Dinner with a Side of Quantifying the Benefits of Innovation

Last month, our Senior Community Manager, Evie, jetted off to Boston and Toronto for two bespoke, Head Trader dinners with our North American FX community—hosted with our friends at 360T.

Read on to discover what was discussed, from scalable, tailored trading solutions to unbiased analytics and everything in between…

First up, Boston
The FX Hive: Boston Head Trader Dinner, 24th January

Evie made her way to Mastro’s Ocean Club to meet nine of our most senior, Boston-based FX members for an exclusive dinner meeting. Attending firms included: Putnam Investments; Wellington Management; T. Rowe Price; Rippling; Fidelity Investments; State Street Currency Management; and MFS Investments.

On the menu: prime steak, exquisite seafood, and quantifying the benefits of innovation.

Quantifying the Benefits of Innovation

Evie welcomed 360T and our members inside The Liberty Room, then it was time to unpack the key innovations in FX execution and how to quantify the benefits of these. Innovation and automation are two sides of the same coin, and to many of our members, are inextricably linked; both innovation and automation are of high-priority to our members this year, and now more than ever, heads of desk are seeking scalable, tailored trading solutions that can enable further automation. 

When it comes to the challenges posed by automation, our members explained that automation is sometimes delayed by senior traders to allow certain trades to net first. With this in mind, it is possible to start with semi-automation to manage complexity. Some of our members also expressed that they have experienced internal resistance to innovation, but the recommendation here is to adopt automation slowly, starting with G3 and then progressing to G10 currencies—as the saying goes, slow and steady wins the race when automating FX workflows.

As the role of the trader evolves over time, automating as much of the desk as possible is an increasing trend—across all asset classes—but automation is not possible without data. Accessing, maintaining and managing data is a universal challenge; it is significantly harder to access valuable data in non-deliverable currencies than it is in deliverable ones at the moment. Our members agreed that it is also difficult to source any useful NDF or swap data, and that most traders are looking for real-time data at the point of execution to ease volatility and improve execution decisions; in their eyes, it would be useful to feed market and trader data into a decision model, guiding when traders should deal and forming part of a feedback loop.

Whilst rounding up the conversation, it became clear that the demand for third-party algos has increased this year, however, our members feel that the algo data currently provided by banks is biased and unreliable; there is a need for unbiased analytics to enable comparison. On the custodian side, fees cannot be traded away ahead of time, so gathering and storing cumulative data on these fees may be a possible solution for our members. 

Next Stop, Toronto

Before catching her flight to Toronto, Evie met some of our North American Fixed Income members for coffee and a much-needed catch-up, including heads of desk from the following firms: Loomis, Sayles & Company; J.P. Morgan Asset Management; Parametric Portfolio Associates; Wellington Management; and Putnam Investments.

Our members put forward topics to shape upcoming meetings, and also gave their advice on reports and surveys that could capture valuable member insights. One of the key themes that cropped up during these conversations was direct connectivity, with our members agreeing on the need to cut out the middleman from Fixed Income workflows, suggesting to Evie that we should run dedicated meetings on the inhibitors to direct connectivity with the wider community.

Watch this space…

Just Landed
The FX Hive: Toronto Head Trader Dinner, 26th January

Shortly after arriving in Toronto, Evie headed to Stratus Restaurantlocated on the 36th floor of the TD South Tower, and boasting spectacular, birds-eye views of the financial district. On the way to meet her were nine of our highly-regarded, Toronto-based FX members, representing the following firms: RBC Global Asset Management; TD Asset Management; Mackenzie Investments; CI Global Asset Management; Royal Trust Investments; OMERS; BMO Global Asset Management; Ontario Teachers’ Pension Plan; and CPP Investment Board. The topic up for discussion: getting ahead of key FX trends.

You’ll be able to read the full takeaways from this meeting in a special report that we’re working on with 360T—coming soon to Hive Insights! Expect a thorough review of: moving FX traders up the value chain; the future of FX liquidity; technology trends shaping the industry; and FX execution channels.

A Date for Your Diary

Evie and The Finance Hive team will be back in the US on the 11-12th of May for our first-ever FX Residential Meeting on American soil.

The Finance Hive Residentials are flagship, annual meetings for our regional Hive communities, spanning all asset classes. The 2-day agendas are strictly shaped by our members and partners, consisting of: deep-dive roundtables; educational masterclasses; tailored, 1-1, pre-scheduled meetings; a gala dinner; onsite entertainment; and pre-planned social/networking activities—all in the backdrop of a stunning location. This time, we’ll be meeting our members in the beautiful setting of Newport, Rhode Island.

Just follow the link above to register your interest in this meeting, and we really hope to see you there!