Important debate and vital networking in the world’s most important region for FX: FinanceFeeds goes East at P&L
As electronic trading industry benchmark conference series by P&L expands in China, the current hot topics were discussed in detail in an interaction between Chinese and Western senior executives from large institutions and prime of prime brokerages. China’s market maturity represents its position as the most important region in the world. Here is a montage of the event
Mainland China, and its immediate surroundings, have rapidly become the most vitally important region for the entire OTC derivatives industry globally.
China’s unique business structure, which is internalized by a stringent Communist government that pragmatically involves itself in every aspect of business to the point whereby it has driven the country to international superpower status without having to do anything – and we really mean anything – outside of its borders, whilst its highly educated population generate tremendous economies of scale as a result of exactly that level of commercial backing from the central government.
Although China has become host to a large number of its own domestic FX firms, many of which have metamorphosed from being an IB with a large client portfolio away from sending the execution outside, instead opting to conduct their own execution of trades, it is clear that the Chinese branches of established firms from outside China are absolutely preferred in the mainland.
During November, Profit & Loss, a renowned media entity whose roots are firmly planted in the listed derivatives heartlands of Chicago, a city in which the annual conference is held by said publication, held two events, attended by FinanceFeeds, in China.
The first, a new calendar fixture for Profit & Loss (known as P&L), was in Hong Kong, followed two days later by the main fixture in the mainland, at the Grand Hyatt in Shanghai, which was well attended indeed.
Whilst China is home to a vast domestic industry, largely centered around gargantuan IBs whose operations are often larger and more well capitalized than some of the brokers to whom they refer business, the entire structure of the business relies on face to face dialog with Western senior executives from large institutions and OTC prime of prime brokerages alike.
This is because China does not have a free internet, hence those wishing to gain access to the right relationships and the most accurate information, have to do so via speakers at conferences, or private exclusive meetings or symposiums.
Additionally, Chinese traders who entrust what is often vast sums of capital to IBs in China find locally issued, government-orientated Chinese stocks very unappealing as they are limited in their range and often slow in terms of capital gain opportunities, therefore the correct balance consists of well-organized IB networks with full client-facing facilities, and a good quality relationship with overseas providers and prime of primes that have presence and infrastructure inside China.
Discussions at P&L centered on exactly that, and were chaired by very senior executives including David Clark, Chairman of the Wholesale Market Brokers’ Association (WMBA) as well as being Honourary Past President at ACI -The Financial Markets Association who introduced the event, followed by a panel discussion on how China’s growth outlook is perceived by senior Chinese leaders, debated by Feng Guo, Ph.D, a Global Partner & Chief Economist at Heaven-Sent Capital Management Group, and Wei Li, Senior Economist China Global Research within the Financial Markets division of Standard Chartered Bank (China) Ltd.
Those who wished to gain a greater viewpoint on hte next step in the evolution of FX trading joined a discussion which included London’s Raj Sitlani, Managing Partner at prime of prime brokerage ISPrime, along with Patrick Myles, Managing Director at Caplin Systems, Laurence Timmons, Head of Sales Asia Pacific at NEX Markets and Mark Bruce, Head of FICC at Jump Trading.
During this discussion, the role of technology in boosting trading volumes, as well as what the risks are with regard to new technology in the FX industry.
A much discussed moot point is the availability of RMB liquidity, which was a topic during this panel, in terms of how to adopt the best model for accessing such liquidity.
Factors that are important to Western firms were also on the agenda, with limitations of moving FX onto electronic platforms and whether China is ready for algorithmic trading being key points of interest, as well as which pre and post trade technology innovations are likely to have a large impact in China in the near future.
Here is an overview, photographed by FinanceFeeds China, of the day’s events.
