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Welcome to


e-FOREX Spring 2011


I


transforming global foreign exchange markets


t won’t come as any surprise that in this edition we focus our attention once again on the regulatory uncertainty facing the FX market. As James Kemp stresses in his Leader article, time


is running out to make the case for the exclusion of OTC FX forwards and swaps from mandatory clearing. He makes the same point as Manfred Wiebogen does in our Foreword, that FX swaps and FX forwards are not ‘swaps’ in the traditional sense and that because these instruments are qualitatively different from derivatives markets, they should continue to be overseen by central banks. If regulators do press ahead with the proposed changes and introduce mandatory central clearing and an exchange or swap execution facility (SEF) trading regime for FX, many believe they will end up introducing very significant new risks to the market.


We have tried to gather feedback from banks and FX trading venues to see how they think regulatory changes may impact on their own activities. For example, in our Focus section which examines the growing interest from both institutional and retail FX traders in ECN trading platforms, the consensus amongst some providers seems to be that the nature of the ECN trading model, including its transparent pricing from a wide range of market participants, could see it well positioned to meet any SEF requirements. In our FX Prime Brokerage feature, we report on how leading FXPB providers are already increasing their preparedness for OTC2CCP by leveraging cross-product resources and taking steps to future-proof their platforms by continued investment in infrastructure needed to process trades that could be subject to mandatory clearing. However, it still remains hard for us to offer much clarification about the full level of complexity that various market participants might be facing in meeting any new regulatory requirements until the final decisions have been taken by the authorities.


To round off this edition we have gathered some industry opinion on the launch of the new MT5 trading platform. Amongst the numerous new features included with MT5 the range of multi-asset class trading capabilities it offers is interesting. By utilising these tools traders will be able to make comparisons between currency, commodity, equity, and precious metals markets which should give them better opportunities to both diversify their portfolios and improve their trade strategy development.


As usual we hope you enjoy this edition of the magazine.


Charles Jago Editor


Susan Rennie Susie@Aspmedialtd.com Managing Editor


Charles Jago


Charles@Aspmedialtd.com Editor (FX & Derivatives)


Charles Harris Charles@Cjag.demon.co.uk Advertising Manager


Helen Rochford Helen@Aspmedialtd.com Production Manager


Michael Best Michael@Aspmedialtd.com Subscriptions Manager


David Fielder David.Fielder@e-forex.net Features Manager


Simon Moss Simon.Moss@e-forex.net Commercial Manager


Felix Shipkevich Contributing writer Regulatory Roundup


ASP Media Ltd Suite 10, 3 Edgar Buildings George Street, Bath, BA1 2FJ United Kingdom Tel: + 44 1208 821 802 (switchboard) Tel: + 44 1208 821 801 (e-Forex sales & editorial) Fax: + 44 1208 821 803


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e-Forex (ISSN 1472-3875) is published quarterly in January, April, July and October www.e-forex.net


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Although every effort has been made to ensure the accuracy of the information contained in this publication the publishers can accept no liabilities for inaccuracies that may appear. Te views expressed in this publication are not necessarily those of the publisher.


Please note, the publishers do not endorse or recommend any specific website featured in this magazine. Readers are advised to check carefully that any website offering a specific FX trading product and service complies with all required regulatory conditions and obligations.


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