(Bloomberg) -- Just a few years ago, Glen Point Capital co-founder Neil Phillips was celebrated as an aggressive but canny trader in the mold of one of his...
-- Just a few years ago, Glen Point Capital co-founder Neil Phillips was celebrated as an aggressive but canny trader in the mold of one of his macro hedge fund’s main investors, George Soros.
The FX market today is increasingly dominated by quant-driven, programmatic flows. To be sure, currency funds have still been able to deliver solid returns for investors. But as Bloomberg reported last year, the number of FX-specific funds has declined by nearly 80% since peaking in 2010, according to data provider BarclayHedge.
“There were days that you saw him make tens of millions of dollars for the fund, for his investors, yes?” Hecker asked the trader, David Coratti, during the trial.“And the reverse is true, correct?” Hecker pressed.Former Glen Point analyst Nick Croix described for the jury how the macro fund tried to identify “themes” around broader economic and political trends.
Phillips’s lawyers had highlighted the fact that Phillips’s counterparty on the option and alleged fraud victim was Morgan Stanley. The defense contended that the bank wasn’t hurt by his actions and, in fact, was playing the same game itself. Morgan Stanley sold more than $560 million in rand on Dec. 26, 2017, much of which was bought by Phillips.Big banks are no strangers themselves to accusations of misconduct in the currency markets. In 2015, JPMorgan Chase & Co., Citigroup Inc.
Regulatory and law enforcement scrutiny is another reason that hedge funds have ceded ground in the FX market to big multinationals. Corporate treasuries hedge their balance sheet with currency trades at regular intervals, generating lucrative, steady fees for the banks. Shakedown or smart business? Quebec restaurants balk at hefty penalty for using competitor's payment machines
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