2016 was the year of the new normal, in every sense

The rise of non-bank market-makers, regulatory costs and risk management were the main themes in a busy year

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Eva Szalay: "Congratulations to all our deserving winners"

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There are three standout themes for the year 2016: the rise of the non-bank market-maker, regulatory costs and ways of mitigating them, and risk management. In a way, the past 11 or so months have been remarkable in that normal business has resumed after years of regulatory woes.

Except normal today means something very different than it did two years ago, or even last year. In the 2016 normal, markets can have big gapping moves and that's ok. Tail scenarios with assigned probabilities equalling the near-impossible materialise and surprise markets? Of course. Brexit? Bring it. President Trump? Absolutely. Sterling flash crash? Why not.

Against such a background, it's little surprise that risk management has played a huge part throughout last year and into 2016, and while the Swiss National Bank's shock move in January 2015 was certainly a trigger for this exercise, subsequent events accelerated the process.

Risk management only goes so far when the underlying cause of the moves is a reduction in the number of risk-warehousing entities in the space

But risk management only goes so far when the underlying cause of the moves is a reduction in the number of risk-warehousing entities in the space. The well-documented decline in risk capital applied to market-making by banks due to regulation still stands true, but since last year, a handful of alternative market-makers have stepped up and morphed their business models into risk-taking entities.

Within banks there is a universal acknowledgement that non-banks are here to stay, and while most dealers welcome competition, some scepticism remains over the extent that these players will fill the void left by banks' retrenchment.

There are also growing calls for a levelling of the regulatory playing field; something that will develop further in the years to come, as the prominence of NBLPs has surely caught the attention of rule-makers as well as market participants.

Regulatory costs, meanwhile, are starting to trickle down from the sell side to customers – an alarming sign for an industry that operates on shoestring margins. One head of business says that if all of these costs were passed on to clients, volumes and liquidity would be severely affected.

Whether that will happen remains to be seen. And, in the meantime, the hunt for the Holy Grail has begun in earnest as efforts to develop over-the-counter FX clearing intensify.

Congratulations to all our deserving winners. I look forward to a busy 2017!

Interviews with the winners

Citi

JP Morgan

HSBC

UBS

Deutsche Bank

LCH

Fenics

Saxo Bank

RBS

Standard Bank

Danske Bank

BBVA

Barclays

Bank of Montreal

Thomson Reuters

360T

Bloomberg

EBS BrokerTec

BGC

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