FX MANAGERS
in advance before developing and implementing a strateg y.
JW What is the average leverage
that you normally use? And the maximum leverage ?
SH The fund has a historical
average leverage of 1.3 to 1.4 times. Leverage has ranged from 0 to 4 depending on the volatility profile of the portfolio’s currency pairs.
JW How many execution brokers do you use? How do you split execution between electronic and voice ?
SH We currently execute at two
major institutions, Newedge UK and Deutsche Bank, with execution split between voice and electronic. Live Beta testing of other currencies and strategies is 100% electronic.
JW Which opportunities and
risks do you see in ultra-high frequency trading for FX managers ? Hedge funds
seek
to use technology to improve latency and benefit from first move advantage over other market participants. The speed with
which such programs
operate and execute brings different strategies into conflict
more and more frequently and has the potential to increase intraday volatility and thus affect liquidity.
JW How does liquidity impact the efficiency of your strategies ? Have you already explored to what AUM limit the strategies would allow you to grow to?
SH Arktos was specifically
designed to operate with the most liquid Spot FX pairs as defined by the Bank for International
Settlements’
sur veys. This was done to optimise the efficiency of transactions and limit slippage.
JW What is the biggest strength of your team?
SH Our ‘grey hairs’. We believe
our team’s lengthy experience and acquired understanding over many years of proprietar y trading has given us a discernible edge, especially in highly volatile, fractious markets when back tested models suffer from ever more frequent sharp inflection points and the subsequent over extended moves.
JW Can you give us your feeling about the move of the EurUsd
in the next 6/12 months ? a
SH My own view is that we saw significant
high around
the second ECB LTRO and Greek ‘agreement’, but that the recent range of 1.27 to 1.35 needs to be meaningfully broken for a fresh move to occur. The USD and the EUR both have issues. The formers are twin deficits and political impasse; the latter ’s sovereign debt problems, member state elections and status as a single currency without having fiscal union. This will lead to market positioning being the important factor in any ensuing moves.
JW What’s the best advice you
would give to traders who want to enter the FX fund management industr y ?
SH Self-discipl ine and robust
risk management combined with a wil l ingness to learn and continue learning are of paramount importance. This is probably one of the world’s most competitive industries; the number and type of global players is changing and the market is undergoing radical regulatory changes. Be comfortable with your style of trading and make sure that it is consistent over time.
FX
FX TRADER MAGAZINE April - June 2012 57
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