As liquidity has clearly deteriorated in FX markets over the past two weeks, this week’s podcast is faced with a series of questions regarding participant behaviour, and joining Colin Lambert to discuss these issues is John Crouch, founder and CEO of Ideal Prediction.
Using the imagination for which he is famous* Lambert kicks things off by looking at Monday morning in Sydney when strange things happened in USD/CAD – prompting the question, is the issue of establishing highs and lows even more pressing in such illiquid conditions?
The conversation them moves onto the issue of behaviour around fixes as Lambert recounts a (second hand) story that begs so many questions around the ethics of trading decision, the use of a time stamp fix and the lack of central bank intervention to change an obviously broken process.
Crouch highlights some key aspects of the issue that mean it is not so straight forward as some would have us believe (i.e. this is not front running in the judicial sense) before he achieves a first for this podcast by respectfully disagreeing with Lambert (everyone else does it disrespectfully) when the discussion turns to the use of liquidity seeking algos.
The podcast closes out with Crouch outlining the broader challenges of monitoring activity with such a diversely spread workforce, and highlighting one technology innovation of the past decade that is more than proving its worth in the current conditions. Ultimately, our podcasters agree, after the current crisis is over, firms’ technology priorities may have changed thanks to this technology.