Profit & Loss talks to John Deters, chief strategy officer and head of multi-asset solutions at CBOE, about the potential for cryptocurrencies such as bitcoin to trade on regulated exchange platforms.
Profit & Loss: You recently announced a deal with Gemini to use its bitcoin market data to develop your own bitcoin derivatives and indices. What was the thinking behind this deal?
John Deters: We’ve been observing the evolution of the cryptocurrency space, and of bitcoin specifically, for some time. In parallel with that, we’ve been thinking about what sort of structures might work well for these products.
Terence Chabe, business development manager, Colt PrizmNet, and John Sullivan, head of Capital Markets USA, at Colt Technology Services talk to Profit & Loss about the challenges posed by Mifid II compliance.
Profit & Loss: Are you currently seeing a disparity between different market participants in terms of how ready they are for Mifid II?
Terence Chabe: The sell-side seems to be more ready for Mifid II, as they’ve made an investment to ensure compliance. It’s really on the buy-side where we see less preparation, and they might not necessarily have the same infrastructure or funds available to make sure that they’re compliant with some of the technical requirements of Mifid II.
Guy Debelle, deputy governor of the Reserve Bank of Australia and chair of the FX Working Group responsible for producing the Global Code, discusses his hopes and ambitions for the much-awaited document with Colin Lambert.
Colin Lambert: May 25 sees the full Code released after two years of work, what is your message to the wider market that is seeing it in its entirety for the first time?
Guy Debelle: I would like to stress that this has very much been a public/private endeavour to move the FX market to a better place by providing guidance around what constitutes good practice.
Profit & Loss talks to Tod Van Name, Bloomberg's global head of FX and commodities electronic trading, about how technology is changing the way that corporate treasurers operate.
Profit & Loss: With a lot of global macro uncertainty anticipated for the year ahead, are corporate treasurers under more pressure when it comes to managing their FX exposures?
Tod Van Name: There’s no question that corporations are always considerate of market pressures, and while there haven’t been wild currency swings in the US, where the dollar has been strong and stable recently, for treasurers not in the US it has become a particularly big issue.
Brandon Mulvihill, managing director, head of FXCM Pro, explains that there is still not enough clarity about the different prime-of-prime services being offered in the FX market, and warns that it is a mistake to believe that these firms are currently ready to fill the gap left by the tier one prime brokers.
Profit & Loss: Since “SNB Day” there have been a lot of firms touting prime-of-prime (PoP) services to the FX market. Many of them actually provide very different services. Two years on from SNB, do you feel like these differences are better understood by market participants?
Scott Fitzpatrick, CEO of Tradition SEF, talks to Profit & Loss about the ways in which the swaps market structure has – and hasn’t – evolved since the introduction of Swap Execution Facilities (SEFs).
Profit & Loss: Has the launch of SEFs three years ago actually precipitated any major changes in the structure of the swaps market?
Scott Fitzpatrick: From an infrastructure perspective, you could argue that an increased level of efficiency has been introduced into the post-trade processing of swaps transactions. Whether it’s the centralization of processing through SEFs adopting a straight-to-clearing model or the direct reporting to the Swap Data Repositories (SDRs), and provision of daily trading activity files, there is a transparency and fluidity in the post-trade environment that did not exist prior to the introduction of the SEF regulations and the creation of the accompanying infrastructure.
Moises Michan, managing partner at Tanridge Capital, talks about the benefits of FX within a portfolio and explains how firms can benefit from more active hedging strategies
Profit & Loss: How long has Tanridge Capital been trading now?
Moises Michan: We started the firm about two years ago. We’re an FX-focused asset manager with three main products: alpha strategies, passive overlay and active overlay.
P&L: Prior to this you were on the bank side, correct?
MM: Yes, it was working on the bank side that I noticed a real gap in the FX market.
Petra Wikstrom, global head of Execution and Alpha solutions at BNP Paribas, talks to Profit & Loss about why FX TCA benefits from “a pragmatic engineering approach”.
Profit & Loss: When it comes to producing meaningful TCA, what are the big data challenges facing market participants?
Petra Wikstrom: Over the last five years we’ve seen a constant uptick in the electronification of FX, but the number of venues offering FX liquidity has increased far beyond that, which means that similar volumes are now offered across more venues.
Birgir Haraldsson and Mario Manna, co-founders of Nightberg, an independent macro strategy firm, talk to Profit & Loss about getting noticed in a crowded market and how data analytics is changing the traditional research model.
Profit & Loss: given your experience in the market, how have you seen financial research change over the years?
Mario Manna: Spending a lot of time on the buy side we’ve always been big users of research and it has changed quite a bit, in particular it’s become more siloed. So now you often have specialists carved out to cover a specific niche, firms have a US rates strategist, an EU rates strategist, etc, and so the research becomes narrowly focused and at risk of constantly reporting about a topic or asset when perhaps nothing much is happening.
Franck Mikulecz, managing director of the newly established clearing house FXCH, explains why
and how his firm is using distributed ledger technology to clear spot FX
Profit & Loss: You’ve launched a clearing house to clear spot FX using ...