Unique insights regarding how the FX market today is developing.

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.

In this episode Asif Razaq from BNP Paribas talks about why the pandemic has driven an uptick in the number of firms using execution algos for their FX trades and traces the evolution of these tools from basic, rules-based strategies to sophisticated and interactive ones which effectively enable human traders to augment their own skills.

Razaq also delivers his view on what will come next in the FX algo space, arguing that we are likely to begin seeing these tools deployed across a broader range of instrument types.

This latest podcast episode comes from the Canadian Association of Alternative Strategies & Assets (CAASA) and features Tom Nakamura, Vice-President and Portfolio Manager, Currency Strategy and Co-Head of Fixed Income at AGF Investments, and Matt O’Hara, CEO of 360T Americas, analysing some key trends that they’re observing in the currency markets. It’s a wide ranging discussion which covers the impact of credit constraints, new technological innovations, evolving cost pressures and how the pandemic has changed behaviours within the FX industry.

Stuart Simmons, Director and Head of Currency at QIC, argues in the latest episode that not only is the London 4pm Fix not a good time to trade FX on behalf of investors, but that in fact it might be the very worst time to do so. Expanding on this, he claims that order flow imbalance lead to herd behaviour amongst investment managers trading at the Fix that in turn causes market impact which negatively impacts execution outcomes. On top of this, Simmons makes the case that the interests of investors are misaligned with both asset managers and their counterparty banks when it comes to using the 4pm Fix as a benchmark.

In March 2021 Millennium Global Investments published a report analysing whether emerging market (EM) currencies were priced as cheap or expensive relative to the global environment. The authors of that report, Claire Dissaux and Elisa Baku — who respectively hold the titles of Global Head of Economics and Strategy and Economist at the currency management specialist — both join the podcast to discuss its findings, and what they mean for investors. They also talk about why currency performance is likely to diverge significantly amongst EM countries and how the pandemic has impacted conditions in these markets.