James Phillips Lombard Risk Global Head of Regulatory Strategy
James Phillips Lombard Risk Global Head of Regulatory Strategy

Regulatory compliance in FX - transforming a burden into a value-added function

James Phillips, Lombard Risk Global Head of Regulatory Strategy, reviews the impact of changing regulation in FX trading.

Like the Four Horsemen of the Apocalypse - conquest, war, famine, death – incoming regulations create a difficult and challenging world for FX trading!  My featured four are FX Global Code of Conduct, MiFID II, Market Abuse and Senior Managers Regime, not forgetting EMIR.  However, unlike the horsemen, regulations are bringing constructive changes, transparency and added value. Albeit overtaken by the industry scandals, the Bank for International Settlements (BIS) 2013 Triennial indicated the direction of travel.  The next triennial will show FX tarnished due to fixing the fix.  The $5.3bn market is less dealer-centric. There is more diversity -- high frequency traders and retail FX investors -- with lower trading costs.  Today non-dealer participation increases trading fragmentation albeit computerisation joins it all up, with participants (to quote BIS) in this “topology” enabling FX liquidity and “hot potato” trading.  FX market structure is...continued

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