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.
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.
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.
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.
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.
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.
If you have ever investigated how elite athletes prepare for a gruelling challenge it is unlikely that speaking at an finance industry conference features, however that was the case last when two speakers at Profit & Loss’ Hong Kong conference overcame the challenge of intense interrogation on stage before completing the slightly(!) more challenging matter of the Oxfam Trailwalker Team Challenge in Hong Kong from November 17-19. The team completed the 100km, 4500m climb in 23 hours and 16 minutes.
The subject of how data is used to conduct Transaction Cost Analysis (TCA) formed part of a lively debate at Profit & Loss Forex Network Chicago. Galen Stops moderated.
Paul Aston, the CEO of Tixall Global Advisors, proposed the motion that “TCA Is Just a Morality Carwash”, effectively arguing that many buy side firms are simply handing over their fiduciary duty to ensure best execution for their investors to their sell side counterparts, while using TCA to justify the trading decisions that they make as a result.
Opposing the motion was Isaac Lieberman, CEO of Aston Capital Management, who formed his argument around the proposition that market participants who are trading risk do so against a set of metrics by which their success is measured and therefore they are conducting TCA to show performance against these metrics.
A panel of buy side market participants at Profit & Loss Scandinavia in Stockholm shared their insights into their FX activities and discussed how data has come a long way in terms of helping them measure best execution; however, analysing that data isn’t as easy as they’d like.
Is the availability of data and technology changing how the industry assesses execution quality? That’s the question addressed by Marcus Samuelsson, portfolio manager at Ericsson; Andreas Wollheim, head of trading and treasury at SEB Investment Management; and James Koutoulas, CEO at Typhon Capital Management, speaking at Profit & Loss Scandinavia in September.
This years CEMPROSPECTS conference will take place at the Hotel Placio dei Principi in Rome from October 8-10.
The event will cover energy markets of relevance to the cement industry, notably coal and petcoke, as well as freights. The conference is also of relevance for producers and traders in these markets.
Time will also be dedicated to a debate on geopolitical events happening across the globe, including the US political scene, Brexit and legislative developments in the field of CO2 and sulphur emissions.