In this week’s In the FICC of It, your podcasters are taken to task by a listener over some points they may have missed when discussing the State Street/BestX deal last week and Galen Stops asks Colin Lambert the question (on behalf of a listener), ‘can you be too client focused?’
They also look at the impact of political events on FX markets and Lambert appeals to listeners of a ‘certain generation’ (i.e. as old as he is!) to come up with times when global politics was potentially such an influence on FX markets?
The evolving market structure of crypto markets also attracts their attention, and they ask the question; ‘Can innovation really thrive in banks today?’
And so, dear readers, we commence the second 500 of these columns by returning to a theme that has dominated the past 100 – and which remains the biggest single issue facing the foreign exchange industry at this time. I refer of course, ...
It is widely believed that it is inevitable that technology will assume more control of the decision making in markets, but I for one, hope it does not, for I don't believe the outcome would be particularly good. At the moment technology dominates the execution of strategies, but the decision making is still a more balanced process with the human very much involved – which to me is a good, because what we need is a good blend of human and machine if we are to continue to see risk takers.
I want to follow up on last week’s column about the lack of risk takers in FX.
Firstly, several of you reached out to me to share your thoughts and clearly there are some concerned people out there who believe the foreign exchange industry is vulnerable to more flash type events because of the lack of skilled people able to take risk. Secondly, i had an interesting conversation with a friend about the lack of diversity in the FX risk/trading role.
The communications channels have been buzzing following Thursday's column about banks taking more risk in their FICC businesses - especially FX - and some really good points were made by correspondents. But while there was general agreement that more risk-takers would benefit the broader industry, my correspondents and I diverged on a key point. To me this is not about spreads or the advantage of man over machine (or vice versa), it is about the risk taking role adding something different.