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Foreign Exchange

There are lies…

OK, I’ll admit that even I’ve got bored of using this quote, attributed by Mark Twain to the 19th century British politician Benjamin Disraeli. But I’ve yet to find a better one to explain the sometimes embellished figures sent out by many participants in the financial markets to try to stress how successful their businesses are.



Lies, damned lies and statistics

Perhaps the spin doctors responsible have in their heads another Disraeli quotation: “Man, my Lord, is born to believe.”


Anyway, enough of all that highbrow historical nonsense and on with the column. This week, I have to confess, I was starting to get a bit nervous. There was, it seemed, a real shortage of buzz, perhaps because everyone in the market is busy focusing on making their year’s budget before the end of January. Anyway, thankfully those nice people at CLS came to my rescue by sending out what is likely to prove a strong contender for Euromoney’s new “Most Disingenuous Press Release of the Year Award, 2007.” And with 2007 only a couple of weeks old, that takes some doing.


The following landed in my inbox from CLS’s PR company about a new “record” day last Tuesday (January 16). “CLS Bank settled 705,582 payment instructions with a gross value of $5.22 trillion. This new record, following the Martin Luther King US public holiday, is the first time that the volume of payment instructions settled has exceeded 700,000 in one day, and is 33% higher than the previous record of 529,318 set on December 20, 2006.”


At first glance, it all looks very impressive. But hang on a second: because of the US holiday, doesn’t that mean two day’s business settled on Tuesday? Obviously, that means the figures are heavily distorted. According to my pals in the market, neither the following Thursday nor Friday seemed particularly busy. So two days have been counted as one. So,far from being a 33% increase on the previous record day, it could easily be argued that Tuesday’s volume was 30% lower than the former best. I emailed the PR, saying: “You’ll have to get up earlier in the morning to get stuff like that past me.” Like the headline says, there are lies... Meat feast

My body is still recovering from the huge amount of cholesterol I rammed into it yesterday at lunch with Saxo Bank’s Rob Gray, who chose to go to Simpsons Tavern in Cornhill after winning my Christmas Quiz. For those of you who don’t know it, Simpsons is a British institution. It is very anachronistic and I reckon if you asked for the vegetarian option on offer, the poor old waitress would have a heart attack. You can’t book a table and you have to sit on benches, taking pot luck on who will be chomping away next to you. In the old days, it was a great place for getting the odd nudge and a wink and picking up some decent stock tips. Insider trading rules and a reluctance to go to lunch, plus the wholesale move of banks from the City to the horror known as Canary Wharf, have put paid to that.

Rob and I ordered the meat feast – steak, fried egg, bacon, tomato, sausage and kidneys. I’m not into offal so I declined the latter, and was (unnecessarily, I have to say) offered an extra sausage. Not so much a meat feast as an abattoir, as one of my colleagues quipped. Rob pretended to be healthy by ordering a side dish of spinach. More like a whole cabbage pack when it arrived.

Still, the food, while simple, was as always good. And it was great to visit Simpsons again. As the photo below shows, it was mandatory to wash things down with a glass or three.

meat-feast.gif



Who’s got Getco?

While it may not be a familiar name to many traditional FX participants, the somewhat secretive Global Electronic Trading Company (Getco), is a very big player in the market. The company is an example of one of the so-called Chicago prop shops that have brought a lot of liquidity into FX, sometimes to the chagrin of the traditional sell-side banks. Apparently, having developed its electronic trading skills in other assets, it moved successfully into FX and it now accounts for a huge chunk of the CME’s turnover. It is also believed to be active through prime brokers on various OTC platforms, including EBS Prime, and it was one of the first to sign up for FX Market Space as an early adopter.

I have no idea if Getco was one of the loathed latency arbitragers, but I had to smile at the email address given for one of the company’s key staff on Euronext.liffe’s website, which ended @getcolic.com. The email I sent bounced, but I still reckon the firm almost certainly caused a feeling similar to colic at some of the FX liquidity providers.

Anyway, the talk is that the company has been bought after being put on the block a couple of months ago. I was given the name of the rumoured bank buyer, but it has denied it. Still, normally reliable sources are adamant that a deal has been done. If true, the move appears similar to Bank of America’s acquisition almost exactly a year ago of Financial Labs, a Cambridge, Massachusetts-based trading firm full of pointy heads who had developed some rather neat algorithmic pricing and trading models. I remain to be convinced of the value of buying such firms and how scaleable their profits are. I would have thought that the same results could be achieved by outsourcing the process to India at a fraction of the cost. But what do I know?

New money-broking exam

An email is doing the rounds with details of a higher exam in money broking. Obviously, none of the questions is what could be termed politically correct. Still, they are funny and I’ve listed a couple below.

1. Del, Dean and Locko are socializing in a City bar. They each require a bottled beer at £3.50 each and a bottle of Pinot Grigio for some ‘birds’ at £15.00. How much money do they have to give the barmaid.

  a) £30.00; 

  b) £25.50;

  c) Take it out of that luv.

2. You spend a Thursday night with a newly acquainted young lady. You wake up at 6.30 on Friday morning and realize you are soon due at the office, what do you do?

  a) Thank the lady for a lovely evening and exchange email addresses;

  b) Phone your boss and ask for a day’s holiday so that you can enjoy a post-coital day of romance;

  c) Get out of bed, scratch yourself, break wind loudly and utter, “Sorry love I gotta go. It’s non-farm payrolls.”

On completion of the paper please hand it to the examiner and ask him, “If he’s ’avin it at 5 bells?”

Global Investor

I’ve just accepted an invitation to moderate a couple of sessions at a conference on February 1 in London for Global Investor, which is a Euromoney stablemate. The magazine is holding an FX masterclass, which is free to anyone who registers. As ever, I guarantee that I will ask all the panellists at least one awkward question.

www.globalinvestormagazine.com/fxmasterclass

And:

People moves

Barclays Capital, HSBC, Tradition, RBC Capital Markets, Deutsche.

For our premium subscribers only.


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  Lee Oliver can be contacted at fx@euromoney.com.           


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