Does the Last Look Feedback Show a Shift in Industry Sentiment?

The Global Foreign Exchange Committee (GFXC) has published all responses to its request for feedback on the language set out in Principal 17 of the FX Global Code of Conduct, which looks at the practice of last look. The feedback has been published ahead of an expected decision by the GFXC over whether to change the wording and while it indicates a majority in favour of a strengthening of certain practices involving last look opinion is by no means universally in favour of change.
Read More »

Take the Spotlight Asia Survey

The latest P&L Survey is online ahead of our Asian conference swing starting Thursday November 9 in Singapore, through Tuesday November 14 in Hong Kong, ending in Shanghai on Thursday November 16. To accompany our conference agenda, we have published a short survey for readers to complete – the questions have both a global and regional relevance ranging from liquidity conditions, through execution, to clearing and cryptocurrencies.
Read More »

Anatomy of an FX Flash Crash

A new Staff Working Paper published by the Bank of England supports the assertion made in the original investigation by the Bank for International Settlements’ (BIS) that the October 2016 sterling flash crash may have been exacerbated by the temporary suspension of trading on CME’s sterling FX futures. The report also uses a new methodology to measure liquidity during the event and while it concludes that the market behaved as expected during the first few seconds, thereafter the speed of the move, “goes beyond that consistent with our estimates of the likely impact on prices given the quantity of orders to sell sterling”.
Read More »

OFR Launches New Monitoring Tools

The US Office of Financial Research (OFR) has launched two new tools aimed at monitoring and measuring the risks and stress levels of financial markets.  The first tool, the Financial System Vulnerabilities Monitor (FSVM), is replacing the OFR’s existing Financial Stability Monitor, which combined signs of vulnerabilities and stress. By contrast, the FSVM focuses exclusively on monitoring vulnerabilities in the financial markets to signal potential risks, while the new Financial Stress Index (FSI) focuses on monitoring the stress levels of the financial markets.
Read More »

Bernanke: Geopolitics is the Biggest Risk to the Financial System

Geopolitics represents the single biggest threat to financial markets, warned Ben Bernanke, former chairman of the US Federal Reserve, at an event in Toronto yesterday. Speaking at the Swell event hosted by Ripple, Bernanke noted that the financial crisis of 2007-2008 was so severe because different elements of the financial system has become so interlinked that stressful conditions in one area soon spread to other parts of the system. However, he argued that the financial markets are systemically safer now and that the biggest threats to these markets come from external sources. 
Read More »

And Finally…

With apologies to those loyal readers who normally part with their hard-earned cash to read this column, today I am going to make it “free to air” – mainly because I feel there is a message that simply has to get out there regarding FX execution and liquidity. If nothing else, the ongoing Mark Johnson trial in New York is highlighting how there are some seriously poor assumptions made in the wider world about how the FX market really operates.
Read More »

Turkish Lira Slumps on US Visa Row

The Turkish lira dropped some 5% at the Asian open today after the US suspended all non-immigrant visa services in its Turkish consulates and Turkey responded as relations deteriorated. Although Thomson Reuters has the official high at 3.7694, multiple sources report trading in USD/TRY above 3.80, with some reporting trades at 3.85 and 3.88. The market had opened at 3.6150. Sources report the market functioned well with good liquidity and reasonable volumes and ticket sizes being executed – spreads were naturally wider.
Read More »

Are Cryptocurrencies Edging Towards Mainstream Adoption?

At the very start of June, Profit & Loss published an article looking at why demand for cryptocurrencies had spiked in 2017, with the price of bitcoin rising over 200% between January and the latter end of May. Subsequent to that, demand continued to grow, with the price of bitcoin reaching $4,950 by the start of September. Meanwhile ether – the native cryptocurrency of the Ethereum network – went from $8.29 at the start of the year to $388 by September.
Read More »

Brexit and a Different Perspective on Sterling

A new research report from Deutsche Bank highlights a change in the perception of sterling across the three major FX market time zones following last year’s vote to leave the European Union. The article, How Brexit changed how sterling is traded across the world is written by Deutsche Bank analysts Oliver Harvey and Rohini Grover, and it uses intra-day seasonality as the basis for its study. Previous work by the authors had found “strong evidence” of investment biases in the different time zones.
Read More »

Gaining an Edge

It is a conundrum of the current foreign exchange market that while the world is awash with events and opportunities to trade, successful traders seem thin on the ground. Tony Sycamore recently left his FX sales role at Commonwealth Bank of Australia in Sydney and – leveraging his background in sales there and BNP Paribas, as well as his time on the prop trading team at Goldman Sachs in Sydney – has established TechFX Traders, a new advisory firm that seeks to provide structure and discipline to individual traders, and ideas to professionals.
Read More »