|Click here to receive your FREE copy of The Forex Summit The April FCM360 Forex Summit profiles Shift Forex CEO Ian McAfee, whose FXIC New York, opens June 12. We also feature excerpts from Richard Willsher’s article in the April
e-FOREX: “Why FX Needs Better Policy Synchronisation and Trading Transparency.” Also, find out how spoofing—placing and immediately cancelling NYSE orders that tanked the market—could land a British trader in jail ~ The Editors.
Ian McAfee’s Shift Forex is an FX knowledge center. After a stint with FXCM, Ian McAfee co-founded Shift Forex as a consulting firm specializing in FX. As CEO, he was soon leading a broad-based knowledge company offering advisory services to brokers, banks, exchanges, and technology companies that are expanding their FX offerings, as well as large and small companies seeking to enter the FX markets for the first time. Ian’s ten years in the FX industry includes a strong background in business development, marketing strategy, and industry analytics.
His company’s FXIC New York, is one of the industry’s go to conferences where an international crowd gets the latest on trends, regulation, bellwether technology and a good dose of informal networking and latest word-on-the-street conversation.
We had a chance to sit down with Ian to find out what’s new at Shift Forex and what to expect at this year’s FXIC New York.
Q-Ian, what sets Shift apart from the crowd?
First and foremost, we specialize in FX. For clients, this means virtually no learning curve so we can begin adding value for clients immediately. Beyond this “instant on” capability, we bring expertise and an unparalleled global network of FX contacts to every client engagement.
Q-You have an event coming up in June in New York – FXIC New York. Why is it important to be there? How does FXIC New York differ from your other shows in Shanghai and Mexico City?
Our events reflect the company’s broader perspective. In work with our clients, we see great ideas emanating from two-person startups to the largest financial institutions. The FXIC event series is different in that it brings together people from the retail, wholesale and institutional market segments.
Also, we do everything we can to make FXIC events melting pots for a FX market and industry participants. We keep ticket prices low and do everything we can to ensure attendees meet the right people not just a lot of people.
New York is our flagship event and brings in a global audience. Last year it was the largest FX event in North America.
Q-What will be different about FXIC New York this year?
We’re introducing a structured Speed Networking session at this year’s event. Basically, sponsors will host tables and attendees will shift from table to table after a few minutes in which they’ll be able to figure out who’s the best fit for them to follow up with. We did this at our Mexico City event and it was hugely productive and popular among the attendees.
Q-Everyone talks about “disruptive technology.” What’s the next big thing when it comes to Forex trading technology?
There are very few truly disruptive technologies, but more importantly there is a constant stream of significant innovations that are improving the foreign exchange markets. At FXIC we will be holding our highly popular Innovator’s Inquisition, in which new, potentially break-through companies pitch their innovations to a panel of industry experts and venture capitalists as well as the audience.
Q-After 2008, the regulatory pendulum swung toward more regulation. Is it swinging back or are we going to see more regulations over the next few years?
Most of regulations that grew out of the global financial market crash have yet to be implemented by regulators in foreign exchange. In a way that’s appropriate because the FX markets performed we throughout the events that triggered Dodd-Frank and similar reforms overseas. Lately, we’ve seen European regulators back away from mandating clearing of NDFs, for example. However, there are issues in the US and elsewhere that are causing regulatory uncertainty in the market. I think everyone hopes regulators can sort those out for the benefit of participants.
Q-What worries FX brokers and traders today?
Going back to the previous question, regulatory uncertainty is one worry. Clients also tell us they are concerned about the changing credit paradigm, which is being influenced, in part, by new capital rules governing banks. The SNB debacle exacerbated this trend with clients losing credit providers sometimes in a matter of hours. I think the credit issue is sorting itself out, in part with the expansion of prime-of-prime providers expanding into the territory being ceded by banks.
Q-How did Michael Lewis’s Flash Boys influence FX?
We didn’t see any real impact in foreign exchange. Clearly the FX market structure is very different from equities. Also, being more a principal market, FX market participants are perhaps more aware of how their trades are handled rather than believing they all have an equal chance at the best bid or offer in the market all the time.
Q-What do you want Forex Summit readers to know that we missed?
Since we’ve spoken about our FXIC NYC event, it’s interesting to note that much of last year’s event dealt with the sustained period of low volatility in the markets. Clearly that changed in the latter part of 2014 into this year. To us that means that FX is a great market to be in more than ever.
Q-Will national regulation curb global FX abuses?
In the latest edition of e-FOREX, Richard Willsher examines uncertainty over the future course of regulation and whether more trading manipulation will further cloud the foreign exchange market. Here is an excerpt from Richard’s recent article on why FX needs better policy synchronisation and trading transparency.
It all seemed so straightforward then. The 23-page Leaders’ Declaration released following the September 2009 G20 Pittsburgh Summit included the following:
“Since the onset of the global crisis, we have developed and begun implementing sweeping reforms to tackle the root causes of the crisis and transform the system for global financial regulation. Substantial progress has been made in strengthening prudential oversight, improving risk management, strengthening transparency, promoting market integrity, establishing supervisory colleges, and reinforcing international cooperation. We have enhanced and expanded the scope of regulation and oversight, with tougher regulation of over-the-counter (OTC) derivatives, securitization markets, credit rating agencies, and hedge funds.”
Some of these claims now seem premature. The joint communique´ projects an impression of unity of purpose, implies coordination across the globe and that matters are in hand. Now, more than five years later, different national regulators have moved at different speeds, in some cases producing uncoordinated local market rules to suit their own financial markets.
Nations are managing their currencies to protect their own economic interests. Meanwhile in FX, market manipulation and disruptive trading practises have brought the market’s integrity into question more than once, giving rise to louder calls for greater transparency.
The reform of the market in OTC FX derivatives demonstrates what happens when individual regulators make their own rules. It also shows how much slower governments and their regulatory authorities are at getting things done.
As Dan Marcus, CEO of spot FX matching platform ParFX and interest rate swap platform Trad-X, points out: “The Pittsburgh G20 in 2009 wanted regulation of OTC FX derivatives by 2012. This got going in 2014 in the US. In Europe it will be 2017. This highlights the reality that, while financial markets are global in nature, regulators by necessity must maintain a regional or jurisdictional focus. So as a result of these cross-border delays and lack of harmonisation we have seen, there remains scope for regulatory arbitrage. Although this adds numerous challenges and complexities in the regulatory reform process, it leaves a gap in the market for individual firms that are globally operational to take the initiative to shape a new trading mentality underscored by best practice and technological innovation.
“The spot FX market has a history of evolving and introducing innovative trading practices that improve the way participants trade, and this is equally the case with ParFX. In our case we set up our platform in nine months after the industry’s largest participants came to us with a vision for reforming the way spot FX is traded, and we delivered with a solution that operates across borders, so there is no scope for regulatory arbitrage.
So you can see that if you let the market come up with its own solutions to its problems it can often be optimal as compared with local regulators operating on a national basis who are trying to do the same.”
Marcus went on to add that fragmented regulation damages the very market it is meant to improve. “This is not helpful to anyone, not even the regulators. It just lowers liquidity, widens the spread and increases systemic risk.”
For the complete article, Why FX Needs Better Synchronization and Transparency by Richard Wilsher and other in-depth coverage please visit the April edition of e-FOREX
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News That Matters to the FX World
Reuters – Alleged spoofer Navinder Singh Sarao, 36, has been arrested in London and charged with market manipulation and wire fraud. Authorities seek to link his activities to the May 6, 2010, flash crash when $1 trillion temporarily vanished from U.S. stock markets in a matter of minutes. For details visit Reuters.
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The London Evening Standard – As seen in The Standard’s: Confessions from the City: It’s a poorly kept secret that there are firms running what are essentially Ponzi schemes. One client’s funds are used to pay another in a never-ending merry-go-round until the music stops. For more click: The Standard.
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Maritime Executive – For a look at Iran’s seizure of a cargo vessel in the Straight of Hormuz, the US Navy’s response and whether this will stall a 6-nation nuclear accord with Iran visit Maritime Executive.