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Foreign Exchange

Cry havoc! And let slip the dogs of polls: FX poll

Today the 30th Euromoney FX poll is launched. As one hedge fund manager said to me, this is the time of year that he suddenly finds he’s got lots of new best friends.

30th Euromoney FX poll

Poll runs from 5pm 18th January
Votes received before 5pm WILL BE DELETED
 

Clearly a lot of lobbying does go on to get clients to vote. This reflects how seriously the poll is taken, and although I will be the first to hold my hands up and say it’s not perfect, no other poll comes close to providing such a rich analysis of what is going on in the market. Last year, more than 8,000 valid votes were cast, which was 30% higher than in 2006. We all know that the FX market has had another year of surging volumes, so will this be reflected in the number of poll respondents and will we go surging through the 10,000-vote barrier? Or has there been a concentration of liquidity on the buy side as well?

We can naturally expect a concerted effort by Deutsche Bank to cling on to its top spot. Word reaches me that technology has replaced the Desktop Zar, the cartoon figure the bank used last year to exhort its troops to vote. Apparently, Deutsche is using a hologram of Zar Amrolia, its illustrious leader, and I shall, of course, make every effort to try to get hold of it.

If nothing else, Zar knows how to play the poll game. But the bank’s position is not built on slick marketing alone. Feedback suggests that its Autobahn platform remains the market’s de facto benchmark, even if it has been hard pressed by the highly regarded Barx. UBS is said to be planning a serious counter-attack to Deutsche’s hegemony in the poll. But the return of volatility to the market in 2007 highlighted several things. Electronic trading platforms are important, especially when it comes to featuring in what is essentially a volume-based poll, but consistency of pricing is what really floats the boats of the buy side. On that basis, I predict that Deutsche won’t suffer a reduction in its market share this time around.

As I’ve said before, the FX market is not just about the top five in the poll and there might be a case that the most profitable are lower down the list. I’m thinking about such shops as HSBC, Goldman Sachs and, more specifically, Standard Chartered. It’s an open secret in the market that Stan Chart made a shed-load in FX last year – the bank said itself that in the six months to the end of June 2007 its global markets income grew 46% to $1.35 billion. I hear FX made up a chunk of this number, and yet in 2007 the bank did not even feature in the top 20. Will it be different this time around? I’m also going to keep an eye on UniCredit. The bank feels that it should already be a top 20 player – as recorded by the poll, but it only ranked 31st in 2007. And what about Merrill Lynch? I hear it’s had a profitable year, but will the new management also have an impact on the bank’s poll rating?

Oh, and I will of course be listening out for any news of dodgy marketing for poll votes. The story of one banker standing at the bottom of a piste collecting votes from clients as they finished a ski run might be an urban myth, but we all know that shenanigans take place. Please let me know if you hear of any. Happy voting.



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