In the FICC of It

There is plenty for Colin Lambert to ponder in this week’s podcast as he reviews the feedback to his recent comments suggesting the NDF market doesn’t need fragmentation, lets listeners in on the background to something that has been puzzling him, and then, with no little trepidation, he “tiptoes” into Cryptoland. Of course, there is no such thing as him doing anything delicately so kicking off with a blast at what he sees as rather simplistic market analysis, he then looks at not only the growing interest of the authorities in crypto markets but also at a new product that, Lambert believes, highlights just why retail markets in these products must be regulated. Lambert is then joined by Adrian Patten, chairman of Cobalt to discuss the crossover between digital assets and foreign exchange markets. Patten, who admits to being a sceptic on the price of bitcoin, talks about how the technology in the digital world is gradually transforming fiat markets, especially in the post-trade space. He also explains how Cobalt is using a Stablecoin to drive change and build efficiency levels in the post-trade space, and how he thinks the world will look in just a few years’ time. There are, naturally, people who remember Patten and Lambert from their days trading spot Cable, if nothing else, listen to this podcast to find out how one, at least, can discuss something other than ‘yours’ and ‘mine’!

There’s a behavioural feel to this week’s podcast as Colin Lambert opens up with his views on the number of spoofers being brought to heel by the CFTC. He then moves onto another CFTC-related issue, wondering if questions should be asked of the management team that allowed Citi’s voice monitoring operation to descend into apparent chaos – leading to a CFTC fine. Finally, in yet another inspired(!) prediction, Lambert wonders if a deal announced this week signals the retreat of voice brokers from the hybrid model. Lambert is then joined by Guy Hopkins, founder and CEO of FairXchange, to discuss how data and analytics is changing the face of the FX relationship. With the firm’s pricing stack analysis tool newly launched, Hopkins explains how LPs and customers are using it and what it can really tell about a relationship. Lambert, predictably, wants to “out” those LPs who claimed they “stayed in” during the Covid peak when anecdotal evidence suggests many didn’t, but thankfully for the listeners the conversation soon turns to another aspect of the FX relationship – managing a panel of LPs in a world in which customers want less. And as Hopkins explains, sometimes when looking at the relationship, less can mean more.  Download and listen to find out more.

In this week’s podcast Colin Lambert gets his teeth into one of his favourite subjects – spoofing – and, as usual, has some theories about lessons that can be learned elsewhere.  Ahead of Forex Network Chicago later this week, however, which will kick off by a panel looking at the FX swaps market structure, the majority of the podcast looks at a new initiative in that space as Lambert is joined by Andy Woolmer, CEO of New Change FX to talk benchmarks for FX swaps and currency beta indices. Woolmer explains the thinking behind the new products and answers Lambert’s questions about how the benchmarks deal with the “turns” that create so much upheaval in markets and there is also time for a philosophical discussion about benchmarks generally.  The new currency beta indices prompt a lively discussion about the performance of currency managers generally, but Lambert is particularly interested in one aspect of the indices – the ability to trade FX swaps without the credit, collateral and capital overhang. So, are they the future? Download and listen in to find out.

There’s a slightly different feel to this week’s podcast as Colin Lambert is, not for the first time, given an education in the workings of Profit & Loss! With Forex Network Chicago nearly upon us, Michelle Hemstedt, commercial director at P&L, joins Lambert to explain how our virtual event is going to work, including an explanation of the virtual booths in the virtual exhibition hall. Fresh from understanding how we are putting the “Network” back into Forex Network, Lambert takes a look at three matters from the past week that have tweaked his curiosity. Is he right to see potential tensions building between buy and sell side if a recent report is right? Is the FX swaps market, finally, ripe for change? And what does the flight of risk capital from market making businesses mean for the FX industry.  All questions are answered…almost…in this week’s In the FICC of It.

The podcast has a nice positive vibe to it this week as Colin Lambert is joined by Ayesa Latif, head of EMEA e-commerce FX sales at Citi to discuss the eighth annual “e-for-education” campaign by the bank, which kicks off this week. Latif explains how the campaign works, what channels are likely to generate the funds, as well as the not for profit partners Citi’s FX team works with – she also highlights some great examples of material help the programme, which raised over $8 million last year alone, has provided. Lambert also appears to be in a good mood when discussing the launch by XTX Markets of its first execution algo for clients, this even extends into the broader impact of the growing use of algos generally, although clouds do appear on the podcast horizon as this segment veers into last look! The changing mood continues as Lambert expresses his bafflement at the workings, more specifically the thinking, within the US Second Circuit Court of Appeals as Mark Johnson has a bid for a re-trial knocked back just days before the same court accepts a separate bid using exactly the same legal argument!

This week’s podcast kicks off with Colin Lambert discussing some of the feedback he received over his comments in the week’s column over the re-papering of trades post the SNB debacle in 2015. He does not, of course, miss the opportunity to drive home his argument that algos should have mandatory price limits, along the way dismissing concerns aired over what would happen if we have another Brexit-type event. Lambert also has time to discuss the latest episode in the Cartel saga as well point listeners, unusually, in the direction of another podcast, before he is joined by Mike Keenan, head of currency strategy at ABSA in Johannesburg to talk about conditions in emerging markets. Keenan talks about how market conditions have evolved along with the COVID crisis as well as about the changing correlations in markets, not least involving Turkey, Brazil and South Africa. Lambert is also delighted to hear, in the true spirit of In the FICC of It, that ABSA’s forecast for the rand in the year ahead is very much off-consensus. To find out why download and listen now.

This week’s podcast focuses largely on liquidity in FX markets, which naturally gives P&L’s managing editor, Colin Lambert, an opportunity to share some of his more strident opinions, not least when it comes to customers complaining about spreads. Luckily for listeners, Matthew Hodgson, founder of Mosaic Smart Data is on hand to provide some reasoned analysis, backed up by hard data! Hodgson and Lambert discuss Mosiac’s FX Liquidity service which was launched earlier this year and, more pertinently, the trends that have emerged from the data. The chat runs through spreads, volumes, volatility and much more before Lambert, observing that the number of data services is growing exponentially, asks, ‘what should people be looking for in their data and analytics providers?’ As Hodgson observes, there is a tremendous amount of terrific raw data out there on FX markets, but cleaning and collating it the right fashion can provide a serious competitive advantage.

There is a controversial start to this week’s podcast as P&L’s managing director Colin Lambert ponders whether the US really does have an “innocent until proven guilty” ethos in its legal system, before debating whether a firm, no last look, order book can really be spoofed? He argues “intention to deal” is fairly easy to ascertain and also makes another one of his predictions, this time about how demand for data could stimulate activity on firm liquidity venues. Lambert is then joined by Todd McDonald, co-founder of R3, to discuss central bank digital currencies and the advance of enterprise blockchain into the market environment. McDonald discusses how moves that are only now coming to the forefront of peoples’ thinking have actually been underway for some years and explains the impact this evolution on fiscal policy as well as the more traditional areas of payments. Interestingly, McDonald feels that the latest innovations in blockchain away from CBDCs are, possibly for the first time, being commercially driven, something Lambert sees as being a vote of confidence in the new technology. This new approach could lead, McDonald believes, to a significant change in how we view financial markets and traditional assets. To find out more, download from your podcast store or from the Profit & Loss site.

There is plenty to talk about for this week’s podcast as Colin Lambert casts an eye over EBS’s plans to alter its matching engine infrastructure and shares some of the feedback he has received. He then has time to launch into a diatribe about the results of a survey last week indicating that spreads are the biggest challenge to market participants – noting that the FX market is a competitive space and therefore spreads are very likely to accurately reflect the risk environment at any given time. Sanity is then restored as guest John Ashworth, CEO of Caplin Systems, joins Lambert to discuss how regional and specialist banks have responded to the pandemic conditions. The two discuss e-distribution and automation of the sales process, before Ashworth provides some thoughtful and interesting ideas around how an existing model in FX markets, white labelling, may be changing. With thoughts on the use of mobile devices thrown in for good value, there is much to take in, so download now from your favourite podcast store, or from the Profit & Loss website. 

On this week’s podcast P&L’s managing editor Colin Lambert is joined by Martin Pluves, CEO of the FICC Markets Standards Board (FMSB) for a broad ranging discussion around the evolution and use of technology in the trading business. The two discuss the governance of algorithmic execution processes, following a recent discussion paper and white paper published by FMSB ahead of its next Statement of Good Practice on the subject. Pluves stresses the importance of the right processes, controls and hierarchy in an algo business, while Lambert ponders on whether there be a “fit and proper person” test for those using them, especially at third parties. Pluves then outlines work being conducted by FMSB on standards for large trades in FICC markets, before Lambert asks him about the behavioural analysis conducted by the board last year, noting that a lot of the industry’s recent problems have been driven by its inability to keep up with technological innovation. Pluves observes that the modus operandi in most misconduct cases can be traced back (literally) centuries and reveals details of further work planned by FMSB in this field in the coming months.

In this week’s podcast, Colin Lambert casts his eye over a new challenge facing Refinitiv Benchmarks over the London 4pm Fix – something he confesses to not have even considered in the past, and then gives his thoughts on a small, but potentially important change at CME Group on its FX Link service. He is then joined by Rashid Hoosenally, co-founder of Lacero, to talk data, APIs and compliance – but from a very different perspective. With data volumes continuing to soar, and the scrutiny of how data is handled increasing commensurately, Hoosenally shares his concept of the policy engine, on distributed ledger technology (DLT). It is not only about data, however, for the control of API keys, automation of the “four eyes” rule and building security in a dispersed workforce environment are all part of the discussion Hoosenally has some pretty dramatic numbers to highlight the potential scale of the problem facing financial institutions as he discusses with Lambert yet another potential crossover from the crypto world to fiat, before a stimulating conversation ends with Lambert asking, “is this a machine learning application or an app to manage machine learning?”

The move by Refinitiv to a 5ms data feed on its Spot Matching platform has grabbed Colin Lambert’s attention this week, leading him to call for an open debate in the FX industry over the length of last look windows. With both primary venues at 5ms, is it now the time for platforms to step up and impose a ceiling on hold times? Equally, will this move highlight the “good” LPs from the bad? There’s time for a quick note on this week’s month-end Fix before P&L’s editor-in-chief Julie Ros takes over to talk to Justin Slaughter, partner of Mercury Strategies and Managing Partner of law firm Justin Slaughter PLLC, about a rash of US rule making last week. Slaughter highlights what he observes are the controversial and major changes to the Volcker Rule and Reg AT in particular, but also points out that all of this work could be for nothing depending upon what happens in the US election in November.  The interview closes with what Slaughter describes as an unusually well-attended congressional hearing on a “Digital Dollar” last week – an event that illustrated what he terms “the illusion of consensus” in Washington DC over the subject.

Colin Lambert flies solo on this week’s podcast, thanks to the sheer weight of news. So the agenda ticks quite a few “Lambert Boxes”, starting with his thoughts over the changing role of the Global Foreign Exchange Committee after this week’s virtual meeting, especially that group mentioning publicly, for the first time in a formal environment, market conditions around the 4pm Fix.   This feeds nicely into another feature run by Profit & Loss last week, Lambert’s interview with Shirley Barrow, global head of benchmarks at Refinitiv, and the person who runs the organisation responsible for the 4pm Fix. The full feature can be read here, but listen in for Lambert’s takeaways from the conversation, including whether or not he thinks reform will happen. There is also time to look at the latest P&L Talk Series with Morgan Stanley and the trends around the use of algos, Lambert believes this could be a watershed moment for algo execution services, as well as quick thoughts on moves by Euronext FX and Cboe FX to change how parts of their service operate. That includes, of course, a quick poke at last look!

Data is very much on Colin Lambert’s mind this week, but not in the usual sense. Thursday saw two glitches involving economic data releases, one of which had a comedy element, the other more troublesome, and while he understands mistakes happen, he wonders if we are going to see more of these incidents following the rules around the release of certain dataets being changed. Lambert is then joined by Rowland Park, co-founder and CEO of LimeGlass, a fintech company looking to evolve how research is consumed by streamlining access to the critical components of what can sometimes be very long reports. There is time to talk about alternative data sources, the personalisation of reports and how the research business could evolve – leading Lambert to speculate, have we finally found a good use for all those reports that few, if anyone, reads?

On this week’s podcast Colin Lambert is joined by Xav Porterfield, head of research at New Change FX (NCFX), to discuss a new method of measuring execution quality – the unit cost of volatility (UCV). Porterfield explains how the measurement actually derives from a landmark market impact paper in the mid-1990s before the two delve into the theory behind it and how NCFX plans to use it. The discussion then turns to more practical matters with Lambert asking how a trader on an execution desk could utilise the analysis and also about a case study that used UCV as a methodology to analyse execution at the 4pm Fix. Whilst accepting that the random walk nature of FX markets does mean that wins and losses from executing at the Fix are imbalanced, but not hugely so, Porterfield highlights the disproportionate returns highlighted by the research, leading Lambert to observe that not even he could find value in the risk/reward ratio when it is negatively skewed 15-1! There is time for Lambert to highlight early reaction to LMAX Group’s launch of Weekend FX – which does exactly what it says on the tin – as well as ponder a new debating arena for the FX industry; the decreasing value of the primary venues.

In this week’s podcast, P&L managing editor Colin Lambert takes a look at the week’s news, including a brief look at the month-end Fix and the “Friday phenomena” in liquidity, leading him to describe the overall experience as “not a good look for the market – although he does also ask the question, “has much changed since 2010?”.  He then moves on an incident that he sees as being an egregious breach of the principles of the FX Global Code in the triggering of a barrier option and is concerned that while it is in the public interest that people know about it, the matter-of-fact nature of the report indicates an overly-casual attitude to the Code. So, does this indicate that as well as continue to focus on specific nuances in the Code, we need to reiterate the basic principles to participants? Lambert also notes the launch by Refinitiv of an API for its Matching for Forwards and tentatively (he does have some “previous” on predicting this) sees FX swaps market structure as one of the key themes in the next 18 months. Another launch last week was CME Group’s FX Swap Rate Monitor, so Lambert talks to Paul Houston, global head of listed FX products at CME Group about the new product, what it does and the benefits to traders.  They then move on to discuss CME’s FX Link, a key component in the exchange group’s FX suite of products, including the rate of adoption, the diversification and regulatory benefits – especially around capital and G-SIB issues – before looking at the challenges of building out what is still a relatively nascent product and it’s place in the overall FX swaps market structure.

This week’s podcast is all about performance – following the third of Profit & Loss’ spring Dial-in-Days, editor-in-chief Julie Ros joins Colin Lambert to discuss some of the themes coming out of the events, starting with hedge fund and CTA performance in the recent market upheaval. Ros dives into the suggestion by panellists in New York that more idiosyncratic, or capacity constrained, strategies worked well, giving Lambert to ideal opportunity to dive in on a regular theme of his – herding and crowded trades – he also, much to the delight of his former co-host Galen Stops no doubt, manages to get a quick dig in about trend following! Lambert also picks up on speakers’ observations that nimble macro and discretionary funds seemed to do best when the world gets turned upside down, highlighting the reactionary role of data in decision making. When Ros asks about FX market performance Lambert doubles down by noting that data shows everything is OK…until it isn’t! Lambert then highlights what to him at least was something new – investment advisors and allocators talking openly about the possibility of allocating to crypto. Ros talks about the recent surge in offerings in the crypto prime space, leading to a spirited chicken and egg discussion about whether banks are needed to lead the way in this space – in turn this sees Lambert, as is often the case, manage to argue with himself!

Two guests for the price of one on this week’s podcast as Colin Lambert is joined by Keiren Harris, co-founder of Data Compliance LLC to discuss the recent first quarter results, and the future of, the inter-dealer broking industry. Lambert sees some interesting observations in the reports regarding how people are trading, while Harris discusses the squeeze on the major IDBs from above and below. Harris then discusses the importance of these firms being well-capitalised, before the discussion moves to the future of the IDBs, during which Lambert reassures Harris that a making a statement that cannot be backed up by data is not exactly foreign territory for this podcast! Lambert is then joined by Rob Franolić, head of quantitative analytics at Eyes on FX, who takes the audience through recent analysis he has conducted looking at spreads in FX markets. While some of the findings will come as no surprise to listeners, there are a couple of interesting points for further discussion – namely the “Friday effect”. Do spreads widen out on Friday’s, if so why, and how long is this likely to last. The answers, and Lambert taking advantage of another opportunity to bang on about the old days (sigh), can be found by listening in now.

When Colin Lambert posted a column arguing that the events surrounding the April month-end FX Fix highlighted the need for reform – and then followed that up by asking if the industry needs to revisit the 2014 FX Benchmark Group’s recommendations – it ignited a firestorm of debate over both public and private channels. This edition of In the FICC of It focuses in on that debate as Lambert lays out – and often disagrees with – the points made by correspondents. He also discusses a few new areas of interest around the value or other otherwise of netting and peer-to-peer mechanisms as part of a potential solution. Lambert is then joined by Jamie Walton, co-founder of benchmark provider Raidne to discuss that firm’s Siren benchmark and some very interesting data from Q1 and the April month-end that raises Lambert’s eyebrows into Roger Moore territory. The pair then also discuss the benefits of longer windows, something that Lambert has long argued is the solution to the current situation. So, does the data support that argument for a longer window and how long should it be? Listen in to find out.

Due to the level of interest generated by Profit & Loss’ discussion with Rohan Churm, head of the FX division at the Bank of England as part of our first ever Dial-in Day, we are releasing the audio as part of our In the FICC of It podcast series. You can download either by clicking the link below or going to your regular podcast distribution app to hear about how the Bank of England maintains its operations and market surveillance function during the pandemic; as well as Churm’s observations on the evolution of FX swaps markets highlighted in the latest Bank for International Settlements’ Triennial Survey of FX Turnover; the recent basis blow out; and efforts aimed at further mitigating FX settlement risk.

This week’s podcast features Colin Lambert and Julie Ros taking a look at the week’s event, along with a bit of inter-office banter. Lambert kicks off by asking a question of Ros and the audience and, when he eventually gives the answer later in the podcast, the latter is quick to claim she was going to say that answer…even though she actually answered with something else! The discussion then moves onto events in the oil market and Lambert’s suggestion that what we actually witnessed was a phenomena across markets – the end of “sell the rumour, but the fact”. Instead, he argues, what we have is an over-reliance upon data which breeds a herd mentality and, when the data disappears, a mad rush for the exit. Ros then asks Lambert about the latest paper from the FICC Markets Standards Board on algorithmic trading and machine learning. This is a subject Lambert has discussed previously, indeed with the FMSB’s chair Mark Yallop, and while he expresses a little concern over FMSB and the Global FX Committee both having work streams on algo trading – probably with committee personnel in common – he thinks the paper is very valuable for fixed income markets, into which algo execution strategies are starting to creep. The discussion then moves onto the impending bitcoin halving, which means Lambert shuts up! Ros takes us through the likely outcomes and highlights the inter-connected nature of crypto markets, asking why the different digital assets – which all have different uses – remain inextricably linked in price action terms? Lambert, as always, has a theory, and, as always, it involves one of his bugbears – tracking error and benchmarks. The podcast closes out with some images the audience may wish they could lose quickly as the two look forward to next week’s Profit & Loss Dial-in Day and the associated chat, sartorial and social activities.

This week’s podcast allows Colin Lambert to sound off on two of his favourite subjects as he discusses buzz from various conversations that indicates some LPs in FX markets are extending their last look windows. Referring back to concerns he has raised before in both his columns and on this podcast, Lambert wonders why LPs are simply quoting wider – after all, he asserts, what they are doing at the moment is guessing where the market is because they don’t have to stand behind the price. Liquidity, or the lack of it, has also reared its head again this week, so there is time to discuss a few of the moves that have occurred as well as to reflect on an article in the Financial Times that highlights a problem he has been banging on about for years (and years!) – the London 4pm Fix. Sanity then prevails as Lambert is joined by this week’s guest Steve Englander, head of global G10 FX strategy and North American macro strategy at Standard Chartered to discuss a research piece the bank released recently. The two discuss how the work finds, in a risk on/risk off world, that FX can offer a better opportunity to express this view than the S&P 500, and there is also the question of what this means for the perennial argument of FX as an asset class. Subscribe on your favourite podcast app or download from the Profit & Loss site to listen now.

For this podcast special, Colin Lambert is joined by Alan Schwarz, CEO of FXSpotStream for a fascinating look inside a business operating in stressful conditions. That FX markets are volatile and volumes are high is obvious to anyone but Schwarz is able to put some numbers on the issue – and they are quite staggering at times. From volumes to order and message rates, through to fill ratios, the podcast studies how FXSpotStream handled the unprecedented challenge of these spikes in activity with a dispersed workforce. Although in retrospect Schwarz is not surprised by some of the things that happened, he provides fascinating insight into how conditions looked at the time when the market heat was at its hottest. Finally, the podcast tries that trickiest of tasks – a look into the future. Is what we are seeing likely to be a new “normal” or will behaviour revert the way markets often do? Listen in to find out.

As liquidity has clearly deteriorated in FX markets over the past two weeks, this week’s podcast is faced with a series of questions regarding participant behaviour, and joining Colin Lambert to discuss these issues is John Crouch, founder and CEO of Ideal Prediction. Using the imagination for which he is famous* Lambert kicks things off by looking at Monday morning in Sydney when strange things happened in USD/CAD – prompting the question, is the issue of establishing highs and lows even more pressing in such illiquid conditions? The conversation them moves onto the issue of behaviour around fixes as Lambert recounts a (second hand) story that begs so many questions around the ethics of trading decision, the use of a time stamp fix and the lack of central bank intervention to change an obviously broken process. Crouch highlights some key aspects of the issue that mean it is not so straight forward as some would have us believe (i.e. this is not front running in the judicial sense) before he achieves a first for this podcast by respectfully disagreeing with Lambert (everyone else does it disrespectfully) when the discussion turns to the use of liquidity seeking algos. The podcast closes out with Crouch outlining the broader challenges of monitoring activity with such a diversely spread workforce, and highlighting one technology innovation of the past decade that is more than proving its worth in the current conditions. Ultimately, our podcasters agree, after the current crisis is over, firms’ technology priorities may have changed thanks to this technology. *he isn’t

It’s an all Profit & Loss affair for this week’s podcast as Colin Lambert is joined by P&L’s editor-in-chief Julie Ros to run through a long agenda in these “interesting” times. This being the podcast Lambert can’t resist a little cynicism to kick off as he “praises” some market analysts’ abilities, but Ros easily pulls the conversation back into line as they discuss the various views proffered by analysts over whether or not the market has priced in the worst case scenario. Lambert believes we are approaching the time when analysts need to switch away from the very vanilla “risk on-risk off” approach and start looking at who and where will come out of the pandemic in better shape than others. Listeners will be unsurprised to hear he has an opinion on that as well… The discussion then turns to market structure with a quick chat about events in the gold market this week where we saw a severe dislocation, before Lambert asks Ros, “Whatever happened to the idea that crypto was a hedge against events like this?”  The conversation then moves firmly into events in the FX space as our podcasters take a look at liquidity conditions, those LPs that stood up (and those than didn’t), algo providers (including a pop quiz for Ros) and look ahead to what Lambert fears could be a serious problem – the quarter end WM 4pm London Fix on Tuesday. 

There is one theme for the podcast this week – the FX market’s ongoing challenges in the current volatile environment. Joining Colin Lambert, managing editor of Profit & Loss is Rob Loft, founder and CEO of performance consultants Harvey Loft, to talk through the issues, starting with a perspective of how markets have handled the extraordinary and, in modern times at least, unprecedented, events. Firms’ business continuity plans and technology preparedness comes under the microscope, especially as Lambert asks the question, ‘how long can the industry work like this?” and Loft talks through some of the strategies that can be deployed. With so many people working from home, Loft also raises the issues of controls, not in conduct or behavioural terms, but rather in getting the right technology solutions and the right information to the right places quickly enough to be effective, while Lambert first talks up, and then down, the chances of a surge in mobile trading. Finally our podcasters get to the big question: Should markets be closed or slowed down? While accepting that it is only a suggestion from a few sources, Lambert observes the fact that the subject is even being discussed highlights the challenging nature of our times. Loft has a firm view on the question (spoiler alert – the answer is ‘no’), as well as a few suggestions on how such a thing can be avoided. He also, to Lambert’s astonishment, highlights one way in which all the onerous regulation imposed on markets over the past decade has actually helped them cope with the current crisis. 

The podcast lives up to its name this week with an in-depth look at conditions in fixed income, credit and FX markets as volatility spikes continue in markets generally. After a few observations on bitcoin’s failure to live up to its hype as a hedge in times of turmoil and conditions in the FX market generally, P&L’s managing editor Colin Lambert is joined by Mark Yallop, chair of the FICC Markets Standards Board to talk about recent developments in fixed income markets. With automated trading very much to the fore in markets, the conversation then turns to the sensitive issue of managing these machines in an AI/deep learning environment. Yallop observes it is about so much more than the robustness of the algorithms and that there are questions of ethics, control and management to be considered as well. There is time for a look at how platform fragmentation is evolving in other asset classes than FX, as well as what the FCA’s call for input into market data means for providers and consumers.

The is one subject on the agenda for this week’s podcast – the return of volatility to FX markets. Joining P&L’s managing editor Colin Lambert to discuss the issue are David Mercer, CEO of LMAX Group, and Joel Kruger, currency strategist at LMAX Exchange. After Kruger provides his view of current conditions in, and drivers of, markets (including the challenges of central banks and governments managing the current crisis with “exhausted policy tanks”), and Lambert observes that any “emergency” policy measure aimed at calming markets do anything but; he and Mercer turn to the impact of these events on the FX platform world.  Acknowledging that most platforms saw record days, Mercer also expresses his concern at the downside of the current volatility, specifically how businesses and the global economy may be negatively impacted going forward. He and Lambert then chat about FX markets in crisis conditions and the dichotomy of the risks of a global economic downturn increasing at the same time as the platforms’ customers generally are, to quote Lambert, “making nine months’ budget in a few weeks”. There is time for Lambert to poke fun at people bemoaning what they see as “the wrong kind of volatility”, as well as share a story from Black Wednesday in 1992 when sterling dropped out of the ERM, before the conversation turns to customer and liquidity provider trading behaviour – and yes, there is time for a quick chat about competing with last look platforms!

Market structure dominates this week’s podcast as Colin Lambert goes to town on the SEC’s refusal to grant Cboe permission to implement a speed bump (and along the way take a few pops at the equity market structure of course), before touching upon news that the LSE-Refinitiv deal may be delayed and what that means for the latter’s FX business in particular. Following on from last week’s podcast conversation with Matt Kulkin about Libor reform, Lambert also provides some observations on the Bank of England’s plan to “help” the transition to risk-free rates (which he believes includes the use of a big stick), as well as on the potential impact of the Ion purchase of Broadway.  Lambert is then joined by James Wooster, COO of Glue42, to discuss the challenge of navigating all this market structure change at desktop level – the most widely used tool in financial markets. Wooster discusses the complexities involved in building an intuitive, modern desktop before outlining an approach that is less transactional than legacy models, and more behavioural, as well as highlighting the huge benefits available from such an approach.

On this week’s podcast Colin Lambert casts his eye over the week’s news, before he is joined by Matthew Kulkin, partner at US law firm Steptoe, and former director of the CFTC’s Division of Swap Dealer and Intermediary Oversight, to discuss all matters regulatory. Lambert is pleased to find out that one of his observations – that there is a rush of rule-making at CFTC – is actually accurate, thanks to the natural cycle with US regulatory circles, as Kulkin takes him through last week’s important rule proposals from CFTC around swaps data reporting and dissemination. Stressing that the proposed rules are just that – proposed – Kulkin and Lambert discuss the balancing act required to ensure that trades are reported soon enough for regulators to be able to track market activity accurately, but with enough of a delay to protect market participants seeking to hedge large risks. The conversation then touches on how the world is preparing for the change to risk-free rates for benchmark purposes – and Lambert is warned that precedent dictates that his prediction that the deadline will be met is not quite the surefire thing he believes – before moving into electronic trading territory with an update on RegAT. For those of you out there (Lambert included) who thought this was, as CFTC commissioner Brian Quintenz stated in 2017 “D.E.A.D”, Kulkin has a surprise, because that is not actually the case. The podcast closes out with a look at regulators’ attempts to bring some rules to cryptocurrency markets – Kulkin follows a long tradition on the podcast by raising an eyebrow at one of Lambert’s predictions – following Financial Stability Board chairman Randal Quarles’ waring last week that there was a danger of regulators falling behind the curve for this growing asset class. Download from your podcast store or from the Profit & Loss website and listen in now and to read Steptoe’s forecast of the CFTC’s 2020 agenda, click here.

In this week’s podcast P&L’s managing editor Colin Lambert is joined by Guy Debelle, chair of the Global Foreign Exchange Committee, to discuss the recently released survey of attitudes towards the FX Global Code. From the latest on the debate around last look, pre-hedging and mark ups, to the effectiveness of the Code, the survey’s results are dissected to lead into a discussion around the impending three-year review of the Code. There is time for a quick look at the paper on anonymous trading in FX markets released by the GFXC – and the challenges involved in monitoring conduct in that environment  - before Debelle explains to Lambert why he is optimistic that the committee’s huge effort to build buy-side adoption of the Code may be about to pay off.

In this week’s new style podcast Colin Lambert casts his eye over some key news stories of the week and is joined by Jay Moore, founder and CEO of FX Hedgepool and Rob Loft, founder and CEO of Harvey Loft to discuss two in depth. Listeners will be surprised to hear that Lambert has some thoughts on the Investment Association’s call for standardised FX reject messaging, and equally that he has some observations on the first two rounds of data from the FX platform world. What may nonplus listeners is his willingness to comment on things AI, however this really is just an excuse to engage the audience in a game of buzzword bingo (other titles exist). Following a bit of feedback from last week’s podcast, and with FX Hedgepool, a peer-to-peer matching service, launching just a couple of days before, Lambert is joined by Jay Moore who explains why the service is different to other initiatives out there, while at the same time trying to win over a sceptical Lambert! Rob Loft and Lambert then focus in on the FX committees’ FX turnover data and pay particular attention to the e-trading data, asking the question, with e-ratios seemingly static, what will it take to get them moving again? There is also time for the traditional In the FICC of It scepticism over the quality of the data, and the podcast closes out with Lambert issuing an impassioned plea – backed up by Loft – for more standardisation of data generally. 

There is a packed agenda for Galen Stops’ last In the FICC of It podcast as he and Colin Lambert discuss a busy week in FX markets – especially if you’re in the survey business!  After Lambert salutes Refinitiv for its gesture in donating brokerage to the Australian bushfire relief effort and Martin Mead on his retirement (the podcast was recorded during the celebration, but sadly from 13,000 miles away) from the FX market, it’s back to cynical business as they take a look at the fourth annual e-trading survey from JP Morgan. While Stops questions some of the findings,  he is keen to highlight the emergence of data as a key factor in trading, while Lambert thinks it is more significant what isn’t in the report, and remains convinced that in spite of a lower number naming it as their number one concern, liquidity is still front and centre of dealers’ minds night and day. It also, much to everyone’s disappointment, gives him a chance to roll out his ultimate definition of liquidity…again. The discussion then moves onto events surrounding last week’s sterling spike ahead of the Bank of England monetary policy announcement and while Stops has a (tongue in cheek) explanation for it, Lambert is less convinced, believing that someone “might have been a little naughty”. He also asserts his view that the regulators need to clamp down on such behaviour and is so “positive” in his view that Stops nominates him for FCA head! Lambert is in even more strident form as our podcasters discuss the FCA’s HFT report last week, not least in his assertion that the equity market structure is “stuffed up” and that this type of trading, “adds nothing to the market” and is just “blokes with microwave towers pinging away at each other”. There is time for a quick look at events around the FX Global Code, following the BIS Markets Committee’s open letter to the Global FX Committee and the latter’s release of a report into anonymous trading on platforms, with Stops still struggling to see buy side adoption accelerating and Lambert sensing a lack of consensus on the GFXC around the key issues of anonymous trading, last look and the use of tags. The podcast closes out with Lambert turning the tables on Stops with a surprise quiz. As the latter heads to a new role at 360T, Lambert probes him with questions about his new employer – so tune in to find out exactly how much he knows about his new firm!

Trading automation in the non-spot FX world is again firmly in the sights of Colin Lambert and Galen Stops in this week’s podcast, although this time it is in FX options. With SynOption launching in Singapore this week and Digital Vega expanding its capabilities further, they ask, ‘is this the time that the FX options market finally electronifies in the multi-dealer space?’ For once our two podcasters agree that the conditions are probably right for such a move, thanks to changing perspectives on both buy and sell side and while they will undoubtedly not have the field to themselves they are optimistic over the platforms’ chances. With SynOption based in Singapore the conversation then moves on – via a couple of anecdotes about misreading emails – to news that Standard Chartered has achieved “significant” latency reduction on its first trade on the Singapore e-FX hub. Regular listeners will not be surprised to hear that the cynical Lambert has caveats about exactly how big a gain will be achieved overall. The conversation then move on with Stops detailing moves in the world of central banks and the push for digital currencies. Noting that there has been a surge in interest in the concept – mainly from emerging economies – he takes listeners through the key points under consideration and then suffers Lambert’s questions on the entire digital currency concept. So, will the concept work, what are the geopolitical influences, what about independent cryptocurrencies like Libra, and why are the central banks pushing the concept? All is revealed in this week’s In the FICC of It.

There is plenty on the run sheet for this week’s podcast as Galen Stops quizzes Colin Lambert over a report that links FX swaps liquidity and spreads to spot. Lambert confesses to being a little puzzled over some of the statements in the report and willingly confesses to Stops’ accusation of him being an FX geek by explaining what he would like to see in the next piece of research into what he thinks is a phenomenon and not a structural shift. The conversation then moves onto to discuss a new blockchain collateral solution that will underpin one of the new peer-to-peer FX trading platforms and while Lambert agrees with Stops that the technology solution could have a significant impact on market functioning he is still sceptical about how many trades will actually be done to put on the solution? Stops finds time – much to Lambert’s disappointment – to discuss the rise last year in full amount trading on CboeFX, one of his 2019 predictions coming true, while Lambert is keener to discuss the non-firm fill rates on the platform. While he thinks there is more to do on the fill rates, Lambert does acknowledge there is no benchmark to measure against because no other platform offers such granular detail. Our podcasters’ then offer their views on the FX Global Code hitting 1,000 Statements of Commitment and Switzerland being named a currency manipulator (five years to the week after it stopped manipulating…and almost destroyed the FX market), they also find time to highlight a couple of “interesting” Asian responses to the US Treasury report on FX practices. Finally, Lambert shares his press release of the week, which demonstrates, if nothing else, what can happen when enthusiasm dominates the naming of a company.

The podcast is back for 2020 and Colin Lambert and Galen Stops immediately try to dampen new year’s spirits with a look at what was a pretty poor 2019 for the FX platforms. On a more positive note, Lambert thinks that 2020 could be a breakout year for two services in the FX industry as they seek to build out from the foundations established over the past year or two, but Stops is a little worried there will be a downside to this for the P&L editorial team. Our podcasters then launch into a discussion over the alleged “hacking” of Bank of England new conferences. Stops believes this is a straight legal issue and while Lambert agrees, he is also concerned that questions are being asked of those traders who took the quicker service and argues this reflects the paranoia that still populates the banking industry especially. The first podcast of the year closes out with Lambert offering some time saving advice to an academic seeking to build a Twitter-following FX trading model and, despite strenuous efforts, he can’t avoid Stops talking about the good year for trend followers in 2019. But exactly how good was it and why is a dead Labrador introduced to the conversation? Listen in to find out.

It’s a boisterous end of term party for our podcasters as Colin Lambert and Galen Stops interrupt their festivities to grade each other’s predictions for the industry made at the start of the year. Stops is in triumphant mood as he picks apart a couple of less-than-successful predictions from Lambert, however the latter is ready with some handy data to dampen the former’s spirits – or so he thinks.  So, from algos and crypto, through tap ins on market data and FXPB, to full amount trading and unintelligible predictions, there is plenty for them to get their teeth into and listeners can decide for themselves on the big issues – does a +5% return that underperforms the benchmark by 3% really constitute success as Stops claims? And does a return of -4% that outperforms a -10% benchmark constitute success as Lambert claims? Listen in to find out.

There is plenty for Colin Lambert and Galen Stops to get their teeth into this week as the BIS released a series of papers studying the data in the Triennial FX Turnover Survey. From working out who the mysterious “others” were in the survey, through some initially confusing execution data, to a signalling of the return of settlement risk to the regulatory agenda, our podcasters run through the key issues.  Lambert has time to share some thoughts on the future of the primary FX venues before the conversation moves onto some hedge fund launches that appear to fly in the face of anecdotal evidence that global macro is struggling – and it wouldn’t be an In the FICC of It podcast without Stops sharing the latest bizarre happenings from the crypto world. His message is simple – if you’re a CEO, stay off Twitter!

This week’s podcast starts with a bombshell that leaves Galen Stops reeling and lost for words before he and Colin Lambert get into the details with a look at the results of the first day of the Global FX Committee’s deliberations this week. Lambert highlights one of two challenges he believes the committee face, not least that of actually getting US buy side firms to commit to the FX Global Code. The scepticism is amped up following that as Lambert picks up on a quote about internalisation in a report this week, Stops joins in the fun by suggesting it is all about one’s definition of “internalisation” before raising the stakes further by asking, ‘can a single product platform be a multi-asset class venue?’ This leads to a lively discussion around the chances of two new FX venues to launch this week – at a time when the existing platforms are reporting historically low turnover data. Our two podcasters then step into the digital world by discussing the likely impact of LMAX Digital publishing its ADV data in crypto before Lambert tries (hard), and fails to get Stops to admit he was right in an assertion he made (several times) over the past two years about crypto markets. On the subject of innovation, the podcast closes out with a quick chat about the challenges of instant settlement in FX with Stops admitting he is surprised by the complexity involved in delivering such a service. Subscribe or download now from the iTunes store and other podcast services, or from the Profit & Loss website. 

In this week’s podcast Colin Lambert and Galen Stops tackle the tricky question of ‘if things are as bad in FX as some will have us believe, why are outside firms still investing?’ With three investment deals in the past week to discuss there is plenty for them to get their teeth into and, listeners will be pleased to hear, plenty for our two podcasters to disagree on. For example, is Lambert right when he says he thinks banks should – and probably are – looking at creating a new round of consortia to incubate firms to challenge the existing fintechs? While Stops is more sceptical about the prospects, Lambert has a real bee in his bonnet about firms paying to access what is effectively their own data and wonders if the strategic investment teams at the banks are thinking the same? On the subject of data, Stops is keen to question Lambert on the value of data in FX swaps and the two manage to agree that this product set is probably from where the next level of success for the platforms emanates – although it is very much a question of timing…and pricing. The podcast closes out with Stops trying (and failing) to commiserate with Lambert who reveals he has been on the end of some “robust feedback” in the past week over his attitude to two legal cases working their way through the New York courts. As always, he has an answer of course, but he does find time to highlight the paradox of two courtrooms in the same building exonerating and finding guilty, people effectively carrying out the same conduct.

There is a long run list for this week’s In the FICC of It podcast, which kicks off with some welcome listener input into last week’s questions of algos intentionally losing money to throw the “order sniffers” off the scent and the challenges facing Singapore’s efforts to build an FX liquidity hub. Colin Lambert and Galen Stops then develop the conversation further by discussing recent comments on FX platform consolidation – Lambert highlighting his concerns that the universal belief in data as a revenue generator may be a short lived model for many – before moving onto the establishment of a code of conduct for crypto markets, something Stops believes cannot hurt the industry in spite of his doubts over how deeply embedded in the digital assets world it can really become. There is also time for a quick chat about the very fluid nature of the prime brokerage world at this time before our two podcasters close out by asking, can a 10-year old product really be labelled as “new”?

This week’s In the FICC of It podcast is an emotional rollercoaster, containing euphoria, resignations and emotional pleas for clemency as Colin Lambert and Galen Stops discuss key themes from the last two conferences of the year at Profit & Loss, in Singapore and Hong Kong. Reflecting upon some really interesting (and different) perspectives on the geopolitical landscape at the two conferences, our two podcasters dive into the themes of de-dollarisation and the future of the RMB, asking what are the alternatives to the dollar? There is plenty of noise about moving away from it, but where will reserve managers go? Maintaining the Asia theme the two then discuss the efforts on the part of Singapore to attract major FX players to its liquidity hub. Regular listeners will not be surprised to hear there is a level of cynicism over how the centre is going to get the buy side to connect, especially when the primary FX venues are not, as yet, connecting, and also what would happen if China decides it wants a liquidity hub? Stops also recounts one of his favourite moments from the conferences, when a panel was asked what they considered to be the drivers of the huge surprises in the BIS turnover survey – the 67.8% surge in volumes via prime brokerage, before Lambert follows up last week’s discussion on the value of liquidity and connectivity to platforms. What is probably the loosest In the FICC of It yet closes out with Stops and Lambert sharing their favourite moments from the week’s conferences – and this includes algos deliberately losing money and an idea for the most combative panel session ever!

In this week’s podcast Colin Lambert and Galen Stops pick through the big talking point of the week, Citi’s reported decision to cut the number of platforms it connects to in the FX market. Once he can stop him being smug about predicting such a thing two months ago, Stops asks Lambert whether he thinks other banks or LPs will follow the Citi lead, while the latter asks the question, Is Citi trying to establish itself as the leader of a movement to radically change how the FX market operates? The pair then move on to discuss the latest development in the Mark Johnson saga, with the former head of cash FX trading at HSBC formally applying for a re-hearing of his appeal against his conviction. Lambert relays a statistic that doesn’t make for optimistic listening but reiterates his belief that the FX industry faces what could be serious disruption if the reasons for striking down the appeal are allowed to stand. The pair close out with Stops revealing news the first FX hedging deals to be arranged under BNP Paribas’s new sustainable derivatives platform, which is linked to the United Nation’s (UN) Sustainable Development Goals (SDG). This prompts Lambert to look up the 17 goals under that programme and try to assess how they can relate to an FX trade, and like last week’s quiz, it doesn’t go that well.

Profit & Loss editor, Galen Stops, is in London right now and explains that Brexit seems to be the main topic dominating a lot of conversations. And unfortunately for those who might be sick of the subject, he explains that even if the UK leaves with or without a deal in the near-future, this is only the beginning of the Brexit discussion. Meanwhile, Colin Lambert, managing editor of Profit & Loss, relates the dizzying highs and lows he experienced this week at a conference focused on benchmark reform. Regular readers will not be surprised to discover that Lambert has some thoughts of his own on this issue, and neither will they be shocked to find out that he thinks the regulators have got it wrong (again). This in turn leads on to a discussion about whether individuals at financial services firms have been unfairly singled out for alleged misbehaviour, when more senior figures in the management of these firms should actually be shouldering more of the blame. Stops relates a couple of amusing comments and observations from former FX market participants that have now shifted into the crypto world, which leads Lambert to speculate on whether the fiat-BTC carry trade is going to be the next big thing. The pair also discuss a recent report highlighting the growth of FX algo trading, noting that it contained some similar claims to another report published by the same company a couple of years previously. And finally, Stops surprises Lambert with a quiz! Following the news that FXall has added a new liquidity provider to expand its offering of frontier currencies, Stops tests whether former FX dealer Lambert can guess some of these currencies from their codes.

In this week’s podcast Colin Lambert comes out swinging from the start as Galen Stops reports on a sharp divide between panellists at Profit & Loss’ Copenhagen conference over the future of FX volatility. Typically Lambert gives short shrift to one side of the argument as he channels his inner Star Trek (of which he has never seen an episode or a film!) by suggesting that what we actually have now is volatility, but not as we know it. The conversation then moves on to quantum computing (yes honestly) as Stops argues that while it will be hugely influential in financial markets, it is unlikely to be in trading for some time yet. Again typically, rather than have his absolute lack of understanding of the subject shown up, Lambert prefers to share an amusing story from a presentation he attended on the subject! If Lambert came out swinging to start with the tempo is raised even further when Stops causes the heart of every listener to sink by asking him about last look. A column written this week was quick to get feedback, as our podcasters discuss and Stops makes a stout effort to defend a practice that Lambert believes is unconsciousable – having different hold times for different clients on the same connectivity. The podcast closes out with a tongue in cheek tip of the hat to the brokers at Tullett Prebon in 2008-10 whose actions were last week targeted by the UK’s regulator. Exactly what constitutes “lavish over-entertaining” and should we stop turkeys voting for Christmas? Download now from iTunes, Android or the P&L website.

New technologies and old issues are on the agenda for this week’s podcast as Colin Lambert and Galen Stops take a look at the likely impact of blockchain on FX swaps. Stops makes the point that this would be a radical step for what is often seen as an archaic segment of the market, but also stresses that the ambitions for the project remain limited at this stage. Lambert, for his part, has no problem with the limited ambitions, pointing out that most of the challenges facing the FX swaps markets are in the inter-dealer space, where most of the trading takes place. The pair then move on as Stops asks Lambert about ESMA’s consultation paper on adding spot FX to its Market Abuse Regime and asks ‘are you nervous by a regulator taking this level of interest?’ Whilst Lambert admits to a little trepidation he prefers to see the move as a signal to the market to be compliant with the FX Global Code…assuming the European regulator makes what he thinks is the sensible move by adopting that document as its framework for judging behaviour. The podcast closes out with a spirited conversation over the likely erosion of the dollar’s position as a reserve currency. Stops is intrigued by the possibilities offered by the digital world, whereas Lambert sees it more as a game of numbers…and politics.

With the disclaimer that one only has a degree in English Literature (the other keeps his 5 O levels quiet) Colin Lambert and Galen Stops ignore their lack of expertise to dive back into the legal world in this week’s podcast. Stops explains the details that will drive former Citi FX trader Rohan Ramchandani’s case against the bank for “malicious prosecution”, while Lambert discusses the comments he has received from industry sources, which in turn leads him to ask about how the industry views moral or ethical indiscretions that have been found not to be illegal? Can institutions looking to employ people overlook such indiscretions? Lambert then makes the case for a firmer line to be drawn regarding exactly what an inter-dealer broker can and cannot do as part of the price discovery process. While he fully understands the CFTC case against BGC and GFI that was settled this week for what were effectively “wash” trades, he is concerned that barring brokers from suggesting prices and hinting at interest in the market would serious hinder the price discovery process. Stops challenges Lambert over this, asking if this means the long-discussed electronification of FX swaps markets will not take place. The podcast closes out with a robust discussion over the similarities and differences in the crypto and FX world – not least, what exactly do we mean by “institutionalisation”?

In the FICC of It

P&L’s managing editor Colin Lambert and editor Galen Stops are joined by guest podcasters John Crouch and Brandon Primack to discuss the hot topics from the first day at Forex Network Chicago for this In the FICC of It special. The podcast looks at how platforms seek to build a better liquidity landscape through the effective monitoring of both liquidity providers and consumers – and inevitably data rears its head. There is also a healthy discussion around the benefits (or otherwise) offered by the high frequency trading community and although there is some discord a consensus is achieved. The role of innovation and the impact of regulation on the key themes of liquidity and execution are also debated before the podcast ends with Crouch really wanting (honest) to hear an old trading story from Lambert. So, if you really want to hear the ultimate story regarding operational risk, DEM/ITL (look it up kids) and using signalling risk to your advantage – listen on!

In the FICC of It

Although there was plenty of news for Profit & Loss' managing editor, Colin Lambert, and editor, Galen Stops, to get their teeth stuck into this week, the duo focused on just three main stories. First of all, they discuss the news that former HSBC head of cash FX trading, Mark Johnson, has lost his appeal to have his conviction and sentence overturned in the US, highlighting a number of way in which this decision could have important ramifications for the FX industry, not least because it creates a precedent for any future legal cases. Secondly, Stops questions Lambert on whether he buys into the hype around algos as the "next big thing" amongst the buy side in FXand whether selling them will really come to represent the robust, consistent sort of revenue that banks are hoping it will. Lambert doesn't seem convinced, but points out that the large liquidity pools that some of these banks are sitting on gives them a crucial advantage over fintech firms that might be eyeing this segment of the market. And lastly, the pair discuss the news of Hong Kong Exchanges & Clearing's (HKEX) surprise  £31.6 billion bid for the London Stock Exchange Group (LSEG) and the subsequent rejection of that bid in no uncertain terms. Both appear convinced that this deal is unlikely to go ahead, but could LSEG shareholders be tempted by more cash? And could Britain's impending exit from the European Union also have an impact?