9:00 - What themes will dominate the FX agenda over the next 12 months and what investment opportunities will these bring?
Recent history tells us to expect the unexpected when it comes to political risk, particularly in the US and across European regions. Hoffmann expects the dollar to rise in the near future; if dollar goes even further these would be conversations happening in the White House around increased risk.
Volatility and turbulent activity in emerging markets were expected to some point, but it extended into an avalanche in some ways; some contagion in Turkey for example, more so than in Argentina. This did impact on the Euro due to its proximity to Turkey.
Hoffmann says execution has changed dramatically over the last 25 years, particularly due to the increasing pace of technology where there is far less micro-management now. Assessing liquidity around market events has become much harder despite advancement of machines in trading; work more with orders and defensive orders now.
9:20 – In Conversation: How has the European FX market responded to an updated Global Code of Conduct, and how has the European FX market responded and performed in the wake of MiFID II?
Global FX Code of Conduct is key for reinstating trust in FX markets which have been troubled by a sequence of scandals and fines. At the same time, all market participants must look to adhere to the Code despite the process of compliance varying for each individual firm.
Buy-side adoption of the Code has been slower than anticipated. As the Code evolves, the challenges and motivations for those asset managers which have already signed up will be identified, with the intention of lowering the bar for the buy-side in the future.
The commercial benefits for sell-side firms adhering to the Code is more obvious, but compliance will also provide asset managers with the opportunity to engage in a more highly qualified dialogue with market participants and greater expectation from counterparties.
11:00 – 360 Perspective: FX eTrading in 2018 and beyond – how can you measure the performance of liquidity providers to establish the best partners in different trading scenarios?
The uncertainty of geopolitical risk is both impact on and driving FX relationships and activities, and complexity isn’t helped by fragmented liquidity, however volumes are still growing both on listed and OTC. What is clearer is that risk is moving back to the buy-side from the sell-side.
As such, the onus is on the sell-side and liquidity providers to better educate buy-side participants as to the platforms and tools that are available to them to assess their relationships with liquidity providers. Post-trade tools such as TCA can be insightful but only when viewed across a range of activities.
The use of algorithms and algo wheels is still diving opinion despite a surge in use within the equities markets; some believe they are useful for handling complex rules and data sets, while others questions whether they are accessing the most valuable sources of liquidity.
11:50 - Sell-side keynote panel: How is the sell-side implementing strategies and approaches from other non-finance industries to thrive in the new FX landscape?
Banks have historically lagged in terms of innovation and technology compared to other industries, and they are still playing catch up. The key is investing in building up technology teams and implementing digital strategies to make sure they are in line with meeting client needs.
In some cases, FX is far more sophisticated than other asset classes, such as equities. Algorithms and transaction cost analysis (TCA) stemmed from equities, but those tools are implemented in a superior way in FX, which can be more complex compared to other markets.
The idea of customisable algorithms in FX is an increasingly popular concept, and clients are now seeking more in-depth understanding of performance. In some cases, banks are building algos for clients looking to execute with specific venues, which are tailored to investment strategies and based on an individual firm’s goals and forecasts.
15:00 – TRACK A: Capitalising On The New Era of Transparency
Best execution panel: What have been the success and failures of building a MiFID II best execution policy and how can you establish best practice processes and TCA around it?
The buy-side’s use of transaction cost analysis (TCA) varies massively depending on trading strategies. Priorities include speed for quant hedge funds, for other asset managers it’s more about market impact or cost of execution.
Build vs. buy? Buy-side panelist agree that they are not experts in building technology, and often they work alongside technology vendors to build a customisable TCA solution, rather than build a single solution in-house.
Buy-side using more than one TCA for best execution. Various sources of data provides opportunity to analyse in-depth and remove potential bias for a bigger picture of trade execution is available.
15:00 – TRACK B: Exploiting New Currency market Trends
360 Perspective: Predicting the top 3 geopolitical hotspots and their influence on global FX markets – is uncertainty set to continue in 2018 and 2019?
President Donald Trump’s relationship represents both the greatest geopolitical risk and uncertainty to the global FX markets, due to his unpredictability and changing positions. This is particularly evident in his relations with China, where trade tariffs have been thrown back and forth, as well as the ongoing negotiations with North Korea.
However, Trump’s “game of chicken” with China cannot last forever and although he will not want to lose faith or see the US Dollar weaken, his time in power is limited and isn’t playing the long game.
In Europe, Brexit is the biggest hotspot although panellists said the worst has most likely now passed and both sides will want to come to an agreement soon, even by the end of this year. There are still serious concerns around the Turkish currency crisis and geopolitical events in Sweden are also not to be taken lightly.
Emerging markets are taking a hit at the moment and although this will continue, further weakening these regions, it will become a full-blown crisis.
