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Voting for the Profit & Loss 2018 Readers’ Choice Awards is Now Open! Voting has now opened for this year’s Profit & Loss Readers’ Choice Digital Markets Awards. The awards are divided up into two categories, one for market makers and one for service providers. It is possible to vote for any market participant in any category, and there is no requirement to vote in every category. Responses may be edited at any time before the survey closes at midnight BST on Monday, April 30th. Anonymous votes will not be counted, nor will votes for one’s own company. To vote in the Profit & Loss Readers’ Choice Digital Markets Awards, click here. Profit & Loss is also accepting nominations for the P&L Hall of Fame. The personal information of those that make nominations will not be made known to the nominee.
And Another Thing... This won’t take long as it’s a long weekend for most in the markets, including me! Just to reminder subscribers that we will have the latest in our monthly Insight calls next Wednesday – I thought we’d give you an extra day to get things back in order – and there is plenty to talk about. I’ve already had a couple of messages about the events of the past month, possible bids for NEX, unfair dismissal claims being won and the Cartel traders making their first appearance in court, so we can discuss all of that if we have time, plus there is something I want to get into regarding the FX market structure. So, it will be great to have you join us – this is only open to subscribers – and I look forward to a nice long weekend preparing some ammunition for Wednesday!
FFK to Mark 10 Years with First Ever Fun Run Futures for Kids, the fund raising effort on behalf of the futures and options industry for charities which work to provide better lives and futures for children internationally, is planning to celebrate its 10th anniversary with its first ever fun run. FFK has raised over £2 million in the 10 years since it was established and has traditionally organised a Walk to Work event – this year it is stepping up a gear. The 10km run – a 5km run is also available – takes place on Wednesday, 23 May from 6.00pm at the Queen Elizabeth Olympic Park, in Stratford, London.
Bitcoin Futures: Looking at the Nuts and Bolts Speaking at a recent buy side event hosted by Profit & Loss and sponsored by CME Group in New York, Tim McCourt, managing director and global head, equity products and alternative investments at CME Group, talked about the nuts and bolts behind the exchange’s new bitcoin futures contracts. In a fireside chat about the CME’s bitcoin futures contract – which launched in December when the excitement around bitcoin was spiking and the cryptocurrency was trading at over $18,000 – McCourt was quick to emphasise that the exchange operator is pleased with the performance of these products thus far. McCourt noted that, “1,500 in ADV [Average Daily Volume] and 1,500 in OI [Open Interest], with 800 accounts and global adoption of the product – these are all very strong indicators of long-term success for a contract, and actually it’s an exception to have reached these numbers so quickly”.
Building a Cryptocurrency Portfolio: Promise Over Peril At a recent buy side event hosted by Profit & Loss and CME Group in New York, a panel of cryptocurrency experts discussed how institutional investors and traders should think about these assets within a portfolio. Interest in cryptocurrencies has skyrocketed amongst investors and trading firms over the past year, as the market capitalisation for this nascent asset class has increased dramatically and volatile price action has offered the potential for outsized returns compared to many traditional asset classes. Yet some firms still consider cryptocurrencies to be too risky to include in their portfolio, a position that Ari Paul, managing partner and CIO of the hedge fund BlockTower Capital, took issue with on the panel.
Can Silicon Valley Business Models Work in FX? It seems that increasingly, some FX firms want to adopt the business models deployed so successfully by the large technology giants that have emerged from Silicon Valley. Banks talk about developing their single-dealer platforms to mimic the Amazon model of being able to supply everything that their customer needs within one platform. At least one trading venue is talking about moving to the Facebook model of charging nothing for the actual technology platform that it provides, because it will instead derive profits from the data generated by that platform.
FinTech in FX: An Evolutionary Process Although fintech solutions are likely to change how FX operates throughout the trade lifecycle, expect these changes to be evolutionary rather than revolutionary, explained speakers during a recent Profit & Loss webinar.  The word “disruption” has become synonymous with fintech in recent years, with numerous articles, whitepapers and analyst reports warning that fintech upstarts are looking to upset the applecart in financial services. Yet speakers on a recent Profit & Loss webinar, FinTech in FX: Getting Beyond the Hype, which was sponsored by IHS Markit, preferred to talk in terms of innovation rather than disruption when discussing the impact of fintech in the FX markets.
Regulators Set to Give FinTech Firms a Long Leash It seems that regulators are unlikely to place any significant burdens on new fintech firms emerging in the wholesale financial markets in the near future, given their lack of familiarity with the technologies involved. Speaking on a recent webinar hosted by Profit & Loss, Justin Slaughter, a partner at Mercury Strategies, explained that, when it comes to fintech, regulators in the US are still very much in “information gathering mode”. “Much of what regulators are doing right now is simply trying to educate themselves. There is a significant lack of understanding about how fintech is so much broader than, say, just cryptocurrencies or even DLT [distributed ledger technology],” he said.
Getting Beyond the FinTech Hype For the past few years the financial services industry has been abuzz discussing how new fintech solutions are going to change the way that the industry operates. Venture capital (VC) firms have been throwing money at fintechs, banks have been launching incubator programmes and innovation labs, and existing technology vendors have been re-branding themselves all to try and take advantage of the fintech hype. As such, it’s nearly impossible to have a conversation about the impact of fintech without someone talking about the potential for “disruption” within financial services.  And yet, certainly within FX specifically, it remains hard to really identify any tangible evidence of this disruption thus far.
ALTSO Hosts Record Breaking Events in New York and Chicago A Leg to Stand On (ALTSO) held its 14th annual Rocktoberfest in New York recently and hosted more than 1,400 attendees and raised a record breaking $740,000 for its chosen charities. Along with ALTSO’s Chicago event the non-profit organisation raised almost $900,000, the net proceeds of which it says will benefit the organisation’s life-changing programmes in the developing world in 2018. Lead sponsors of the New York and Chicago events included CGI, PAAMCO, Element Capital, CME Group, ICE, Jacobs Asset Management, Lyxor Asset Management, Societe Generale and Wells Fargo.