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“ It ' s a bit like […] cooking your own steak and then moaning afterwards that you ' ve overcooked it.”
We do a lot of peer evaluation on the platforms and the liquidity providers. Rather than just talking about things, we need to be able to kick the tyres.”
Playing for volatility T. Rowe Price collateralises its FX forwards and swaps flow and this is something that Baker explains sets the institution apart from its peers, particularly in times of volatility. And, given the tariffs saga that has followed‘ Liberation Day’ in the US, markets have been extremely volatile as of late.
“ That [ collateralisation ] puts us in a strong position in comparison with some of our peers that don ' t collateralise,” he says.“ There is nothing wrong with not collateralising, it ' s just that when a bank looks at clients A, B or C, and if there is a lot of market volatility, they ' re more likely to give stable pricing to the counterparties that do collateralise versus the ones that don ' t.”
“ People probably went into the tariff announcements with a long dollar position and they ' ve probably gone to a more neutral position now. Volatility has actually gone up, but that opens up opportunities in other instruments such as FX options where you ' re literally playing for volatility.”
FX options is one area that Baker notes is ripe for innovation
20 // TheTRADE // Q2 2025