In the FICC of it is one year old this week, and, aside from expressing surprise they got this far, Colin Lambert and Galen Stops celebrate by plunging into two of the themes covered in the first podcast that still resonate today. Stops talks about the evolution of Euronext FX and has two questions for Lambert; how successful has the firm’s FX Tape been? And will its announced building of a matching engine in Singapore mean a shift in the balance of power in Asia?
Our podcasters second link back to the first ‘cast is in the form of Lambert reporting on quite a heavy virtual mailbag relating to the latest developments in the Mark Johnson appeal. As he has made quite clear in columns this week, he was less than impressed with aspects of the arguments given and it seems he is not alone.
Either to fulfil some unannounced quota or because he just felt like it, Lambert then takes the podcast into tricky territory by wanting to talk about the “FI” bit of “FICC”. Not being an expert has never stopped him before and nor does it now as he discusses what seems to be a push to accelerate the pace of change towards replacing the Ibors. Aside from having a real problem with how hedgers will be able to properly assess their cost of hedging, Lambert also highlights a recent comment in a paper from the UK’s FCA that appears (to him anyway) to accept that regulatory reform around Libor will not work unless banks are willing to make more prices and take more risk…which the same regulators appear to have worked against for the past decade! His biggest issue is, however, how the use of overnight rates means markets will not be able to create a curve…whether he himself knows how to create one is open for debate!
Stops then takes the podcast further into unknown territory by discussing the regulatory advantages afforded “challenger” banks in Europe. At the moment the success story in this area is in retail banking, but, he asks Lambert, will the next stage of development be a push into the institutional space?