The world of Foreign Exchange continues to evolve and expand rapidly, at least in terms of global daily average turnover. This evolution is fundamentally due to:
The structure of the market: continued consolidation among the market players.
The composition of the market participants: currency overlay managers and traditional asset managers are joined by hedge funds, high-frequency traders and retail aggregators.
The new technologies: new electronic platforms and networks are used as well as new services and technologies such as STP and CLS which have added efficiency to the end-to-end trade flow while limiting the risks.
This is happening in the context of a recent financial crisis (2008) where changes and uncertainty have brought a mixed of good and bad news to investors including the opportunity to have a fresh look at the currency risk management policy: whereas some may opt for a more conservative approach, other investors may try to capture the newly emerged opportunities.
This document might be the very first step towards the challenging process of setting up a sensible currency risk management policy.Read More