Dominance of Banks in FX Faces Severe Challenge

One of the notable speakers at the London Summit this year is Kevin Rodgers. Retired from Deutsche Bank in 2014 after a 15 year stint, he has since turned to other, rather unconventional pursuits for an investment banker. But he also set out to provide his perspective on a two decades long evolution of the market. The result, Why Aren't They Shouting, is a lucid and surprisingly amusing account of the growing impact technology has on every aspect of investment banking.

In his keynote speech, called 'arguing about shouting', Rodgers will outline comments the book has earned form former colleagues, competitors, regulators and other pundits. Here's a glimpse into what you can expect.

Learn more about London Summit here!

What is your position and what does your role entail?

Being retired, I am currently - apart from writing and singing - not gainfully employed, although I am an investor in a few dozen start ups. This is something that takes up quite some time most weeks - mainly on the ones that are doing very well or doing very badly. Prior to my retirement I was the global head of FX at Deutsche Bank.

What was the single most important event or development the market saw in 2016?

The single most important event was the Brexit Brexit Brexit stands for British Exit, or in reference to the United Kingdom’s decision to formally leave the European Union (EU) as declared in a June 23, 2016 referendum. In a more immediate sense, a tight vote and unexpected result helped drive British pound (GBP) to lows that had not been seen in decades.The day following the referendum, former Prime Minister David Cameron resigned from office where he was replaced by Theresa May, who later resigned from office on June 7th, 2019. Active Prime Minis Brexit stands for British Exit, or in reference to the United Kingdom’s decision to formally leave the European Union (EU) as declared in a June 23, 2016 referendum. In a more immediate sense, a tight vote and unexpected result helped drive British pound (GBP) to lows that had not been seen in decades.The day following the referendum, former Prime Minister David Cameron resigned from office where he was replaced by Theresa May, who later resigned from office on June 7th, 2019. Active Prime Minis Read this Term vote - a decision that, if UK banks lose ‘passport’ rights, could alter the role of London in ways that are difficult to predict. The most important longer term development has been the gradual imposition of a global zero interest rate policy (‘G-ZIRP’) across the Western world. This has profound consequences for the way markets operate. For instance, without the anchor of carry, how will FX markets work if driven primarily by momentum in the short term? Will they be flakier and less liquid?

The exponential rise of computer power will continue to disturb the competitive balance in all markets

What are the biggest challenges that the FX trading community is facing? how do they affect your field?

Looking from the outside, it seems that the dominance of banks in FX is under severe challenge as they have to react to newer, more agile competitors from outside the banking sector. Also, as macro trading becomes more challenging in a G-ZIRP world, will the very important ‘wallet' that macro funds spend in FX diminish? Also, with no carry, does the market become more difficult to trade?

What is the main message you’d like to convey to London Summit delegates?

To be flippant, my main message is ‘buy my book’. Seriously, though, the core contention of the book is that the exponential rise of computer power has permanently disturbed, and will continue to disturb, the competitive balance in all commercial markets, particularly those which are ‘weightless’ (i.e. relying mostly on information, not physical goods). It will not stop. So, whatever your role, you need to be prepared.