Unique insights regarding how the FX market today is developing.

In our latest podcast episode Ivan Asensio from Silicon Valley Bank discusses two recent papers, which he co-authored looking at the impact of FX on firms looking to raise equity and those preparing for an IPO. The results of both, he argues, help to make the case that FX should be viewed as a strategic rather than operational concern within organisations. Asensio also talks about how the marketplace has shifted to “a new paradigm” where controlling costs has replaced growth as the primary focus, and claims that this makes effective FX management more important than ever.

We are in a period of economic uncertainty with rising inflation, divergent central bank policies, supply chain constraints and geopolitical turmoil fueled by a land war in Europe. Against this backdrop how should investors be positioning themselves and what should we expect in the currency markets? These are amongst the questions that Pedro Jobim from Brazilian hedge fund Legacy Capital addresses in our latest episode. Jobim also provides his economic outlook for Brazil ahead of what is shaping up to be a potentially contentious presidential election there later this year.

The Investment Association (IA), which represents UK-based investment firms managing £9.4 trillion of assets globally, recently published a briefing paper calling for reform on FX sub-custodian timestamping. In this episode Hugo Gordon from the IA explains why this issue, which might initially seem to be something of a niche concern, can have significant ramifications for investment managers and outlines steps which can be taken by both buy-side and sell-side firms to help resolve it. Gordon also discusses the FX Global Code of Conduct, highlighting some of the factors which might have slowed buy-side adoption previously and areas where increased clarity has been welcomed by the IA’s membership.

In this episode Eoin Fahy from KBI Global Investors provides a buy-side perspective on ESG investing, arguing that applying these principles to investment decisions actually helps rather than hinders the overall performance of portfolios. He also explains how the considerations around ESG investing have grown substantially more sophisticated in recent years as its popularity has exploded and ponders how these principles will ultimately be applied to the FX market.

ESG: What Isn’t Being Talked About

ESG has, to put it mildly, been a hot topic within financial services in recent years, but in our latest podcast episode Duncan Higgins from Sustainable Trading argues that while much of the focus has been on products or processes that are ESG-friendly there are myriad of ways that operational processes could also be improved on this front. He goes on to talk about the need to define ESG best practices for the industry, why change needs to be driven from both the top-down and the bottom-up and how firms can avoid initiatives in this area becoming simply “tick-box” marketing exercises.

Crystal Ball Gazing: FX Industry Predictions for 2022. Joining the podcast once again Colin Lambert ruminates on some of the most surprising developments in the FX industry during 2021 and picks out what he believes to be the most consequential news stories of the past year. Looking ahead, he argues that the FX Swaps will continue to propel the overall marketplace towards growth in the upcoming BIS survey and makes a series of predictions — from fintech consolidation and regulatory disruption to a potential stablecoin blow-up and a shake-up in the FX prime brokerage space.

FX automation has been a key theme amongst buy-side firms recently and, as Christian Schoeppe from SchoeppeFX International Consulting explains in our latest podcast, this trend has only been accelerated by the pandemic. He also outlines the existing barriers preventing these firms from automating more of their FX workflows and trading activity, talks about how these barriers can be overcome and provides practical guidelines on how to quantify the benefits of this technology.

Whereas Episode 31 of our podcast series focused largely on the evolution of FX algo designs, here John Quayle from NatWest Markets discusses the evolution of how buy-side firms (and indeed which buy-side firms) are using these products to improve their FX execution capabilities.

He discusses using algos to trade emerging market (EM) currencies, why corporate treasurers might be thinking about these products differently from real money or hedge fund clients, how to effectively benchmark the performance of different algos and more.

What are the key factors likely to move currency markets between now and the end of the year and, perhaps more importantly, what risks aren’t currently being priced into the market?
These are amongst the questions addressed by Axel Merk from Merk Investments in our latest episode. Merk also discusses the FX liquidity trends, how diverging interest rates could help certain trading strategies and what recent events in China mean for global financial markets.