08 - 10 September, 2020
Beurs van Berlage, Amsterdam
8:40 AM - Buy-side keynote. An absence of volatility, geo-political disruption and the end of QE - What are the economic fundamentals that will impact currency movements over the next 12 months and beyond?
Speakers: Stephen Hull, former CIO, Ibex Capital, former portfolio manager, Moore Capital, former global currency strategist, Brevan Howard.
• The industry has seen big changes since Stephen began his career in what was then a trillion dollar market. Nowadays, FX is a five trillion dollar market and the dealing room has changed massively to become much quieter alongside the rise of electronic trading.
• Algorithmic trading in FX continues to grow, but around 15-20% of the market is executed via algos, compared to 70-80% of the equities market. The industry has shifted in terms of data and information transfer, which has made the world we live in far more transparent, with a President that now tweets prolifically.
• QE previously forced investors in Europe to sell fixed income products and we saw huge outflows during QE periods out of Euro areas. Investors are now coming back into the bond market, and it is difficult for the euro to go down dramatically, so it’s interesting that the demand for QE is now coming from the bond market.
• On the Trade War, Stephen is bullish about the dollar, but it’s driving US rates lower at the same time. Trump will pursue the Trade War harder when markets are going up, and less so when markets are going down, making growth tricky.
9:00 AM - Keynote. The sell-side’s point of view of the evolving FX market structure - What are the major developments transforming FX markets and how are sell-side reacting to the buy-side’s needs.
Speakers: Neehal Shah, global head of G10 FX trading and EMEA head of FX institutional sales, BNP Paribas
• FX industry has undergone massive change with increased transparency, new entrants to the market, regulation, a low volatility regime which has compressed spreads, and liquidity gaps driven by political events rather than economic events. The banking industry must adapt to stay relevant as processes become more digital.
• BNP Paribas has unveiled the launch of real-time transaction cost analysis (TCA), and a digital trading assistant, known as ALiX, to deliver insights, data and information during a trade execution, putting the trader in the driving seat with increased control.
9:20 AM – 10:00 AM All Star Panel: How can you gain automation efficiencies and create a comprehensive technology workflow across the full FX spectrum?
Speakers: Cyril Batkin, Senior FX Trader, Candriam | Ruben Costa-Santos, Head of Multi-Asset Class Analytics, Virtu Financial | David Newns, Global Head of GlobalLink Execution Services, State Street | David Shack, VP, FX Technology, Fidelity Investments | Jill Sigelbaum, Head of Fxall, Refinitiv | Tod Van Name, Global Head of Foreign Exchange Electronic Trading, Bloomberg
• Automation will mean different things to different firms; there is no “one-size-fits all” definition for trading firms that are active in different parts of the FX markets, but it is widely considered as the gradual and continuous refinement of efficiencies, reductions in cost and manual processes, and a way to reduce frictions on the trading desk, leaving traders free to focus on more valuable tasks.
• The increased use of automation will result in the role of the FX trader evolving significantly. While there will be fewer traders in the future as a result of more automation, this means that the skillset will change and become more refined, with a greater emphasis on analytics and optimisation. This process is already occurring on the sell-side, mainly in banking institutions.
• Data is once again the bedrock for automation. While FX trading firms have greater access to a wider pool of data than ever before, having the right analytics in place to take advantage of this (either from a single asset class or multi-asset class approach) is a key ingredient.
10:00 AM – 10:40 AM All Star Panel: Evaluating the current state of FX liquidity – How can you ensure you have the right capital, access to liquidity and necessary transparency to meet your best execution obligations?
Speakers: Satnam Sohal, Principal, Greenwich Associates | Mark Bruce, Head of Sales and Strategy, Jump Liquidity & Head of FICC, Jump Trading | Darren Jer, CEO, MarketFactory | Kevin Kimmel, Global Head of eFX, Citadel Securities | Paris Pennesi, Director, FX eRisk, HSBC | Robert Sijbrandij, Head of FX, Flow Traders
• The increasing volumes of data are underpinning liquidity opportunities, and by extension, the possibility of achieving best execution; however, in order to fully optimise this, data sets must have a standard degree of normalisation, which is still a work in progress.
• Regulatory measures are moving markets towards central clearing, through measures such as MiFID II and the Uncleared Margin Rules. The role of clearing in FX still varies to a significant degree due to the nature of the different products that are traded.
• The importance of non-bank liquidity providers is also on the rise and will continue to play an important part, particularly when it comes to managing risk.
11:10 AM - Sell-side 360 perspective: How can the sell-side lead the way in offering buy-side innovative solutions across the full FX product spectrum?
Speakers: Svante Hedin, co-head of trading, markets, SEB | John Turney, global head of FX, Northern Trust | Paul Matherne, global head of FX trading, BNY Mellon | David Wilkins, global head of eFX sales, Goldman Sachs | Joe Nash, FX & local markets digital COO, BNP Paribas | Mauricio Sada-Paz, global head of eFICC product and distribution, Barclays
• The mindset at banks has changed from building products and presenting them to clients to see what sticks, to engaging and listening to client needs and building new products, based on those problems. Banks are also engaging with FinTech firms more, and presenting companies to clients that could potentially solve issues the buy-side are facing today.
• The pressures felt by clients in terms of increased costs, regulatory burdens, the active versus passive trend (which are also being felt on the sell-side) are driving the buy-side to seek open architecture and technology to increase workflow efficiency and automate business processes.
• Uptake in FX algorithmic trading still has room for growth, but it’s important to look at algo volume as total traded volume. It shows that the vast majority of FX tickets are under 10 million dollars, and a ticket of this size wouldn't necessarily be routed through an algo. So, FX algo usage across the industry could be larger than it initially seems.
12:00 PM – 12:40 PM All Star Panel: What are the latest innovations in FX algos, how are providers differentiating their offerings, and what is the current buy-side adoption rate?
Speakers: Daniel Chambers, Head of Trading, Sequoia Capital Fund Management | Hasan Amjad, Head of Algorithmic Trading, GAM Systematic Cantab | Ralf Donner, Global Head of Client FX Algo Execution, Goldman Sachs | Allan Guild, Global Head of Alternative Execution Services, HSBC | Vittorio Nuti, Global Head of FX Algos, Deutsche Bank | Sunil Patil, Senior Trader, APG Asset Management
• There are two primary reasons for adopting algorithms: to lower the cost of execution and to enhance the ability to display how best execution was achieved. However, buy-side firms must conduct rigorous research in order to quantify which algos are best suited to their trading strategies. There is also a lack of standardisation from third-party TCA providers, which can hinder buy-side firms.
• The ability to turn algos off and for traders to take control of an order in-flight is still valuable, but there is the risk that by doing so, traders will contaminate the data that will be used in post-trade analytics, such as TCA.
• Innovation in the algo space is a divisive topic; some see that both the ease of use and complexity of using algos are increasing alongside each other, while others believe that there has been a step back in algo product innovation in recent years, although this is starting to show signs of improvement.
1:10 PM Special Guest Speaker: The rise of populism - In an era of Trump and Brexit, how will the US and European political landscape impact global financial markets?
Speakers: Sir Christopher Meyer, former British ambassador to the United States and BBC broadcaster
• The world is in the middle of a trade war. Eighteen months ago, we seemed to be on the brink of a return to pre-financial crisis norms for global economic growth. Growth was strong in the US off the back of Trump tax cuts, fears of a third leg of crisis in the emerging markets was not seen, and we witnessed a surprise reversal of the Eurozone. Since then, the global economy has slowed down significantly and there are many talks of an impending recession.
• The world must get used to the idea that the battle for global economic supremacy between the US and china will essentially be the backdrop to our lives for a very long time. It won’t go away with this President, and China had been on an extraordinary growth path since the late 70s, which has since slowed down, as expected.
• The UK’s Brexit obsession has dominated the news agenda for the past few years. Until a few years ago, EU membership was not one of the top concerns of the British people, so in that sense the result was a surprise. Since the referendum, the UK has seen migration fall sharply, with those that migrated from the EU 8 (Eastern-European) countries now leaving as the Sterling falls against the Euro and other currencies.
3:00 PM – 3:20 PM TRACK A In Conversation: Turning big data into smart data – How can you put new and alternative data sources to work to tap into profitable trading opportunities?
Speakers: Saeed Amen, Founder, Cuemacro
• Before investing in alternative data sets, firms must have a clearly defined requirement and strategy for how new alternative data sets will not only be used, but how they will bring benefits in terms of alpha generation.
• The use of alternative data requires buy-in across the firm, from the board to the portfolio managers, everyone needs to be clear and what the data is for and how it will augment trading strategies.
• It can be harder to source alternative data for FX, compared to equities, but these data sets can take the form on historic flow and tick data. Traditional, larger data vendors are now offering alternative data sets to the market, alongside niche providers.
3:30 In conversation - Beyond box ticking: How can you take pre-, real-time and post-trade TCA and use these insights to gain a competitive edge?
Speakers: Yves Perreard, CEO, Perreard Partners Investment SA | Vikas Srivastava, chief revenue officer, Integral | Simon Wilson-Taylor, Head of EBS institutional, CME Group | Vinay Trivedi, vice president, FX, strategic initiatives, FlexTrade
• For some fund managers, TCA can become a box-ticking exercise. Especially following the introduction of MiFID II, which calls for more transparency in the market. For long-only funds or those perhaps more specialised in a corner of the market, TCA isn’t as useful.
• On the other hand, if investment firms are using TCA just to tick a regulatory-compliant box, then the tool is useless. Those that have made TCA part of their internal trading processes, it can be a mechanism for granular insights and to potentially inform execution decisions. Most asset managers are confused by what they want to achieve by using TCA because it has been 'thrust upon them', but by being exposed to it, firms can begin to understand its uses.
• Panelists were divided about whether TCA needs standardisation in terms of how providers produce it. On one side, standardisation can stifle innovation, but if it’s being used for compliance purposes then without standardisation, regulators would struggle to compare one company from another.
3:50 PM – 4:20 PM TRACK A In Conversation: Separating the AI hype from reality – What are the latest successful applications and how can you implement them on your trading desk?
Speakers: Paul Bilokon, CEO & Founder, Thalesians | Hasan Amjad, Head of Algorithmic Trading, GAM Systematic Cantab | Richard Bateson, Director, Bateson Asset Management | Rafael Molinero, CEO, Molinero Capital | Sunil Patil, Senior Trader, APG Asset Management
• Most on the buy-side are aware that there is too much hype surrounding the use of AI, especially in the hedge fund space, and that although progress is being made by quant funds, the majority of firms are still at the research and evaluation stage.
• Areas that could benefit from the development of AI systems include pre-trade analytics, algo wheels and broker allocation (although this is one area that is in use by industry participants) and certain parts of the execution process.
• However, firms must be prepared to invest time and resources into ensuring the data fed into AI systems has been cleaned properly and hire staff that are able to bring the best of the systems while understanding the results in the context of the financial markets.
5:20 PM - In conversation: How you can successfully achieve electronification in FX options.
Speakers: Farshad Behvand, portfolio manager, Tudor Investment Management | Conor Daly, head of eFX EMEA sales, Goldman Sachs.
• Primes, regulators and what the banks are feeling internally is considered the holy trinity driving innovation in FX options, with a focus on moving businesses to lower touch, and a higher technology component on all parts of the process.
• Exchanges are yet to evolve to this industry due to the unlimited universe of products and a severe lack of liquidity. Panelists agreed that although exchanges solve many challenges for regulators, for the buy-side, it doesn't quite work yet and there is no obvious forward development plan.
• The hedge fund community has driven the electronification of the options market in terms of driving execution API to API, which was a huge motivator for banks to source development programs. Without that, alongside the data, the ability to set limits, and execute seamlessly within that workflow, it wouldn’t have happened as quickly.