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as us because of the positive sentiments there post the elections , I know the logical approach is to go to a bulge bracket US investment bank because it ' s easiest means . But sometimes you want to go to the road less trodden , and that ' s when you make use of local brokers ,” he says . “ My preference typically is to go under the radar of the bulge bracket banks and to make use of smaller regional banks that access to domestic clients .”
Market nuances also mean the trading team at Ninety One are more voice driven and focused on relationships-based trading when it comes to trading FX and frontier pairs . This makes us somewhat of an outlier in comparison with the street , Hagan says .
“ It ' s very much about us having a picture as to whom has the ability to access the liquidity both onshore and offshore , who ' s got a reliable enough franchise that they can potentially show us a risk price and then who internalise and offset the risk in a manner that ' s not detrimental to either us or the wider market ,” he says .
Data is therefore even more essential . On the FX side , Hagan confirms that using multiple single dealer platforms from a data perspective is usually a good strategy as teams can gain access to a better picture of market whether that be volumes in sector flows , revaluations country-by-country or real-time flight data around liquidity available either above the offer or below the bid .
“ What we focus on be at the EM currencies and the frontier currencies , particularly like Nigeria , Egypt , Ghana , Kenya , these are markets that are very fragile , illiquid , and sometimes unobservable , even in Bloomberg ,” he explains . “ It can be very difficult to work
“ Sometimes you want to go to the road less trodden , and that ' s when you make use of local brokers .”
RICHARD WILLIS
out the quality of data sources . Who is saying they ’ re good five by five but is actually only good in one by one , and who has the ability to take down larger risk and partner with us on the larger trade in order to minimise the information leakage and then the subsequent market footprint that we see on our trades .
“ There ’ s a pressing need to interpret data sources in so far as working out what ' s reliable , how big offers or bids are available in as opposed to G10 focus , which is much more liquid and more commodifiable and increasing the electronic . It ' s definitely a seat that leans more towards the high touch approach certainly from an FX perspective .”
It ’ s because of these subtleties and the firm ’ s global remit that global head of trading Gibson confirms outsourcing any or all of the trading desk ’ s functionality is not likely to be on the cards any time soon .
“ If I saw a value of an opportunity in terms of part of the book of business being outsourced I would have to consider it . However , I genuinely just don ' t see how outsourced sourcing trading is actually
48 // TheTRADE // Q3 2024