Archive News (2012)


20/12/2012 Wall Street Journal: Interest in Ukrainian currency wanes

Following two sovereign credit rating downgrades, and as the country struggles to secure IMF funding, it appears that market goodwill towards Ukraine Hyrvnia investments is running low. The Ukraine's managed currency is trading 1% weaker than at the outset of the year, and investors are expecting further declines over the next twelve months, with some betting on falls of up to 30%. Record's head of economic research and currency strategy, Javier Corominas, points out that Record do not invest the Ukraine Hyrvnia - which is only available through dollar-hyrvnia non-deliverable forwards - because liquidity is poor for the amounts Record's clients need to trade in.

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20/12/2012 Institutional Investor: Paying for protection

Whilst investors in the UK, Europe, Asia and Australia are often aware of currency effects on their portfolios, many U.S. asset managers believe that currency is a wash, at least over the long term. However, U.S. institutional investors are increasingly investing in overseas assets, with research showing a substantial increase in global stocks in their portoflios. Given greater overseas currency exposures (and hence currency risk), and the fact that equity managers seldom are or claim to be currency experts, there is a growing argument for either passive or active currency management. In this article Record CEO James Wood-Collins outlines the philosophy of Record's dynamic hedging, which reduces volatility while generating modest return over the long term.

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01/12/2012 Pensions Age: Is now the time for emerging markets?

Strong fundamentals and growth prospects in emerging markets would seem to justify occupational pension schemes' interest in these economies as they search for improved returns. Whilst emerging market assets represent a potentially rich source of diversification and return in the current environment, liquidity and valuation should remain concerns, and opportunities between countries tend to vary by asset class. In debt in particular, Record Head of Economic Research and FX Strategy Javier Corominas points out that local currency bonds are more immune to the interest rate normalisation in hard currency debt, and investors are increasingly concerned with interest rate rather than credit risk in emerging market debt. With developed markets in the doldrums with limited room for policy easing, now is as good a time as any to invest in emerging markets.

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01/12/2012 Euromoney: Currency managers expand horizons for profits

Central bank interventions with ambiguous currency effects, generally low interest rates in developed economies, periods of high intra-day volatility made 2012 a difficult year for traditional currency strategies. However, some managers who moved away from conventional strategies reaped the benefits. James Wood-Collins, Record's CEO, points out that Record's carry strategy profited by going beyond the G5 universe, and that Record's Emerging Market Currency Strategy had a successful year. Thus, whilst trend-following strategies fared badly amidst the sharp market reversals in a choppy year, 2013 may be a better year for currency, and perhaps especially for non-conventional currency strategies.

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01/12/2012 European Pensions: Using cash in an investment portfolio

Cash is often viewed as a safe, perhaps dull asset class, but this article argues that it can in fact be a highly valuable investment tool. In a low-yield environment where investors' risk-aversion has increased, safety, diversification and liquidity are hard to come by. General risk aversion has led to portfolio rebalancing accompanied at times by strong flows into cash funds, generating an upward trend in funds using cash. A focus on avoiding risk and generating a small return has increased potential interest in cash, for risk reduction, LDI hedging, and at times of portfolio repositioning. Record CEO James Wood-Collins points to Record's Emerging Market strategy and nascent global currency cash approach as two ways in which investors can get the most out of cash - in terms of security and liquidity - even if it is not denominated in the domestic currency.

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01/12/2012 European Pensions: Currency discussion

In this engaging roundtable, Record's Managing Director and Head of Portfolio Management Dmitri Tikhonov joins a panel of industry experts, chaired by Mercer principal Malcolm Leigh, to discuss the connections between the recent economic situation - political uncertainty, cental bank intervention, low interest rates, debt overhang and low growth - and the viability of active returns in currency.

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26/11/2012 FX Week: Corporates turn to basic hedging strategies

Basic hedging strategies remain the preferred option of corporate treasurers concerned about ongoing market and regulatory uncertainty. Given that many corporate treasurers view their task as one of managing and reducing volatility, it is easy to see why volatile markets would drive them back to basic strategies. And the regulatory drive towards centralised clearing counterparties will add to cost already high in some cases due to pricing in of credit risk. Dmitri Tikhonov, Record's Head of Portfolio Management, advocates a controlled approach, waiting to see how centralised clearing will work in the current environment before rolling out changes wholesale.

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26/11/2012 FX Week: Disaster in the eurozone still plausible, warns Record

FX Week - Disaster in the eurozone still plausible, warns Record

Neil Record, Chairman of Record Currency Management, argues that disorderly exit from the eurozone remains a possibility. Neil, who believes that Angela Merkel has decided a Greek exit would necessitate the demise of the Euro and the European Union, also argues that southern Europe will see declines in house prices and wages, whilst experiencing a shortage of domestic demand that will not be replaced by current account surpluses. Whilst strong political will could drag a country through, the combination of factors and what Neil believes to be a lack of political will could precipitate moral and political disaster. From a practical standpoint, what is required is a tailored contract to act as a type of insurance against a member leaving the eurozone.

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07/11/2012 Wall Street Journal: Investors See Stronger Dollar, Lagging Euro

While the potentially protracted battle over the US fiscal cliff could be highly disruptive, the euro crisis is felt by investors to be a more immediate and serious problem than the US' combination of the end of Bush tax breaks, the Federal debt ceiling, and massive automatic spending cuts and tax rises. Record CEO James Wood-Collins explains that there are deep, structural problems underlying the eurozone's sovereign debt crisis, and that the same level of structural and existential risk simply is not found in the United States - even with the fiscal cliff looming. The combination of these risks, low growth, and yields depressed by loose monetary policy has led investors seeking higher yields towards emerging markets.

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05/11/2012 FX Week: Buy side considers clearing costs

Whilst the treatment of FX swaps and forwards under Dodd Frank remains uncertain, all managers face a decision as to whether clearing is worth the cost, even for non-mandated products. Record CEO James Wood-Collins highlights that Record has a number of approaches to monitoring, managing, and diversifying counterparty exposure, and expects clients to increasingly choose a prime-broking model over independent FX lines. Whilst the cost of prime-broking could increase as a result of clearing (with some estimates indicating that the cost increase could be substantial) this should be balanced against the cost of clearing. Tony Beal, Record's Head of Portfolio Implementation, points out that clearing is not a panacea and may increase a potential cause of systemic risk, whilst proke-broking arrangements can allow for credit protection at the right commercial cost. With the jury still out, keeping clients informed and monitoring their preferences will be crucial in coming months.

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15/10/2012 FX Week: Record spots dislocation in covered interest rate parity

Record CEO James Wood-Collins explains the thinking behind Record's latest innovation in currency markets - allowing investors to opportunistically benefit from the failure of the covered interest parity condition in currency markets. The opportunity allows investors to benefit by eschewing the normal currency forward,and instead borrowing their money in the lower-yielding currency, swapping it in the spot market and putting it on deposit in the higher-yielding country, and converting it back to the lower-yielding currency to pay back the loan. James attributes the opportunity to banking stress, which has constrained banks' liquidity and capital reserves, and hence in some cases restricted their arbitrage ability.

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13/10/2012 Emerging Markets: Are emerging markets overhyped?

Whilst some critics are concerned that investors' continued commitment to emerging markets is not justified in fundamental terms and exposes those investors to a volatile asset class unsuitable for institutional investors, the institutional appetite for emerging market assets has not been dented. Bouyed in part by the US Fed's latest round of Quantitative Easing and in part by the view that some market indices are underweight emerging markets, and that these markets are fundamentally more sound than their developed counterparts, equities and bonds have seen substantial inflows. Record CEO James Wood-Collins points out that emerging market currencies - which have seen more attention of late - provide multiple opportunities for capturing the emerging market growth story: in a pure return-seeking allocation, by recalibrating exposures embedded in equity or debt, or as a debt alternative.

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11/10/2012 Financial Times: Managers turn to emerging markets for returns

Monetary policy easing by central banks in recent years has limited the effectiveness of simple currency trading strategies of the past. As a result, many currency hedge funds have turned towards emerging markets. The recent gains in the Parker Currency Managers index illustrate the complex interplay between markets and recent monetary policy, which were driven in part by the relationship between Asian and Latin American currencies and QE3. At a time when some view emerging market currencies to be departing from the ro-ro regime of recent times, Record's emerging market currency strategy has been its most successful strategy this year, with gains over 5% since January.

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10/10/2012 Emerging Markets: A change of reserves?

As BRICS countries enter into more local currency swap agreements, and with developed world economies struggling and indebted, the question of the US dollar's reserve currency status looms larger than ever. Whilst governance and infrastructure improvements will be necessary, many managers see opportunities in emerging economies' local bond markets increasing in coming years, and the potential for emerging market debt to become a key asset class. Indeed some view the fact that emerging economies are the largest holders of developed economy debt as a cross-subsidization of their growth. A key question is what happens with these reserves: will a portion be invested? Javier Corominas, Record's Head of Economic Research, argues that central banks are not aiming to maximize return, but that central banks aim to hold liquid, highly-rated securities. Will US Treasuries represent a smaller portion of these securities in future? Time will tell...

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01/10/2012 Financial Times: Draghi buys the euro time

Markets rallied in July following Mario Draghi's announcement that the ECB was 'ready to do whatever it takes to preserve the euro'. His statement on 6 September that the ECB would engage in Outright Monetary Transactions to address distortions in government bond markets indicated he was true to his word, with the euro closing at its highest level for two months. However, currency expert forecasts still predict weakness in the euro in coming months; the bond-buying program will buy peripheral economies time, but will not solve the problem. Record's Head of Economic Research, Javier Corominas, argues that, whilst one resolution of the crisis would involve a 20/30% devaluation of the common currency, Euro fundamentals are relatively benign and a substantial fall in the Euro would only occur if the political will to resolve the crisis stalls.

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01/10/2012 FX Week: Currency managers speak on the FX landscape

In this engaging Q&A with four FX experts, Record CEO James Wood-Collins outlines Record's position on several of the day's key issues, from the company's emphasis on sustainable return-seeking strategies, to the impact of recent ECB actions and Chinese growth, to the operational impact of regulatory change.

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29/09/2012 Financial Times: Investors look to new currency strategies

A recent survey from Towers Watson shows that pension funds' allocation to alternative assets has risen 5% over the past 15 years, with pension funds now holding 20% of their total wealth in alternatives. However currencies, which represent one asset class in the alternatives universe, have struggled in recent years. Record CEO James Wood-Collins points out that, although UK pension funds have undergone a period of retrenchment and moved away from alpha-seeking currency, interest in hedging from Swiss pension funds, an increasing tendency among US pension funds to invest overseas, and a recent pickup in interest in dynamic hedging represent favorable trends. Moreover, currency managers' returns have, on average, been far stronger so far this year. 2012 could be a better year for currency.

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27/09/2012 Financial Times: Different ways to gain EM exposure

Over the long term, economists Bela Balassa and Paul Samuelson have been proved broadly right - emerging market currencies experiencing higher real income growth have experienced rising price levels and strengthening real exchange rates. Investors who have had exposure to appreciating emerging market currencies have benefitted. What many do not realise is that currency return is a key part of any emerging market investment - in the case of equities, for example, between a third and a half of unhedged return. Record CEO James Wood-Collins argues that there are good reasons to prefer a currency-only strategy. Currency avoids risks associated with the issuer and an allocation to countries which issue the most debt, whereas currencies offer far more flexibility, as well as lower costs in terms of custody, administration, and management fees.

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21/09/2012 Financial Times: Currency correlations change

Financial Times - Forex proxy trades fox investors

The confusion characterizing global markets in recent times has apparently led to a fall in the success of proxy trades, which have in the past been used to express views on, for example, equities by buying underlying currency instead. The 'risk-on/risk-off' pattern witnessed in markets after 2008 saw high correlations between asset classes. Recently, however, traditional proxy currencies such as the Australian Dollar, Japanese Yen and Swedish Krona have been behaving strangely, becoming much harder to predict whereas before they would rise or fall with risk appetite. Record Currency Management, acknowledging these changing patterns, has stopped using the Euro as a proxy currency for Swedish Krona and Norweigian Krone, as it has started to behave more like a risk currency.

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10/09/2012 FX Week: Who pays for regulation?

FX Week - Who picks up the tab?

Regulatory changes in the foreign exchange markets are likely to lead to a tug-of-war between the buy and sell sides over who pays for increasing transaction costs. Mandatory clearing and reporting is likely to prices across the industry for buy-side firms, with a recent Deutsche Bank report highlighting that participants trading through prime brokerage - who wil have to move some or all transactions over to clearing - could see a substantial cost increase. Record CEO James Wood-Collins states that Record will be keeping a close eye on the prime brokerage charges levied on banks, particularly as FX forwards are not expected to be included under the remit Dodd-Frank.

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03/09/2012 IPE: What to do with Emerging market debt

The shift of the centre of global economic gravity towards emerging markets, rising credit ratings and the probability of appreciation in emerging market currencies make a compelling story. Whilst supportive of the idea that these trends make emerging market currencies appealing, Towers Watson are less sold on the value of emerging market bonds. Although not everyone agrees and some debt managers prefer to take duration and hedge out currency risk, while allocating to issues with high real yields, some foresee a 'normalisation' in emerging market interest regimes leading to steep losses on bond portfolios. Record advocates separate investment in emerging market currencies, with the option of combining this overlay with US Treasuries for investors seeking duration exposure.

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12/08/2012 Financial Times: Hard Currency Podcast

In this interview with the FT's currencies correspondent Alice Ross, Record's Head of Economic Research and FX Strategy, Javier Corominas, discusses factors affecting the strength of the sterling, recent developments and range-trading in the Euro, and the consequences for traditional investment themes of a shift to the 'risk-on/risk-off' paradigm. In particular, Javier provides interesting insight into the fall in overseas purchases of UK gilts since the beginning of the year, the effect of ECB President Mario Draghi's recent annoucement in removing some Euro tail-risk, and the paradoxical appreciation of Australian Dollar and Japanese Yen, which he explains in terms of a paradigm shift to 'risk-on/risk-off', which makes it difficult for investors to harvest returns from traditional investment themes.

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23/07/2012 Financial Times: OAM closes down

Overlay Asset Management (OAM), the currency management arm of BNP Paribas, will cease operations at the end of the year. OAM's profitability had fallen following its loss of some  big mandates, as some clients have chosen to insource monitoring of currency risk. Whilst OAM view their position as being caught between falling active fees and a loss of passive hedging business to custodians, Record CEO James Wood-Collins views things differently. James sees a clear trend away from using custodians for hedging mandates in favour of appointing 'unconflicted' specialist providers, creating opportunities 'here and now' for currency managers.

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14/07/2012 The Times: Holiday money

Not all euros were created equal - euro bills are marked with serial numbers which could determine the winners and losers in the event of a full euro break-up. Neil Record, in his runner-up essay for the £250,000 Wolfson Economics Prize, argued that eurozone break-up would have to be planned in secret and executed quickly, with the serial numbers on the bills identifying which central bank issued the notes. Drawing on Neil's insight, this article argues that some British holidaymakers are being issued with bills which could end up worth considerably more than others.

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09/07/2012 FX Week: FX transaction cost analysis

Whilst asset owners have an increasing array of tools to measure FX transaction costs, standardisation among the current diverse set of performance measurement methodologies is likely still a long way off. Incumbent providers have in the past provided execution alongside their core offering, but new entrants to the transaction cost analysis (TCA) market offering a standalone service indicates that the interest in TCA is approaching commercial critical mass. James Wood-Collins outlines Record's point-in-time model for TCA, saying that the results of the analysis are all too often systematically to the client's disadvantage.

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02/07/2012 FX Week: FTSE indices will increase transparency

Record CEO James Wood-Collins says that Record welcomes the transparency and price discovery possibilities provided by a new series of indices released by FX technology specialist Cürex Group. The FTSE Cürex FX index series provides executable spot foreign exchange benchmarks for 192 currency pairs from multiple contributors, and is published in real time and in 15 minute 'snaps'.

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28/06/2012 Euromoney: Record sees the US leading future growth

In this profile of Record, CEO James Wood-Collins argues that, although Record has been no different from other currency managers in having experienced a tough few years, there are signs of the green shoots of growth. In particular, Record's blend of passive and active currency management strategies are finding new markets in the US and Europe. In Europe, passive hedging for Swiss clients increased by 50% in the 12 months to March, and active hedging strategies are gaining increasing interest in the US. Asset managers in US are moving away from a preference for unhedged currency exposures on offshore portfolios - based on the belief that the US dollar was in a cyclical decline - and Wood-Collins expects this, and Record's maturing EM offering, to present growing opportunities over time.

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18/06/2012 Financial News: Investors adopt new strategies

Continued volatility caused by aggressive monetary easing and the slashing of interest rates has to a search for new strategies in the currency markets. Record's CEO James Wood-Collins discusses the firm's decision to close its flagship Pooled Plus fund, which was based on the increasing sensitivity of markets to newsflow and the tendency for short-term market sentiment to have a greater impact on currency movements than long-term fundamentals. Whilst such markets did not favour Record's long-termist, fundamentally-driven perspective in this instance, the company has diversified in recent years, launching a Euro Stress Fund aimed at profiting from eurozone volatility. Along with fund launches, Record is also engaged work on a new FX solution to answer an increasingly important question - 'what happens to investments if the euro breaks up?'. Wood-Collins' answer: a new kind of FX forward contract which would stipulate a fixed price for the redenomination of one currency into another.

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13/06/2012 Pensions Insight: Are currency returns what they appear to be?

Although currency looks like an attractive investment, this article argues that returns have been relatively disappointing. Currency investments fall into two broad categories: positions taken to protect the values of existing assets; and invesmtents made to generate a return. Although many US pension funds' equity allocation is shrinking in size, overseas equity exposures are increasing, creating a potential demand for currency risk management products. In particular, and especially in the wake of recent scandals around the competitiveness of custodians' pricing, demand for the services of specialist managers who can adjust hedge ratios dynamically is increasing. James Wood-Collins sees clients as looking for ways to capture the benefits of currency strengthening against sterling, and avoid losing them if the sterling subsequently rises.

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07/06/2012 Investment Europe: Planning for eurozone break up

It is one thing to put a probability on the possibility of a Greek exit from the eurozone, which Citigroup put at 50-75%. It is more difficult, however, to contemplate the potential fall-out from a break-up of the eurozone. The Wolfson Economics Prize, set up to find the most elegant resolution to the breaking up of the currency union, will be awarded on 5 July. Over 400 entries were received, and the short-list is down to five, one of which was written by Record's Chairman, Neil Record. Neil views as a problem the seemingly entrenched belief among continental European asset managers that that the politicians will not allow the euro to fail. He posits that the centrifugal forces in the currency union are moving faster than the centripetal force, which is the political will for the continued integration of Europe.

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05/06/2012 Insurance Risk: Focus on currency risk

Solvency II represents the first time that currency risk will have come under the regulatory spotlight, with a specific charge set to be imposed on on any asset/liability mismatches in foreign currencies. The European Insurance and Occupational Pensions Authority's latest Quantitative Impact Study proposed a charge based on the impact on balance sheets of a +/- 25% move in the reporting currency. James Wood-Collins, Record's CEO, believes that this calls for attention to currency management. Moreover, insurance industry professionals recognize that, whilst some large concerns may have the internal capacity to perform risk management functions, many lack the governance or skills to do it themselves and we may witness increased interest in dynamic hedging.

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04/06/2012 FX Week: Preparation for euro exit increases

As banks and FX market infrastructures step up their efforts to prepare for a possible redenomination of eurozone currencies should Greece be forced from the currency union, Record CEO James Wood-Collins discusses contracts designed to mitigate redenomination risk, pointing out that there are currently no instruments allowing managers to take deliberate positions and profit from or protect against break-up scenarios. The reluctance of banks to consider such instruments is, however, diminishing. Regulators are not ill-disposed to the idea and pricing the contracts could, given the likely supply and demand, be based on a simple supply and demand model, although banks have been slower on the uptake than would be ideal.

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21/05/2012 Investment Europe: FX - a hidden risk

Record CEO James Wood-Collins argues that investors are dangerously unaware that a significant portion of their international equity return has come from the embedded currency exposure. More importantly, the investments have given up this currency return in following years, making the investment 'zero sum' in the long term. Wood-Collins says that it is particularly investors with long horizons and who can manage the periodic cash flows who should think of implementing a hedging program, and that US investors choosing to remain unhedged at present should know that they are taking a strong tactical view on the future path of foreign currencies against the dollar.

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19/05/2012 The Times: The currency conundrum

Can investors be more ambitious with currency? This article argues that they very much can and that there are a number of ways in which investors can put their money to work in foreign exchange markets. Record CEO James Wood-Collins provides a realistic appraisal of the prospects in currency, noting that most strategies have seen mixed results over the past one or two years.

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14/05/2012 Financial News: Clearing houses must come up with FX clearing solution

Six global clearing houses are competing for the FX derivatives market, and many believe that one will ultimately emerge victorious. If the market is not big enough to accommodate even two clearing houses, understanding the offerings of all the major competitors is key. Record CEO James Wood-Collins states that, as a specialist FX manager, Record's focus will be on achieving cost-efficient, robust clearing with a transparent pricing structure.

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01/05/2012 FX Week: Interview with Neil Record

In this interview with Robert Mackenzie Smith, Neil Record discusses the growth of Record over the past three decades, the challenges posed by the financial crisis and his short-listed submission for the Wolfson Economics Prize.

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30/04/2012 Financial News: The cost of currency trades

Many fund managers are beginning to use cost-analysis tools to look more closely at whether they got a 'good deal' on their foreign exchange trades. These tools facilitate a better understanding of just how much these trades are costing, and who is giving the best deals. Whilst transactions cost analysis is common and well-understood in the equities market, James Wood-Collins warns that this type of analysis is much tougher in currency markets. This is due to the fact that many transactions are over-the-counter and reflect the specifics of particular markets, meaning that there is much more scope for getting the cost analysis wrong.

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07/04/2012 The Economist: Currency break-up

The treaties establishing the euro zone declare that the euro is 'irrevocable', but treaties can be changed, and there is much wisdom in seriously considering how a break-up might be managed. If nothing else, such an exercise would provide some rigorous underpinning to the fears of unprecedented chaos currenctly envisaged should the currency union continue to experience strains. Neil Record argues that only one exit from the euro zone should occur, namely the complete dissolution of the currency union as soon as one country's exit becomes inevitable. Moreover, the break-up should be planned in secret and executed with immediate and full effect.

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04/04/2012 New York Times: Solution for the Eurozone crisis

Landon Thomas Jr. introduces the five short-listed entries for the 'Wolfson Prize', which will be awarded 5 July, to the most elegant blueprint for how a country, or countries, might leave the euro zone - or else how the 17-nation project might unwind. Record's founder and Chairman Neil Record argues that once a country leaves the euro, the whole project becomes untenable.

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04/04/2012 Wall Street Journal: Eurozone break-up isn't the solution

Richard Barley writes, in the 'Heard on the Street' section, that the five Wolfson proposals for eurozone break-up only strengthen the case for further fiscal and political integration.

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04/04/2012 The Guardian: How to break up the Eurozone

In the hunt to find the least disruptive way to break up the 17-nation currency union - prompted by the two-and-a-half year sovereign debt crisis - five suggested solutions have emerged. These short-listed submissions for the Wolfson Economics Prize include that of Neil Record, who argues that the departure of even one country would render necessary the break-up of the whole union, because the argument that the single currency was permanent would no longer hold true. His essay goes into the detailed operational considerations which would emerge during such a transition.

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04/04/2012 The Times: Ways to leave the euro

The five short-listed entries for the Wolfson Economics Prize indicate that the break-up of the currency union need not entail economic armageddon, as is often forecast. In Neil Record's view, whilst the consequences of a break-up could indeed be dire if managed incorrectly, a credible plan for transition, to be put into action as soon as the exit of one member became inevitable, would bring an end to recent turmoil and help avoid total disaster.

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04/04/2012 Telegraph: Euro break-up dangerous but liberating

The emerging consensus from the five short-listed entries for the Wolfson Economics Prize is that, if managed properly, eurozone exit need not be catastrophic. Neil Record's view is that, whilst an unplanned exit would indeed end in catastrophe, a transition planned in secret by a German-led task force and put into operation as soon as a single member's exit became inevitable would offer the best chance of minimizing the chaos. There would, in this event, be only one exit from the currency union - the complete and carefully-managed dissolution of the union itself.

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04/04/2012 City AM: A euro exit route

In this article Neil Record personally outlines the plan he put forth in great detail in his short-listed submission for the Wolfson Economics Prize. The plan involves a secret and completely deniable task force, which would formulate a plan for the break-up of the currency union (the steps of which Record outlines), to be put into operation as soon as a single member's exit became inevitable. The plan itself would be sprung on markets on a Friday after close of business and dissolve the currency union immediately and Record outlines the corollary steps for central banking structures, redenomination, finance and export sectors, and the sequencing of the plan itself.

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04/04/2012 City AM: Euro exit plans examined

The 425 submissions for the Wolfson Economics Prize identified a number of problems with the eurozone - lack of competitiveness; political opposition to fiscal transfers; and lack of a mechanism for determining contract arrangements if a country were to leave. Neil Record's submission, acknowledging these problems, presents a solution and a detailed timetable not simply for the exit of one eurozone member, but for the only viable outcome if a single member's exit were to become inevitable - the break-up of the entire union in one go.

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04/04/2012 Wall Street Journal: Ways to break-up the euro

Charles Forelle writes in his blog that, although saying that a country should leave the euro zone is very easy, the union was created to be irrevocable, making a rupture both messy and mind-bogglingly technically complex. The five best efforts at formulating such a strategy are on the short-list for the Wolfson Economics Prize. Neil Record's short-listed submission maintains that the only solution - once one country's exit becomes inevitable - is to 'blow the whole thing up', in Forelle's words.

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03/04/2012 Daily Mail: Eurozone break-up solutions

Whilst the winner of the Wolfson Economics Prize, which received 425 entries, will not be announced until 5 July, analysis and speculation around the five short-listed entries is already rife. Neil Record's entry stresses the central importance of secrecy and deniability of the German-led task force which in his view should plan a transition from the currency union, and the immediate and once-and-for-all nature of such a move. Essentially, as soon as one member state's exit became inevitable, the secret plan for the complete dissolution of the union would have to be put into action and made effective immediately.

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02/04/2012 Financial Times: Passive investing gains transaction in currency

As the interest in capturing passive currency returns through ETFs increases, Record CEO James Wood-Collins argues that currency is relevant in two ways: as a source of risk to be managed and as a potential source of return. He also points out that currency has only been viewed as a source of uncorrelated return since 2004-2005, and that it is only just 'maturing' as an asset class in its own right.

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02/04/2012 Financial Times: Inflexibility can damage returns

In a contribution to the discussion of sources of return in currency, James Wood-Collins outlines the four sources of return which Record believes are persistent (Carry, Momentum, Value and EM), and notes that the carry trade is particularly sensitive to periods of negative risk appetite. He also advocates investing in these strategies with equal weights as a fruitful starting point for thinking about allocation.

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02/04/2012 Financial Times: Eurozone hedging is a tricky game

In a debate over whether the Greek debt-swap and bail-out, and the ECB's two LTRO operations, have resolved the debt crisis or merely delayed the inevitable, Record CEO James Wood-Collins argues that not enough has been done to improve Greece's competitiveness and the eurozone's deeper structural failings. In line with the tone of the article, James views the recent 'solutions' push problems into the future and that bankers will not likely put the time granted them to good use.

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02/04/2012 Financial Times: Questions raised about custodians' fees

Whilst custodian spreads charged on FX transactions are often overlooked in times of plenty, these costs (and the associated profits) are coming under closer scrutiny in today's leaner market environment. According to James Wood-Collins, Record CEO, transactions data received from custodians for audits frequently is not time-stamped, which fits with a picture emerging from lawsuits filed against custodians in recent years. Excessive spreads in aggregate are considerably more common when pension funds' FX execution is left to custodians, rather than being subject to the fiduciary duty of the underlying manager.

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02/04/2012 FX Invest: Solvency II

A detailed discussion of the currency implications of the EU's Solvency II Directive, in which James Wood-Collins goes over the conditions a hedging program must satisfy under the legislation. Although the definition and interpretation of 'dynamic hedging' remains slightly ambiguous, both the Record CEO and Arnaud Gerard of Pareto Partners both anticipate an appetite for systematic hedging programs with variable hedge ratios. Wood-Collins notes the benefits not only of a dynamic program, but of utilising a dedicated and experienced overlay manager.

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01/04/2012 Euromoney: Electronic migration incoming

EuromoneyFXNews' inaugural e-trading survey reveals that electronic trading is building momentum. Record CEO James Wood-Collins discusses the benefits to best execution of the added quantitative feedback obtained from multi-dealer platforms, compared to trading on voice alone.

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20/02/2012 Investment Europe: Record helpe FX investors with EM exposure

Record Currency Management says that investors are increasingly interested in exposure to emerging market currencies which can be overlaid on top of their other investments. 

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Banks are considering creating FX products that would protect investors against a eurozone breakup. James Wood-Collins, CEO of Record, is an advocate of these legal tender contracts which will aid his clients' risk management processes.  

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27/01/2012 Euromoney: Eurozone crisis poses counterparty risk issues

The Eurozone sovereign debt crisis has caused buy-side operators to consider their FX counterparties carefully. James Wood-Collins, CEO of Record, says that his firm aims to balance counterparty strength with counterparty diversification. 

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27/01/2012 Euromoney: Mobile FX trading yet to take off

James Wood-Collins argues that mobile FX trading will not take off from an institutional perspective because of issues with risk management and audit trails. 

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16/01/2012 Financial News: Euro weakness boosts increases carry attraction

Record CEO James Wood-Collins discusses carry trade strategies - borrowing cash in a country with low interest rates to invest in higher-rate countries where cash attracts a better yield - in the context of Eurozone weakness.

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