P&L Talk Series with Ensemble Capital’s Damien Loh

At the Profit & Loss conference in Singapore Damien Loh, CIO of Ensemble Capital, talked how AI tools can be applied to FX trading. Profit & Loss: Artificial intelligence has become a big buzzword in finance. What does this term mean to you and how are you actually using this technology? Damien Loh: So it's a very buzzy term, and that's why we make a distinction by saying that we're using deep learning. AI can just be a general definition where any process that requires thinking is automated in some way and there are people using the AI catchall buzzword that just have a linear regression in an excel spreadsheet.. And you can tenuously call that AI, but it's nothing really game changing.
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P&L Talk Series with Nomura’s Ian Daniels

Ian Daniels, executive director, head of e-FX distribution, EMEA, at Nomura, talks about algorithmic trading trends in the FX market. Profit & Loss: Since you joined Nomura, you’ve been working on developing the bank’s algo offering, what are the latest developments there? Ian Daniels: Our algos are now live on Bloomberg and will soon be live on a number of other major third party venues. I think that one of the benefits of being a later entrant into this space is that you have the experience of previous roll-outs to draw upon. So we knew that access to liquidity and the customisability of our algos would be important characteristics for our clients and that’s why we created algos that enable clients to execute in a default mode or that can be tailored to meet their specific needs.
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Virtu Pays $1 Billion for ITG

Virtu Financial has continued to expand its business by entering into a definitive agreement to acquire Investment Technology Group (ITG) in a cash transaction valued at $30.30 per ITG share, for a total of $1 billion. The deal has been rumoured for several months, as reported by Profit & Loss in October. Describing what it terms as a “significant acquisition” Virtu says the deal underscores its commitment to its institutional client franchise and is a natural next step in its growth.
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P&L Talk Series with Carlos Mosquera Benatuil

Carlos Mosquera Benatuil, the CEO of Mexico-based Solidus Group, which focuses on digital finance through its crypto hedge fund, Solidus Capital, and crypto OTC desk, Solidus Markets, talks to Profit & Loss about why cryptoassets are more than just a vehicle for speculation in Latin America. Profit & Loss: What are some of the key differences you see between crypto trading in Latam compared to the US? Carlos Mosquera Benatuil: So there are only a few places for cryptoasset price discovery in Latam, but the bigger exchanges are pretty good. The market still lacks sophisticated traders, however, which has actually been a challenge for us as we’re looking to hire staff for the proprietary trading desk that we’re building out.
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StanChart Survey Finds Democrat House Win Priced In

A survey conducted by Standard Chartered Bank, both internally and among its client base, finds that a “small” Democratic House win is “well priced in” to markets ahead of the poll next month. “A Democratic win was associated with weaker equities, lower bond yields and weaker DXY, with a stronger Democratic win exacerbating the moves,” the bank says in a release detailing the results. “A Republican win was associated with stronger equities, higher bond yields and a somewhat stronger DXY.”
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Research Paper Finds Fix Tracking Error Increased Post-Reform

A new research paper that looks at trading around the WM Reuters benchmark fix between 2012 and 2017 argues that while the mechanism has been made more robust and less open to manipulation, the shift to a five minute window has made actually achieving the benchmark harder for some market participants. The paper uses what the authors term “a unique dataset that allows us to identify the actions of individual traders” that provide new insights into how trading decisions affect the properties of the fix benchmark, and how the presence of the fix affects trading patterns.
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Why the Rising Tide of FX Options Volumes Means Ballooning Brokerage Fees

A storm is brewing in the world of FX derivatives. Driven by, surprise surprise, Brexit uncertainty and Trump - there’s a sizable chunk of activity in GBP/USD options relative to the other major currency pairs. Now the geopolitical landscape is of course backed into the price of the underlying currency pair, as opposed to the activity of the options. But the challenge is that as volumes increase, investment banks have to inevitably pay more in interdealer broker (IDB) fees. And the bigger the volume, the bigger the brokerage cost. Already under intense scrutiny to reduce costs wherever possible, this is a major headache that any desk head could do without right now.
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The New Learning Curve: Using the Data

The paradox of data is, as observed by panellists at Forex Network Chicago, while the data itself is becoming cheaper and more easily accessible than ever before, the resources being allocated to analysing it are increasing, bringing with it increased costs. “The core fundamental cost of collecting data and storing and processing it is cheaper than ever,” observed John Ashworth, CEO of Caplin. “The premium is going to be on the labour force that will be doing the work on the data.”
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P&L Talk Series with Edward Woodford

Edward Woodford, the co-founder of the trading venue Seed CX, talks about what it really means to offer an institutional grade platform in the rapidly evolving crypto market. Profit & Loss: You recently secured $15 million of investment. There’s obviously a lot of crypto-related ventures out there looking for investment, what was the focus of your pitch? Edward Woodford: The key is that we’re entirely focused on the institutional market, which in turn affects how we build our systems, how we build our products, and it dictates our entire outlook and approach. The trend that we see is more institutional players coming into this space, this institutional flow dominates retail flow, and we’re looking to service these institutions.
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Is the Golden Age of Crypto Already Over?

On September 18, at approximately 1:00pm Eastern, the golden age of cryptocurrencies came to an abrupt end. At that time, the Office of the New York Attorney General dropped a report on the operations of many major cryptocurrency exchanges that found serious faults with both specific firms and the industry as a whole. Most ominously, the report stated that it had referred three platforms that had declined to provide information voluntarily to the NY AG to the “Department of Financial Services for potential violation of New York’s virtual currency regulations”
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