A Different Kind of Alpha

Even when implementing passive currency hedging strategies, it’s still important to think in terms of alpha, explained Jay Moore, a senior vice president at Brown Brothers Harriman (BBH), during a panel discussion at the Profit & Loss Forex Network New York conference. Although this might initially seem to be a contradictory statement, Moore explained that providers of passive hedging services can differentiate themselves both through risk management and what he termed “operational alpha”. While portfolio risk obviously isn’t a concern when implementing passive currency strategies, Moore explained that there is a strong focus on managing other types of risk, such as regulatory risk, operational risk and managing the fiduciary risk that managers have on behalf of the funds that they outsource to firms that are providing the passive hedging.
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Understanding the Limits of AI in Finance

Artificial intelligence (AI) and machine learning have become buzzwords in financial services, but while this technology can be applied in finance in numerous ways to improve returns, it also has some significant limitations that market participants should be aware of. This was the message from speakers at the Profit & Loss Forex Network New York conference, on a panel discussion titled  “AI: Regular Quants with a Bigger Bazooka?” “In my mind the biggest problem with machine learning in its application to finance is the problem of non-stationarity.
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Cryptos Poised to Go Mainstream

Traditional financial services firms, such as banks, are clearly poised to enter the crypto space, explained speakers at the Profit & Loss Forex Network New York conference. “Banks are going to make so much damn money off of cryptocurrencies,” said Nikhil Kalghatgi, a partner at CoVenture, a firm that has a multi-strategy asset management platform for cryptoassets. “They're chomping at the bit, laying the pipe right now in order to get connectivity, to answer all the regulator’s questions.” When thinking about the evolution of technology underpinning cryptocurrencies the key question, according Kalghatgi, is whether it has the potential to be an Internet-sized phenomenon. He pointed out that there was a clear gap between when people first heard about about the Internet and then started using it, and that cryptocurrencies could follow a similar adoption trajectory.
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US Regulators Shift Attitudes Regarding Cryptocurrencies

Speaking at Profit & Loss Forex Network New York, Mike Gill, chief of staff to US Commodity Futures Trading Commission (CFTC) chairman, Christopher Giancarlo, and the CFTC’s COO, provided a fascinating look at how attitudes towards cryptocurrencies have changed in Washington recently. Gill revealed that the CFTC received significant criticism within the walls of government last year for its approach to cryptocurrencies, such as bitcoin, which the agency allowed two exchange groups to list futures on at the end of last year. The reason for this criticism, he said, was concerns about money laundering and illicit activity linked to bitcoin and other cryptocurrencies.
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Profit & Loss “The FoXys” Readers’ Choice Awards – 2018

Voted for by the Profit & Loss readership, the winners of the 2018 "FoXys" Reader's Choice Awards were announced at the Forex Network New York conference held on May 25th. Here is the full list of the firms that topped the voting this year in each award category: Best Market Maker (Majors) 1: JP Morgan 2: Citadel Securities 3: UBS Best Market Maker (EM) 1: HSBC 2: Standard Chartered Bank 3: XTX Markets Best FX Prime Brokerage Bank  1: HSBC 2: Natwest 3: Citi Best FX Prime of Prime Services 1: INTL FCStone 2: Saxo Bank 3: Sucden Financial
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FXPA Webinar: “FX Global Code: One Year Anniversary – Where are We?”

Join members of the Foreign Exchange Professionals Association (FXPA) on Wednesday, May 30, for a webinar on the “FX Global Code: One Year Anniversary – Where are We?” at 10am (Eastern US)/3pm (UK)/10pm (Singapore). This webinar, hosted by the FXPA, takes a look at how firms are approaching adherence to the FX Global Code of Conduct in the FX markets, which was released on May 25, 2017. Join FXPA’s chairman, Chip Lowry, senior managing director of State Street Global Markets; David Puth, vice chair of the Global Foreign Exchange Committee and CEO of CLS Bank International; Lisa Shemie, FXPA board member and chair of the policy committee, and associate general counsel, chief legal officer of Cboe FX Markets and Cboe SEF at Cboe Global Markets; and Mark Bruce, FXPA’s chair of the Global Code Working Group and head of FICC at Jump Trading.
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Forex Network New York is This Week!

Profit & Loss’ annual New York conference is set for this Thursday, May 24 at the Crowne Plaza, Times Square and features a host of sessions looking at the world of crypto as well as more traditional FX issues such as the role of currency managers and the future of electronic trading. The programme kicks off with CFTC COO and chairman Chris Giancarlo’s chief of staff Mike Gill, discussing “Keeping Pace with Cryptos” and then continues with a P&L BURST session in which Brian Liston, co-founder of Seed discusses a new approach to trading cryptos.
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Register Now for Forex Network New York

Profit & Loss Forex Network NYC is set for May 24th at the Crowne Plaza Times Square, with an opening with a Fireside Chat entitled “Keeping Pace with Cryptos” with Mike Gill, Chief of Staff to CFTC Chairman Christopher Giancarlo, and CFTC COO. The annual event will take a look at the emergence of cryptocurrencies and tokens as a “new economy”, one that offers enticing opportunities for traders given the volatility these products exhibit and their lack of correlation to traditional asset classes. The growth in these digital assets in 2017 was extreme, can the beta tailwinds continue in 2018? And with the emergence of so many new exchanges, cryptocurrencies and tokens, where should investors look for the best alpha opportunities?
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Crypto-Assets: Too Big to Ignore, Too Challenging to Trade?

Although cryptocurrencies have become too big for institutional investors to ignore, there are still significant barriers deterring them from entering the crypto space, said speakers at Profit & Loss’ 2018 Latin America conference in Mexico City. Speaking on a panel at the event, Michael Moro, the CEO of Genesis Trading, argued that a lot of traditional financial services firms were caught out by both the popularity and the longevity of crypto-assets. “I believe that – especially in the US – that the major institutions got caught. I don't believe they ever wanted to deal in cryptos, they thought it was a fad or a ponzi scheme and were waiting for the bubble to burst and the whole thing to go away.
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Three New Photobooks Available from Profit & Loss

Three new photobooks have been added to the Profit & Loss website, each containing images and reports on selected panel discussions from the recent Asia conference series. The events were held in Singapore, Hong Kong and Shanghai and the photobooks can be accessed by clicking on the appropriate link.
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