FOREIGN EXCHANGE | K&KGC

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Established in 2009, The Buy-side Trading Community (BTC)
delivers business intelligence and interconnects the
buy-side trading community globally

FOREIGN EXCHANGE

~~Countdown to collateralisation~~

~~FOREIGN EXCHANGE~~

One of the top concerns reflected by the buy side at the recent 5th annual ATF Global Summit on 2 February in London was that the industry has been caught off guard by the deadline of 1 March for collateralisation of NDFs and other non-spot FX instruments. At the same time, trading desks felt that there has been a lack of support from banks. Worst-case scenario, some firms are seriously worried that the CSAs under which they interact with their brokers do not allow for variation margin, effectively meaning that the trader cannot hedge their FX trades.

~~A new paradigm for the FX industry~~

~~Christian Schoeppe, head of FX trading EMEA at Deutsche Asset Management~~

The impending arrival of MiFID II in January 2018 will be a watershed moment for FX markets in Europe, a time when some firms will embrace the future and succeed while others fall by the wayside, according to Christian Schoeppe, head of FX trading EMEA at Deutsche Asset Management.

~~The benefits of going in-house~~

~~David Ketley, head of dealing, Harmonic Capital~~

Founded in 2002, Harmonic Capital believes in doing things in-house – a reflection of the idea that the buy side should take control of its own destiny. Yet this is not a free-for-all. David Ketley, head of dealing sees his role as something similar to a pilot, an aircraft through potentially turbulent skies to a target destination. That destination is decided by the firm’s computer models, built by an in-house research team.

~~Building a modern FX desk~~

~~FOREIGN EXCHANGE~~

In foreign exchange, the main concerns highlighted by the buy side in the second half of 2016 include relationships with counterparties, broker selection and relationships with custodians. In Europe, there is frustration on the buy side that platform vendors sometimes don’t understand the banks and banks don’t understand the platform vendors, leaving a void of knowledge between the two that can leave the buy-side trader in a difficult position with no clear source of help.

~~21st CENTURY FX: THE FUTURE OF FOREIGN EXCHANGE~~

~~Patrick Fleur, head of FX trading and execution at PGGM~~

In 2002, a Dutch asset management company traded an FX transaction algorithmically for the first time. A senior trader at the time, Patrick Fleur has been a pioneer on the cutting edge of electronic execution in FX ever since.
At the time, he was working for APG Asset Management, a Netherlandsbased privately owned asset management company...

~~Caution: challenges ahead!~~

~~FOREIGN EXCHANGE~~

There is some frustration on the buy side at the quality of the services being provided by banks in FX. As one buy-side trader noted in our recent roadshow in Asia, it can seem to the buy side as though the banks are not there when needed, and do not provide a good service in certain currency pairs, for example US dollar and Mexican peso...

~~Back to best~~

~~Achim Walde, senior FX risk manager/currency overlay, Metzler~~

The words ‘best execution’ may be gaining in importance as FX increasingly becomes an actively managed asset class. But this simple phrase means a lot more than just asking three brokers for a price, according to Achim Walde, senior FX risk manager/currency overlay, Metzler...

~~Looking ahead~~

~~Daniel Chambers, Sequoia Capital Fund Management~~

One of the key themes of our recent debates has been the increasing sophistication and electrification of markets as market structure and regulation drive change across multiple asset classes. This month, the Buy-side Perspectives caught up with Daniel Chambers, head of trading at Sequoia Capital Fund Management, to share some observations on the changing execution landscape, the kinds of tools available for the buy-side and the changing relationship between the buy-side and the sell-side.

~~Exchanging ideas~~

~~Christian Schoeppe, head of FX trading EMEA at Deutsche Asset Management~~

Asset management houses are changing the way they organise their business as the asset class is transformed by new technologies and regulations. That means an emphasis on best execution, as well as the technologies to go with it as FX evolves into more of an actively traded asset class for our portfolio management...

~~The Swedish model~~

~~Hans Lindh, head of trading at Swedbank Robur~~

The Swedish model offers the prospect of complete unbundling between commission payments for research and execution. Champions of the new model believe that it offers the only means to offer true best execution. Hans Lindh, head of trading at Swedbank, played a key role in the development of the new model...

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