january 2004 e-FOREX 95
The online dealing revolution has drastically changed the
operating efficiency of money managers dealing in foreign
exchange. The days of telephone allocation have vanished and
nowadays online dealing enables money managers to liberate
more time for what really counts, sales and client acquisition.
Today foreign exchange money managers have a variety of
extremely handy online tools available to help them run their
businesses.
Online trading solutions offered by brokers seeking to obtain the
volume originating from the managed account market segment
has dramatically increased efficiency in the sector by leaps and
bounds. Today managers make block trades for multiple
customers at the click of a button subsequently generating pre-
defined account allocations. This simple feature in itself offers
the added value of enabling money managers to drastically
reduce their requirements for minimum account openings
provided the total funds of their clients pooled under
management represents an overall large enough sum to be able
to formulate a meaningful risk management strategy; however,
the fact remains, retail accounts can easily obtain the services of
asset managers previously reserved for only high net worth
investors or above.
Risk management
Of course the most vital need is also the most basic, the need to
have a profitable business for the asset manager; that can only
mean one of two things, either more commission or more
profitable trading. In both cases the money manager must
accept taking more risk. Any responsible company knows that
they must stick by their risk management strategy which
basically means that they must limit the risks they’re taking and
the commissions they’re making.
This is a controversial subject, there’s been a lot of criticism in
relation to managed accounts and it’s easy to criticize when one
knows that money managers are traditionally remunerated per
transaction obviously raising some conflicting issues vis-à-vis
the client. The basic premise is of course that the