The is one subject on the agenda for this week’s podcast – the return of volatility to FX markets. Joining P&L’s managing editor Colin Lambert to discuss the issue are David Mercer, CEO of LMAX Group, and Joel Kruger, currency strategist at LMAX Exchange.
After Kruger provides his view of current conditions in, and drivers of, markets (including the challenges of central banks and governments managing the current crisis with “exhausted policy tanks”), and Lambert observes that any “emergency” policy measure aimed at calming markets do anything but; he and Mercer turn to the impact of these events on the FX platform world.
Acknowledging that most platforms saw record days, Mercer also expresses his concern at the downside of the current volatility, specifically how businesses and the global economy may be negatively impacted going forward. He and Lambert then chat about FX markets in crisis conditions and the dichotomy of the risks of a global economic downturn increasing at the same time as the platforms’ customers generally are, to quote Lambert, “making nine months’ budget in a few weeks”.
There is time for Lambert to poke fun at people bemoaning what they see as “the wrong kind of volatility”, as well as share a story from Black Wednesday in 1992 when sterling dropped out of the ERM, before the conversation turns to customer and liquidity provider trading behaviour – and yes, there is time for a quick chat about competing with last look platforms!