In the FICC of It

After a week-long absence Profit & Loss‘ managing editor, Colin Lambert, and editor, Galen Stops, are back on the airwaves to discuss some of the most eye-catching items in the news recently. They begin with some reader feedback from stories published last week.

Firstly, a story about the attempt by a futures exchange to introduce an asymmetrical speed bump, which some market participants compared to “last look” functionality, raised questions about whether the exchanges pander too much to the market makers who provide most of their revenues at the detriment to end-users trying to genuinely hedge their exposures. Following on from this Lambert says that the exchanges, having created a latency arms race in futures, are now trying to limit the negative impact of firms using latency arb strategies with these speed bump-type mechanisms. But can the genie be put back in the bottle?

Secondly, a recent article on CTA performance elicited frustrated comments about the challenges facing smaller managers in comparison to large ones which have effectively become asset gathers, transferring wealth from investors to themselves. Lambert and Stops both sympathised with these comments, pointing out that the size and the structure of many large asset managers now prevents them from allocating funds to managers that might be more effective in favour of ones that are bigger and meet all their tick box requirements.

Lambert, having recently moaned about the lack of innovation in the FX swaps market, is quizzed about a new initiative from 360T that is focused on this produce segment and declares himself to be “cautiously optimistic”.

Finally the pair round off by discussing how Lambert’s trade of the year, buying NOK/MXN, is doing, looking at the decision to re-brand FastMatch as Euronext FX and with a plea to listeners not to vote for themselves in the Profit & Loss Readers’ Choice Awards.

To read more on the articles discussed in this week’s podcast, click on the links below:

Profit & Loss Readers Choice Awards – Voting Now Open
Trading Firms Cry “Last Look” in the Futures Market
CTAs: Feeling the Heat
Exclusive: 360T Looks to Drag FX Swaps Trading into the 21st Century
The Profit & Loss Crystal Ball
FastMatch Rebranded as Euronext FX

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Galen Stops

Galen Stops