Vedanta Hedging’s very own Darren Jordan spoke recently with Business Insider UK regarding the ‘wild, Wild West’ of the current FX market. In the article, Darren talks about how regulators are currently focusing their overhaul of financial markets in the wrong areas and instead should be attempting to crach down on what he describes as the “wild, Wild West” of the foreign-exchange market, which is still full of aggressive mis-selling.
Currently, the FX market trades around $5 trillion, or around £3.8 trillion a year and this is done OTC, or over-the-counter. This is when a trade happens away from a formal and transparent platform like an exchange. As the FX market itself is not currently regulated, Darren points out that FX markets are extremely volatile and major movements can happen to affect markets tremendously.
“You just have to look at several big events to see how differently the FX market operates, The Bank of Japan now owns a third of Japanese government debt. You can see how distorted the market is. Also remember when the Swiss National Bank (SNB) tells the market that there is a floor for the Swiss franc and then suddenly pulls it away? It destroyed the central bank’s credibility as well as massively moving prices. It’s rare for something like a stock to move like that.”
If you would like to read more of Darren’s interview with Business Insider UK then please click here.
Darren Jordan has been working in finance for 26 years and has formerly worked for some of the world’s largest banks including HSBC and ABN Amro Bank, where he advised clients on Equity Special Situation strategies within Europe. Concentrating on Index reweighting’s and Risk Arbitrage. Darren holds a number of industry qualifications including the Investment Advice Diploma in Derivatives. He is also a member of the Chartered Institute for Securities and Investment.