I went to the ACI UK’s summer party last week. As readers will know, I am convinced the association has a vital role to play in the smooth running of a self-regulating market. It provides both technical and ethical training to market entrants; more important though is that it provides a network for participants to exchange views.
Unfortunately, it seems that for many of today’s FX players the only network they are interested in is the one their trading systems sit on. But such a blinkered view is foolish. At the party, one of the main topics of conversation was the impact of the huge order JPMorgan transacted in the 1pm FiX on Thursday June 4.
The bank’s initial reticence – which is of course understandable due to client confidentiality – shed it in a very poor light, because of what appeared to be very suspicions price action. However, talking around, very few dealers are critical about the way the order was handled, especially because it now seems that the client also unbelievably gave part of the order to a certain Swiss bank. Having been on the receiving end of large orders split between several banks, I know what it feels to see a market being chased away from you.
Another reason for the lack of criticism from the market is because few people know what the client instructed its banks to do, or conversely what the banks advised. In the old days, the events around its transaction would have been a topic of conversation over a beer after work. But the importance placed on electronic rather than social networking means it is unlikely that a healthy exchange of views will ever take place. So a chief dealer of one bank can’t ask a hypothetical question of one of his rivals, such as: “How would you handle a huge order, which you know is going to move the market and possibly generate negatively publicity for your bank?”
This is an example of a topic that deserves a wider airing – and the ACI’s regular meetings provide the perfect opportunities for its members to discuss such things openly and honestly. Even wearing my journalist’s hat I would be a supporter of holding and moderating discussion panels under Chatham House rules – off-the-record and unreportable under the ACI’s banner. Market participants really should support the ACI – it has the potential to be an extremely important network.