Frances Faulds
Frances Faulds

Avoiding investment regret – assessing potential alternatives to PIT execution strategies in FX

Following the recent recommendations from the Financial Stability Board, Frances Faulds looks at the perceived benefits and drawbacks of using the Fix, and what is most likely the way forward for the FX industry.

It is generally recognised across the FX industry that although the 4pm Fix has grown up over the years, it is an inefficient trading methodology that is long overdue a serious overhaul. No one could have predicted that the WM/Reuters rate would have become such a popular traded rate but it is a situation that cannot continue and it is up to the FX market to change. Speaking at FX Week’s Australia conference in Sydney last month, Guy Debelle, assistant governor (Financial Markets) of the Reserve Bank of Australia and co-chair of the Financial Stability Board, told banks the time to introduce transparent fee-based pricing is now. However, the FX Benchmark Group’s report, containing 15 recommendations aimed at improving the benchmark process and reducing the incentives for manipulation, also criticised the lack of understanding by some asset managers and index providers of how the market benchmarks work, and how they transact with dealers. Chip Lowry, Senior Managing Director and Head of Agency FX...continued

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