The second – and penultimate – Irrational of 2019 is the Event of the Year and obviously this had to be held back to ensure that the Great British public did not don their subversive hats again and surprise at last week’s election. They did not to any great degree (although I don’t recall a […]
Tag: risk warehousing
This column comes with a warning as I am getting increasingly grumpy with attitudes to FX market price action. You clearly can’t please everyone, but how can someone complain – as they did to me this week – that what we have seen in sterling this week was “the wrong kind of volatility”? Luckily I have this column to let off steam so let’s do that – with a take down of the model that has turned FX traders into glorified brokers.
Today is all about questions – the most pressing of which has to be, if Switzerland issues a digital currency, will it immediately put an offer in the market? Perhaps more pertinently, it is also about the impact of the lack of traders in the FX market, because if the first week of the year is anything to go by then cryptocurrencies will continue to steal the agenda – the traditional FX market just doesn’t seem as though it can be bothered.
As some one who has long argued we should not think in terms of ‘banks’ and ‘non-banks’ when it comes to liquidity providers in FX markets, it may come as a surprise to you that I think there is something fundamentally flawed in how we judge these two segments. There is not a level playing field in terms of compliance and capital requirements, and that was OK for a long while. Now though, the non-banks are hiring salespeople – and that gets my antenna twitching.
I don’t think there is anyone out there who doesn’t think the FX market performed well under the stress of the surprise outcome from the UK referendum last week, but I suspect the real test is only just starting. Don’t get me wrong, this is not one of my contrarian columns that will say the […]