Drop in global asset correlation and regulation set to favour foreign exchange
Foreign exchange markets are leading the way in the breakdown of global asset correlations that have characterised financial markets in recent years. And with trading costs rising in traditional asset markets, currency could end up being the best way to express a trading view.
Certainly, this is the conclusion drawn by a growing pool of platforms, vendors and asset managers, which have piled into the market with a series of new products and services aiming to take advantage of the anticipated rise of foreign exchange. In Tailored trading, we speak to new entrants aiming to ensure their survival by introducing a unique way of trading that could bring in uncorrelated flow.
Meanwhile, as the relationship between China and the African continent expands, we look at the role of the offshore Chinese renminbi in settling the rising cross-border trade, in The Chinese way.
However, the major shake-up this year comes in the form of implementation deadlines for the Dodd-Frank Act. As of April, end-users will have to report any inter-affiliate swap trades to swap data repositories. In our cover story, Balancing the books, we look at how far corporates have come in preparation, and what impact the act will have on the use of derivatives for risk management.
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