Nicholas Pratt
Nicholas Pratt

The new challenges of Risk: How will you be tooling up to meet the job?

The recent sub-prime crisis has sent the world’s financial markets into a period of volatility and uncertainty not seen since the last decade. Nicholas Pratt takes a look at what implications this has for Risk Management practices.

First Published: e-Forex Magazine 30 / FOCUS / January, 2008

The recent sub-prime crisis has sent the world’s financial markets into a period of volatility and uncertainty not seen since the last decade. Added to this are a number of increasing trends that are affecting both the way FX is traded and also the participants involved. Nicholas Pratt takes a look at what  implication this has for Risk Management practices. Algorithmic and anonymous trading, two strategies more applicable to the equities market, are becoming increasingly demanded by buy-side firms operating in the FX market, many of whom are new to the FX market and are bringing with them the tools and approaches used in other asset classes. Of particular note are the high frequency hedge funds, specialising in statistical arbitrage and looking to scalp the market with their low latency, short-term approach. And on the other end of the trading spectrum are the speculative retail investors As well as the new FX trading styles and the new FX instruments, such as currency derivatives...continued

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