After upsetting non-bank market makers and then banks in recent weeks, Colin Lambert takes a shot at the buy side in this week’s In the FICC of It podcast when Galen Stops asks him, “will the buy side adopt the FX Global Code?” Our two podcasters discuss next year’s review of the Code as Stops […]
The news this week that Citi served a 90-day notice to the largest non-bank market making firms in FX – including Jump Trading, XTX Markets, Virtu Financial, HC Technologies and, at an earlier point in time, GTS – that it is no longer willing to offer them FX prime brokerage (PB) services, certainly got tongues […]
In this week’s lively and extended podcast Colin Lambert and Galen Stops mange to disagree on just about everything as they dig into the details around the announcement that Citi has given notice to four of the biggest non-bank market makers in FX and discuss the potential implications for the industry as a whole. They […]
A new report from Greenwich Associates argues that the incoming Uncleared Margin Rules (UMR) will fundamentally change the economics of OTC FX options trading to a point where buy side firms will increasingly trade these products on listed exchanges. “Historically, most FX options trading was done over the counter, but UMR has the potential to […]
Traiana has made changes to its Credit Risk Hub that will enable FX prime brokers (FXPBs) to define trade information in more detail in order to increase credit risk controls and reduce the risks of credit over-allocation. Traiana’s Credit Risk Hub comprises two services; Designation Notice Manager (DNM), which helps FXPBs establish, monitor, amend and […]
P&L Report Card This remains a strange area in many ways because while we constantly hear about clients being told they are not big enough for the prime broker to retain them, and of PBs cutting the client tail, just about every PB out there continues to affirm their commitment to building the business! Clearly […]
This week’s podcast opens with Galen Stops gloating over Colin Lambert because CTAs – and in particular ones using trend following strategies – are (finally!) producing some positive returns. One swallow doesn’t make a summer, argues Lambert, but Stops is convinced that this is the beginning of an upswing for these hedge funds. This leads into a more serious discussion about some the challenges facing CTAs when their trend following models aren’t working. For example, do they alter their models to improve returns at the risk of diluting their potency as a diversifier within investors’ portfolios?
New regulations will increase the cost of FX prime brokerage (FXPBs) services and all market participants – including executing brokers (EBs) – will have to share these costs, says a new report from Citi.The report, Collateral Damage? How Uncleared Margin Rules Will Revolutionise the FXPB Business Model, argues that FXPB is entering a “new market paradigm” driven by upcoming regulatory requirements that will increase both the value proposition and the cost of the services that they provide.The Uncleared Margin Rules (UMR) alluded to in the title of the report require market participants to post and segregate initial margin (IM) for derivatives transactions, including FX forwards, swaps and options, that are traded bilaterally.
Following on from Profit & Loss’ recent Forex Network New York event, Galen Stops gives picks out a few key themes from each panel session for discussion with Colin Lambert.On the trading side, they talk about whether there is such thing as “the wrong kind of volatility”, Stops says that panellist responses to a Brexit question perfectly sums up the confusion around recent political events in the UK and they question whether the industry has become so good at trading FX that it’s effectively killed market.Looking at trends around credit intermedation, Stops reveals that there is an emerging debate about whether more buy side firms will gravitate towards the FXPB or centrally cleared model and the pair discuss why it might be inevitable that market participants will pay more for PB services in the future.
There is much for listeners to enjoy in this week’s podcast as Colin Lambert tries to sound intelligent on credit, clearing and crypto, three subject with which he has the loosest connection. Luckily Galen Stops is on hand to provide the voice of reason as our two podcasters discuss how prime brokers and their preferred target customers are poles apart on what the PB service should look like. The potential for big change is there, says Stops, but what, if anything, is going to trigger it?
This week’s podcast also looks at a new ETF launched in the crypto space, which, Stops explains, seeks to provide investor access to “digital assets”. Putting aside Lambert’s inevitable cynicism – “is ‘digital assets’ just another phrase for cryptocurrencies?” – the development is an interesting one, for as he asks, ‘does this make the technology underpinning the crypto world the asset in question?’
Luckily for him and sadly for listeners, Lambert does get to sound off about how the FX market is radically different from even 15-20 years ago, and of course he has a theory about why that is. He also gets to re-live his childhood thanks to Stops asking him, “If you were trading now, what would you do with Cable?”