On Monday 23 September Sibos is hosting the first ever day dedicated to the foreign exchange (FX) industry. Across six sessions, separated by a keynote speech from the popular and closely followed FX research economist David Bloom of HSBC, panellists will be debating all the forces changing the shape of the FX industry: regulatory pressure, technology, liquidity, data and the renminbi.
- Hear from Mark Yallop, chairman of the industry body that is trying to reach the parts of the FX industry that regulators never will by changing how FX traders behave in their day-to-day interactions with clients.
- Join James Sinclair of Market Factory and his panel of experts drawn from Commerzbank, UBS, EBS and Refinitiv as they ask themselves and the audience whether or not liquidity in the FX markets is getting harder to find.
- Catch a preview of the early findings of the 2019 BIS review of the global FX markets, the first for three years, presented by BIS economist Andreas Schrimpf and analysed by three data experts from the FX industry.
- Listen to a panel which puts to the test claims by FinTechs and technology vendors that they can re-engineer a high cost, post-trade processing eco-system characterised by high levels of intermediation, fragmentation and duplication.
- Learn how new technology is helping to make the FX flows between banks and corporates more intelligent, more operational efficient and what the future impact will be transactional banking.
- Ask whether London can sustain its position as the most important offshore trading centre for what is likely to prove the most important new currency to be traded by the FX markets in the 21st century: the renminbi.
Starting at 9:00 AM on Monday 23 September, Sibos is hosting the first ever day dedicated to the foreign exchange (FX) industry. Across six sessions, separated by a keynote speech from the popular and closely followed FX research economist David Bloom of HSBC, panellists debate all the forces changing the shape of the FX industry: regulatory pressure, technology, liquidity, data and the renminbi.
Informal regulation of the FX industry
The greatest of these five forces is the campaign by central banks to raise standards of behaviour in the FX industry. The cost of the misconduct of recent years is high in terms of financial penalties alone, but the costs in terms of trust foregone are incalculable.
The problem cannot be solved by regulation, because the global FX market is impossible to regulate directly without changing its nature completely. Regulation bites at the national level, but the FX market operates from everywhere and nowhere.
This is why regulators are instead looking to influence the day-to-day behaviour of market participants. They drove the creation of the FX Global Code and have persuaded 950 firms active in the FX market to commit to honouring its 55 principles.
In London – the centre of the global FX marketplace - more than 40 firms have joined the Fixed Income, Currencies and Commodities Markets Standards Board (FMSB), a body set up with official encouragement specifically to improve behaviour.
Mark Yallop, an industry veteran now serving as chairman of the FMSB, will be speaking in the opening session of the FX Day at Sibos. He will doubtless reiterate the message of the FMSB: the industry needs to change its behaviour before regulators change it for the industry.
The promise technology holds for the FX industry
One area of the FX industry where insiders are concerned it will actually take a regulatory intervention to change behaviour is post-trade processing costs. The buy-side is pressing the sell-side to cut costs, but banks are struggling to find the funds to invest in improvements.
But in the last few years a string of technology vendors has promised to break the deadlock. At the Sibos FX Daym, PwC partner Sebastian di Paolo will ask panellists drawn from banking, the corporate sector and technology if they believe the hype.
Another set of FinTechs will undergo a similar test in an innovative new format where they are given the opportunity to explain why the model they have designed has the power as well as the potential to transform how the FX markets work.
“We have heard many promises from FinTechs-in-FX but have yet to see any tangible deliveries to our $5 trillion a day market,” says Gavin Wells, who is moderating the session. “The FinTechs attending our session are focused on faster and digitised payments, on digitised assets, on enhancing post-trade through reduced reconciliations and on delivering peer-to-peer netting to reduce execution costs. We are going to ask them to explain what they will really deliver and when, whether they intend to disrupt or support existing market participants, and how their offerings will get sufficient traction to make a difference to the world’s largest market.”
The changing shape of FX market liquidity
One group of market participants that have made a difference to the FX industry already is non-bank liquidity providers (NBLPs). Yet although NBLPs garner the headlines, banks remain the engine of liquidity in the FX markets.
Every day banks allocate hundreds of billions of dollars in credit to clients – including NBLPs. But as the rising frequency of flash events and increased use of “cover and deal” arrangements indicates, making the right calls is harder than ever.
James Sinclair, executive chairman of Market Factory - which provides FX traders with connectivity to more than 80 trading venues – will be asking panellists drawn from banks and trading platforms whether it is true that the market is more difficult to read and liquidity harder to find.
What the FX industry could do with more and better data
Every trading day liquidity providers and consumers are finding out the answer to that question. As they put their trades into the market, they base them on data. That data comes from multiple sources, none of which offer a comprehensive view of the market.
At the highest level, the central bank survey of the FX markets conducted by the Bank for International Settlements (BIS) is the benchmark by which the size, dimensions and growth of the FX market is judged - and it only comes out once every three years (though seven central banks offer some visibility on a semi-annual basis in between BIS reports).
With all the changes occurring in the FX marketplace, the 2019 version of the BIS survey is more eagerly awaited than ever. And the Sibos FX Day offers a glimpse at what it says, with Andreas Schrimpf of the BIS presenting the early findings.
Schrimpf joins a panel discussion with three industry data experts, as they question why it is so difficult to obtain a comprehensive, up-to-date, reliable and continuously available source of real-time data about what is happening in the FX market and – if it existed – what it would be used for.
How London can remain the home of offshore renminbi trading
One development in the FX market does not need to be confirmed by data: the drive by the Chinese central bank to make the renminbi (RMB) an important international trading, investment and reserve currency by opening it up to international traders and investors.
With London having emerged as the top RMB trading centre outside China, Sibos 2019 provides an ideal opportunity to ask whether the City can sustain its lead and grow its share of this powerful new entrant to the global FX market.
Join us at ExCel London on Monday 23 September
If you would like to attend the FX Day at Sibos, review the full details of the agenda. Single day passes to the event are available.