This week’s podcast opens with Galen Stops, editor of Profit & Loss, doing some gloating because the Bank for International Settlements (BIS) has published its latest triennial survey of the FX market and the figures confirm the prediction made by Stops at the beginning of the year that the market would get back to growth.
Stops and Colin Lambert, managing editor of Profit & Loss, then start breaking down some of the key data points in more detail. Swaps were obviously the biggest driver of FX volume growth, but can this simply be explained by the broader growth of assets under management in financial markets? And what to make of the growth of the retail aggregator/prime-of-prime sector, AKA “the others”? Moreover, Lambert is skeptical about the headline figure of $6.6 trillion to begin with.
The pair then go on to discuss the competitive nature of market making in FX today, commenting on the claim made by one banker that the high barriers to entry make FX and attractive market to be in, that’s if you can afford the technology spend necessary to compete in it!
And finally, they move on to analyse the state of FXPB, following a recent article published by Profit & Loss in which one senior industry figures questions whether, after all this time, banks still don’t really know how to properly price credit.