Capital markets are crucial in helping firms to navigate the turbulent geopolitical climate, acting as both a catalyst for growth and a long-term stabiliser to effectively handle challenges such as currency risk, interest-rate fluctuations and the increasing cost of capital. In the first of our Euromoney Market Voices series, the CEO of Lloyds Bank Corporate Markets explains how markets are adapting to the challenges of the new normal – and how banks and corporates can take advantage.

LMAX Group’s recent acquisition of FX HedgePool – following last year’s purchase of Cürex – once again raises the question of how best to address the challenges of building an FX marketplace that appeals to buy-side as well as sell-side participants – and what that means for future market development. What are the key attributes for success and who is doing it best? We talk to market leaders to find out.

Cost-conscious FX clients appear to be going to great lengths to avoid upfront payments for volatility protection, despite the lack of clarity around Fed monetary policy and the potential impact of political and geopolitical factors over the remainder of the year.

Four months on from North America’s move to a shorter settlement cycle, market participants have used a combination of liquidity management, technology pivots and human resources to mitigate their exposure to higher FX costs.

This is a guest article by Vinay Trivedi, chief operating officer, sell-side solutions, SGX FX.

London’s Mandarin Oriental played host on Thursday to the second successful Euromoney Foreign Exchange Awards, with more than 200 of the industry’s most senior leaders and practitioners gathering for an exceptional evening to celebrate, recognise and reward the highest achievements across the FX market during the past year.

The CE3 currencies have outperformed much of the emerging-market FX complex through recent carry unwinds – perhaps surprisingly, given the relative popularity of these currencies as receivers on account of high domestic policy rates.

Having taken a hammering following Mexico’s election results and the Brazilian president's comments on fiscal consolidation, the prospects for the key Latin American currencies over the remainder of 2024 are unclear.

Falling inflation has sparked an early surge in credit demand, which offers the prospect of banking normalization – a potential boon given the negative real interest rates banks are earning on their government securities portfolios.

Corporates, asset managers and hedge funds appear to be willing to work with FX service providers to improve the latter’s offerings despite concerns over core services.

The spike in bitcoin after the shooting at a Donald Trump election rally was a reminder that for all the claims of increased maturity, the world’s largest cryptocurrency remains unpredictable.

After years of being off the table due to historically low interest rates, treasurers can now realistically look to profit from rate differentials between currencies.

Banks are refining their single-dealer platforms to replicate the price comparison benefits of the multi-dealer model while accentuating the former’s unique features.

Currency volatility benchmarking has become a useful tool for FX traders but is by no means the only option for informing trades.

The immediate aftermath of the launch of T+1 settlement in the US on May 28 suggests the acceleration has not yet translated into increased FX risk. But it is still too early to tell what the longer-term impact will be.

MBridge, China’s cross-border digital currency initiative, has entered the minimum viable product stage. It is the world’s most advanced cross-border CBDC and stands on the cusp of playing a pivotal role in the de-dollarization process.

The recent resurgence in M&A activity has driven interest in deal-contingent hedging as firms look for a buffer against unfavourable FX or interest-rate movements.

The absence of staking and the earlier approval of spot Bitcoin exchange-traded funds have sucked much of the excitement out of the SEC’s surprising decision to greenlight spot Ethereum ETFs.

The prospect of interest rate cuts from the Fed in 2024 is disappearing. Japan and Korea are among those feeling the heat.

Blurring the lines in foreign exchange between automation, traditional AI and generative AI runs the risk of undermining trading services by setting unrealistic expectations.

A lack of consensus on whether recent under-performance of Asian currencies will impact China’s willingness to let its own currency weaken is leading to disparate views on near-term valuations.

The body responsible for settling about $6.5 trillion of global daily FX trades has decided against extending its deadlines to accommodate non-US participants who still want to use its next-day settlement service. But it expects the impact to be limited – far too limited to justify the complexity that a change would impose on its members.

Previous changes of policy direction have left analysts undecided on whether to attribute recent sharp corrections to the renminbi reference rate to accident or design – or even a combination of the two.

Despite overlapping in a number of key workflow areas, asset managers continue to face challenges with FX order management systems that struggle to emulate the capabilities of systems designed to manage execution.

Carry traders are going to have to work hard to maintain the momentum of the last few months if expectations of interest rate cuts in the US and hikes in Japan come to pass.

Perception appears to be just as important as reality when it comes to buy-side firms viewing themselves as FX liquidity providers.

Boosting the role of corporate treasury by enabling it to centralize group-wide FX management may sound appealing, but implementation and cost challenges should not be underestimated.

Investors will be hoping that the fall in the value of Bitcoin since US regulators approved the listing and trading of spot Bitcoin exchange-traded products is not a sign of things to come.

Corporates are adopting a variety of approaches to mitigate the impact of uncertainty in foreign exchange markets caused by divergence in economic policy and performance.

Ambitious brokerage firms have precipitated a shift in demand for FX licences, with interest in regulated European and Asian markets on the increase at the expense of offshore jurisdictions.