andy Coyne, CEO of Cobalt DL, explained that when he first began looking at how blockchain technology could be applied to post-trade FX he found that there was a lot of noise and hype around the technology, but that there was a dearth of companies actually ready to implement it in a practical manner.
Coyne said that he looked at the issue that his firm was trying to solve, which was how to reduce cost and risk in post-trade processes, and then started examining if and how this technology could help.
When assessing which large tail risk events are likely to take place in 2017, speakers at Profit & Loss’ Forex Network London emphasised that there are other risk factors being overlooked that might have a greater impact on financial markets.
“Like last year, the tail risks this year are quite high compared to normal,” said Colin Harte, strategist and senior portfolio manger at BNP Paribas Investment Partners. “There are some quite material risks that – if they come to pass – could have a significant impact on markets.”
He noted, however, that many of the expected tail risk events from 2016 were less dramatic than expected in the end: sterling took an obvious hit after the Brexit result, but soon became range-bound again, while the Trump election victory actually led to a rally in the equity markets.
Following on the heels of the FX Fix scandal that rocked the FX industry over the course of the past few years, the Bank for International Settlements (BIS) set up a working group to draw up a Global Code of Conduct for FX market participants, by FX market participants.
Several of those involved in crafting the Code addressed attendees of Profit & Loss Forex Network London to discuss some of the adherence and compliance mechanisms drafted into the Code.
Speaking at the event, Chris Salmon, executive director, Markets, at the Bank of England (BoE), said: “The drumbeat of scandal in relation to the FX industry created issues for market practitioners, but it also became a concern for the central banks of the world.”
Voting for the Profit & Loss readers choice awards – the FoXys – is now open.
Now that the P&L editorial team has made its choices over the best in the banking industry, Profit & Loss readers now get a chance to vote for their favourite service providers.
At the same time, Profit & Loss is equally keen to hear your view as to who should be inducted into the Hall of Fame as part of the class of 2017.
This week, Wednesday March 29, Profit & Loss Forex Network London takes place against the backdrop of UK Prime Minister Theresa May invoking Article 50, formally starting Britain's exit from the European Union. The conference represents a day filled with FX industry experts assembled to discuss everything from the Global Code to Brexit to Flash Crashes to the Liquidity Crunch and much more, kicking off with a panel of experts directly involved in crafting the Global Code, including the Bank of England’s director of Markets, Chris Salmon.
Thom Lant, a former marketing and PR executive at CME Group, Nasdaq, and LME, has completed an epic 300 mile walk in 15 days, re-enacting the historic Jarrow March to raise awareness of and funds for the Motor Neurone Disease (MND) Association.
Supporters of the City Against Motor Neurone Disease Network, a group for those working in and around the City of London who have in some way been touched by MND, welcomed him as he finished in Leadenhall Market.