REGIONAL e-FX PERSPECTIVE
>>> Future growth
Looking ahead, FX markets in South East Asia look well placed to prosper but where specifically is growth going to be felt. We asked market participants for their views. “I think there’s going to be a generic shift to the Asian region,” FXall’s Woodward adds, “as everybody looks to Asia as the saviour of the world economy - the engine of growth. We will see a shift in asset allocation strategies as funds search for alpha generating investments and a lot of hedge funds have started to spring up in Singapore and Hong Kong. You may pick up investment capital from some of the local sovereign wealth funds and escape, for the moment, some of the regulatory moves that are taking place elsewhere. Prop traders from banks who have been impacted by the Volcker Rule and lost their jobs are thinking of setting up funds here; there’s been a big growth in this area.”
Anthony Northam
“As banks have further embraced technology from a liquidity perspective we have developed a strong community of users in this region, especially where local currencies are allowed to be listed on Tomson Reuters Matching and Dealing,”
Reuters Matching and Dealing,” says Anthony Northam, the head of Asia for Tomson Reuters Marketplaces group. “Some of the major regional banks are adopting Reuters Electronic Trading (RET) for in- house process management, they are using it as a pricing engine and to automate their branches for spot and swaps currency exchange. Whereas before, currency exchange would have been done mainly by phone, the benefits to them of automation are straight-through processing and better risk management. In addition, banks are now starting to use RET as a pricing engine to push prices out to their customers.”
Another leading FX provider whose business has been growing strongly in the region is New York based FXall. Teir multibank portal is now used by many locals as well as international players in South East Asia. “It is all about workflow,” says Jonathan Woodward head of Asia-Pacific, “reducing risk for the buy side, ensuring compliance with various international accounting standards and future-proofing them for the changing regulatory environment.
84 | january 2012 e-FOREX
Woodward says that FXall has seen 150% annual growth in the NDF business traded on its platform. He sees this continuing at a similar pace for the next three to five years. He notes however that people tend to overestimate the amount of change that may take place in a two-year period but underestimate the change in a ten-year one. He believes that over the longer term NDF business could disappear in large measure as restricted currencies become freely tradeable.
Jonathan Woodward
“It is all about workflow, reducing risk for the buy side,ensuring compliance with various international accounting standards and future-proofing them for the changing regulatory environment.”
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