At the FX Week Europe conference in London on November 21, FX Week convened four senior industry participants to discuss how they expect the FX market to evolve over the next five years. Speaking in the final panel discussion at the conference, the panellists made their predictions on-the-record about the shape of the FX market in 2017.
Kevin Rodgers, global head of foreign exchange, Deutsche Bank:
"Volumes will continue to expand – I still see FX as one of the growth areas in the financial services industry. Because of the huge investments needed to compete in this market, I expect further consolidation and those people not in the top bulge bracket of providers, whoever they should be, will be increasingly focused on niche strategies, whether in their home markets or in particular products."
David Puth, chief executive, CLS:
"The FX market will remain the most robust and interesting market in the world. But regulation is here to stay, so how we all interact with central counterparties, how we deal with regulation, and importantly, how we deal with cost, will be key factors. We are in a world today where the cost of doing business has risen significantly, and we all need to get to the real cost of operating a business – the real cost of capital, the real cost of risk mitigation, and the real cost of liquidity."
Phil Weisberg, chief executive, FXall:
"People will get used to buying cloud services – we're going to see more interconnectivity, so that move to the cloud really gets all of the communities connected. They can still be distinct and diverse, but I think we will find new ways to connect all of the different players together, and if we can somehow dig our way out of the challenges of complying with regulations, we will still be able to try some innovative new things."
David Clark, chairman, Wholesale Markets Brokers' Association:
"In five years' time, many over-the-counter products will not be cleared, because we don't yet have any criteria for standardisation from the European Securities and Markets Authority, nor out of Dodd-Frank, and before significant migration of products into clearing can take place, globally acceptable recovery and resolution plans for CCPs must be agreed. It cannot be discounted that extraterritorial aspects of Dodd-Frank will remain, in which case the possibility of on- and off-shore markets in major products may emerge."