Jon Vollemaere of R5
Jon Vollemaere of R5

Forget G10 – arise the EM10 EMFX London – May 20th 2014

May saw the 3rd instalment of the EMFX conference this year with a whole day dedicated to emerging markets, technology and people.

Forget G10 –  arise the EM10 EMFX London – May 20th 2014

Market structure panels in the morning – Currency specific views and technology in the afternoon. Yet again the demographic was mainly buyside names coming along to share thoughts and learn about currencies they’re considering but not yet trading.


Whilst not quite the ‘get your helmet on’ moment of last year - the highlight was surely the opening address from Wenjian Fang – CEO of the Bank of China who gave an overview of RMB trading in London – letting us all know that the Renminbi is already a freely available currency in London, just give the BoC a call.

Fun remarks aside the growth figures are considerable with many mobile phones taking pictures of the graphs – particularly the one that actually looked like the great wall of China itself. London alone accounts for 56% of all offshore RMB spot trading. Yes you read that correctly. Punching well above its share of overall G10 trading.
China is the world’s largest trading nation, and yet only 15% of that trade is settled in Renminbi – this will change. The BoC forecasts it to grow to 24% in 2015. I suspect it may well be more than that.

Forget G10 –  arise the EM10 EMFX London – May 20th 2014

While Taiwan has recently been knocked off its perch by RMB settlement in the USA growing 229%, London has seen a 298% increase. All those ‘Made in China’ goods are no longer being paid for in USD. China has enough of those already.

EM issues

Next up was Societe Generale’s Benoit Anne’s who’s “EM from Doon to Boom” speech spoke of trading benefits from the flow out, and back again to the EM world.

Most hedge funds are underweight EM and yet technical and economic fundamentals are up. Current account deficits are reducing and pro growth governments coming in. Taking last year’s Fragile 5 to this years top performers.

Forget G10 –  arise the EM10 EMFX London – May 20th 2014

No small part was played by the EM Central Banks. Turkey, India and South Africa defended well ( see Rupee Volatility: e-Forex Jan 2014 issue )

USD is still a risk as the Bernanke earthquake recedes, and bond flows are now chasing a rally, but in his view CLP and MXN are one ones to watch - as BRL shuts down for the football.

The EM market structure is changing – and the first panel anchored by newly appointed ACI President Marshall Bailey, who did one of the best jobs of panel moderating I’ve seen in years, quickly pushed the discussion into the areas that matter most.

Felix Adam of ACT Currency Partner was surprised more people aren’t trading EM. If you’re just G10 then you don’t get the returns. Paul Chappell from C-View spoke of how differentiation and opportunities are in the new EM world.

Will Patrick from the CME illustrated the similarity of a 1 month NDF to a 1 month future and how easily bilateral trade could be hedged and cleared on exchange. Which could work very well for sections of the market – but also how some are resistant to change and the delay in clearing hadn’t helped ( more on that later )

Paul disagreed stating how clearing helps but OTC is still better than exchange with its bespoke dates and amounts. Speculation on the Indian Elections being a good example of that. EM liquidity is better than it used to be and traders see more aggregation over SDP in the future.

Jens Jacob Foged formally of SparInvest spoke about how real money is looking for better execution, and would prefer a central limit order book approach. Better execution means better liquidity and there’s potential for a CLOB revolution as custodians have been too greedy. Giving examples of asset managers looking for better advice as they’ve been trading on the worst price of the day.

Regulation came up and luckily then went away again with the comment “ Politicians will always look to fix yesterdays problems “

Forget G10 –  arise the EM10 EMFX London – May 20th 2014


The afternoon took on a more currency specific tone Katie Martin of the WSJ asking – If they’re all individual currencies - why do they all trend together? And the now infamous comment of,  “what exactly do Latam traders do all morning?” Her opposite number from ECU group gave the also now infamous George Bush quote of “how many zero’s are there in a Brazilian exactly?” in response.

But we did learn that 80% of Latam trading is MXN and BRL and the later will flat line during the football. Making the question even harder to avoid.


Roophand Betala of Volvie Capital Management flew in for the conference from Mumbai and gave the attendee’s a first hand view of the Indian Elections in response to questions raised from a UK High Commission to India Economic Advisor report.

Who would the new finance minister be? How quickly will financial markets open up? How strongly would regulatory reform be adopted- if at all? And - Would the RBI be crazy enough to replace Rajan with their own man?

Forget G10 –  arise the EM10 EMFX London – May 20th 2014

I’m glad to report that all of Roophand’s predictions have come to pass since the event. Demonstrating the undeniable value of having a man on the ground.


(Que the Dad’s Army soundtrack... ) Who do you think you are kidding Mr Putin?  - is indeed a relevant tune when it currently comes to the RUB.

Currency and capital movement has been very noticeable and whilst pricing is better in London than it is Moscow the currency does continue to slowly move towards CLS. With many hoping the Ukraine situation is resolved and goes away before the end of the year.

Harry from Alpha felt the RMB/RUB cross would become a closer watched and traded pair in the future, and I suspect while Moscow has kicked off RUB/RMB there’s an office somewhere in Beijing which would prefer RMB/RUB, even with the continued growth of CNM (CNY in Moscow).

The Rouble is no stranger to unrest and controversy and this too will pass with the bounce coming quick and fast.


The final and most innovative of the day was the final panel including Level39 FinTech start up Myriada Systems who ran a live poll throughout the day asking attendee’s 3 simple questions. The most telling of which was – when will NDF’s be mandated to clear in Europe? The wisdom of crowds answer was Oct 2015.

By which time MXN, BRL, INR and RMB will surely be household names.