Algos, Data, Liquidity and Transparency – key FX issues for our members in 2018

Foreign Exchange, Liquidity, TCA

The Finance Hive’s annual FX London meeting on Thursday 6th December brought representatives of 85 of the leading names in the buy-side community – including Allianz Global Investors, Fidelity, Goldman Sachs Asset Management, AXA Investment Managers, Prudential and Vanguard among others – for a frank and open discussion, where Chatham House rules applied.   We also welcomed The Bank of England’s Executive Director for Markets, Andrew Hauser, who urged the buy-side audience to sign up to the Global Code of Conduct.

Attendees took part in several roundtable discussions throughout the day, covering a broad cross-section of relevant topics.  Key issues included:

  1. Algos. While not new to the industry, there is still a divide between those who love and hate them. The balance between taking a ‘leap of faith’ to algorithmic trading and maintaining control with human interaction was much debated – but the importance of analysing and learning from each trade is always essential.
  2. Data. Its usefulness is undisputed – but to get true insight, a wide spread of trades is needed. This is where peer-to-peer interaction becomes important, but is so much transparency giving too much away to competitors?
  3. Transparency. Again, this divided opinion between Hive buy side members, with some feeling that transparency is a positive progression in the industry, and others feeling that it could kill competition.
  4. Liquidity. Liquidity options are changing. It’s crucial to develop methods on how to evaluate and have the tools to validate. At present, the buy-side are happy to let custodians do FX – but it is time to assess whether there is a better way.

Julie Nicolas, Managing Director, the Finance Hive, commented at the meeting: “It’s vital for the buy-side to have a voice in the industry and an opportunity to come together to discuss the issues that affect them. The Finance Hive is an important step towards this, creating a collaborative environment where FX buy-side professionals can debate peer-to-peer trading, liquidity, regulations, and identify necessary next steps as a community.”

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