After a week-long absence Profit & Loss‘ managing editor, Colin Lambert, and editor, Galen Stops, are back on the airwaves to discuss some of the most eye-catching items in the news recently. They begin with some reader feedback from stories published last week. Firstly, a story about the attempt by a futures exchange to introduce […]
Tag: Last Look
As a futures exchange proposes a new speed bump mechanism, a number of market participants are coming out in opposition to it. Some of the arguments they’re making will sound familiar to those in the FX markets, says Galen Stops. On February 1 the Intercontinental Exchange (ICE) put the cat amongst the proverbial pigeons by […]
Regular readers will know that, with a few honourable exceptions, I don’t have the highest regard for FX strategists. It comes from bitter personal experience and, if I am honest, the surge in retail (sorry – institutional!) FX brokers seeking to give their clients insight (when all they mostly do is report the news). That said, even I would have to draw the line at FX strategists as market manipulators. According to reports at the weekend, however, this is a line that the Turkish authorities are more than willing to cross.
In a rumbustious podcast this week Galen Stops relates how he took on the Twitter world following a tweet that was clearly misunderstood (he says) and he and Colin Lambert get into a debate over the value of speed bumps in futures markets. One group, as Stops observes, is very unhappy about it, but Lambert points out there is another – rather influential – group, that really like the idea.
Our two podcasters also follow up on a recently published story by Profit & Loss about the potential buyers of Refinitiv as well as take a look at a recent blog post on aggregation in FX which inevitably leads to a question from Stops to Lambert, ‘what do you consider full amount trading?’ Luckily for everyone, the latter keeps his answer reasonably (to him) short – even delving into the depths of his own trading career for an analogy.
Speaking of delving the depths, the podcast closes out by fulfilling its promise of the previous week through delivering “considered analysis” of a recent rival podcast which took a look at the events surrounding the death of crypto exchange Quadriga’s CEO. There are those that think, as Stops notes in this podcast, that the FX industry likes a good gossip and wild speculation, but his report on the investigation into Quadriga leaves FX standing well in the shade…
Galen Stops is back on duty for this week’s In the FICC of It podcast and he and Colin Lambert have a lot to get their teeth into. Starting with a response to Lambert’s question from episode 37 as to why the Cartel were in a chatroom anyway, our podcasters discuss the throwing out of the case against former Barclays’ FX head Robert Bogucki in the US. Staying with that bank, they then discuss a website set up by Barclays’ former head of automated trading David Fotheringhame that is “a public defence of last look”. Listeners will be glad to hear that Lambert doesn’t bang on for too long on one of his favourite subjects, preferring instead to move the conversation onto exchange in FX, with the question, “will scale ultimately win the day?”
What can only be described as a frisson of excitement ran through the FX market in London last week when word spread of former Barclays head of automated trading services David Fotheringhame launching a new website that – and this is putting it delicately – analyses the bank’s response to a fine imposed on its FX business in 2015 for what was found to be a too liberal use of last look.
Fotheringhame won an unfair dismissal claim against the bank last year, however Barclays defied the employment tribunal’s edict to reemploy him, resulting in a second hearing this year at which he was awarded nearly £1 million.
Having taken a look at Galen Stops’ predictions for 2018, Colin Lambert decides that overall he didn’t do a bad job, but there is an obvious reason why…Obviously having been a very generous marker over the years when assessing my own predictions from the previous year I have now swung 180 degrees and plan on being as critical as possible when looking at Galen’s five key themes for 2018. The problem is that, overall, he didn’t do too badly. Firstly, he suggested that 2018 could be the year that active currency management makes a comeback, although – and this is a theme of this review – there was a caveat because the headline ended with the words “sort of”.
We’d all like to write our own reviews, but if the recent emphasis on third party transaction cost analysis (TCA) has taught us anything it’s that it can be beneficial to have an independent party conduct reviews too. With that in mind Profit & Loss challenged some of its readers to look over our 2018 predictions and provide feedback.Prediction: “The Great Divide” – 2018 will be all about the data and it will empower those willing to pay for it, however there will be challenges for those who cannot or will not pay up to consume and store the vast amounts of data required. Those with data will be more protective of how their pricing is used by counterparts and those without will struggle in an increasingly fragmented market as more platforms package and sell their data.
A second working group set up by the Global Foreign Exchange Committee (GFXC) in 2018 to look at how market participants operating the “cover and deal” model utilise last look has published a paper highlighting areas in which it believes practice can be improved. Primarily, the report stresses the importance of those operating cover and deal models ensuring that there is adequate disclosure of the practice, the way in which it is being used, and the clarification of the role and capacity in which the participant acts.
The FX industry is advancing how it deals with certain issues, but the pipeline of areas in need of clarification and further debate shows little sign of slowing down. Two areas that concern me at the moment are exactly how platform operators are enforcing their rulebooks – are they being fair and balanced to both LPs and LCs? – and exactly what constitutes “full amount” trading? An open and data-backed discussion will solve the latter, but I wonder if we need an industry ombudsman for the former?