Understanding Passive Currency Overlay

Understanding Passive Currency Overlay

The world of Foreign Exchange continues to evolve and expand rapidly, at least in terms of global daily average turnover[1]. 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.

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Strategy of regulation or regulatory strategy (full White Paper)

Strategy of regulation or regulatory strategy (full White Paper)

For many years now, new regulation comes out as a top concern in financial industry surveys. Implementing the vast amount of new regulation proves to be very challenging for all stakeholders, even regulators themselves, in terms of scoping, budgeting and timing. 

A new white paper by Frank Van Hoornweder, Senior Consultant and Manager of Business Line Risk & Compliance at initio.

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