In 2009, Profit & Loss celebrated its 10th anniversary by establishing the Profit & Loss Hall of Fame, which sought to recognise those individuals who have made significant contributions to the growth of the foreign exchange industry.
The Class of 2012 continues to reflect that ethos, comprising people who have long been held in great esteem by peers and colleagues, both professionally and personally.
It is with great pleasure that we unveil the next four members of our industry to be honoured in the Profit & Loss Hall of Fame:
Tony Dalton was one of the pioneers of FX prime brokerage back in the early 1990s – a business that started out as a niche, largely manual business – but which has since evolved to become one of the most important business models in FX. FXPB today offers end users market liquidity, anonymity, competitive pricing and reduces the operational burden on the back office.
Early on, there was a distinct lack of trading technology involved in the PB process, but as time moved on, more automation meant less touch with the client base. But Dalton’s strong focus on customer service and support has proven to be a winning model.
“Client service is the differentiator for us,” says Mike Harris, head of trading at Campbell & Company. “You can base your business on the best prices, but as these have converged, the differentiator has to be someone that you can trust. Tony is someone who has integrity and that you can trust.
“He discovered early on the importance of high touch client service. Tony is legendary in the industry for applying this high touch client service to the business,” adds Harris. “He opened up a different way of presenting a product like prime brokerage by modeling it around customer service, which really changed the industry.”
Dalton is currently managing director and head of foreign exchange prime brokerage sales at Bank of America Merrill Lynch in New York, a position he has held since October 2011.
The bank’s global FX prime brokerage business is dedicated to providing customised FX structures to institutional investors, and partners with some of the most successful CTAs, hedge funds and other clients globally.
Dalton joined Bank of America in 2000 to build the FX prime brokerage business. He initially led the firm’s FX prime brokerage structuring activities, later became responsible for global FX prime brokerage sales, and in March 2010 was named global head of the foreign exchange prime brokerage business.
Dalton has played a major role in successfully building FX prime brokerage businesses from the ground up since the inception of the product, first at Barclays Bank in the mid 1990s, and subsequently at ABN Amro in 1998. He began his career in financial services at MBIA.
Dalton served as a senior advisor to the Foreign Exchange & Investments Markets Group of the Federal Reserve Bank of New York as it developed Best Practice Recommendations for FX Prime Brokerage in 2005.
Among his many accomplishments, Michael deSa pioneered the “hub and spoke” model of centralised risk management and decentralised sales while serving as global head of FX at Deutsche Bank between 1994 and 1997. He also pioneered emerging markets and second-generation derivatives trading during his prior career with Citibank.
While he is known for his trailblazing business models, he is also known for undertaking one of the most notable coups in FX history when, in 1994 while serving as global head of FX at Citibank, he moved about a dozen of his top trading and sales team with him to Deutsche Bank, at the time, a much smaller, largely European, player.
The news riveted the industry due in part to deSa’s 17-year career with the US bank, as well as the calibre of those involved in the move. While some pundits raised questions about potential culture clashes between the US-styled deSa and the old guard at Deutsche, deSa and his team went on to put those doubts to rest. When he arrived at the German bank, deSa took the rather controversial move of consolidating the bank’s trading centres, while fanning out satellite sales offices around the globe – trailblazing the newly coined hub and spoke concept.
Under his leadership, Deutsche went from number 22 in the FX industry to number two in just a few short years. He also hired from outside the firm, including such future heads of the business as Jim Turley and Zar Amrolia (also a member of the Profit & Loss Hall of Fame).
DeSa’s successes in FX propelled him to loftier levels. From 1998-1999, he served as the deputy group chief executive and chief executive officer of Deutsche Bank Asia Pacific Commercial and Investment Banking in Singapore. Between 1999-2000, he served as a member of the Operating Board of Directors at Deutsche Bank and as chief operating officer of Deutsche Asset Management. DeSa later founded D&D Partners, a private equity management group formed as a joint venture with Deutsche Bank.
DeSa moved again in late 2001, joining Merrill Lynch in London where he beame co-head of Global Fixed Income Rates and FX. This role included co-ordination of firm-wide FX activities across the private client and asset management divisions. He was also a member of the investment bank’s management committee over this period. During the three years he spent at Merrill, the firm’s rankings rose from 27 to six and its profitability increased several-fold.
Currently, deSa is managing partner of Edrich LLC, a merchant bank focused on cleantech industries in BRICS, located in New York and Barcelona, which he founded in 2005. He was the founder and chief investment officer of the firm’s predecessor Vinya Capital LP, a hedge fund making public and private investments. Vinya Capital managed a macro hedge fund from 2005-2008 with a performance of 14.3% during the three-year period.
During his 35 years in the markets, he has served on various financial markets committees, including the Federal Reserve Bank of New York’s FX Committee, the Bank of England’s FX Joint Standing Committee and the Bond Markets Association of America. He is currently a member of the Board of “Cherysh Trust”, a foundation focused on the development of underprivileged children and mothers.
Both as a trader and as an innovator, David Ogg has been ahead of the markets – a man unafraid of challenging conventional wisdom.
His trading career commenced in 1981 and went through HSBC, Dresdner, Lehman and most significantly, Credit Suisse, where he established a reputation as the biggest flow trader in the North American FX market. By making Credit Suisse the “go-to” destination, Ogg was illuminating the future of markets by highlighting the value of market share to a successful FX operation.
Ogg’s different way of thinking was only just starting however, for in the era of innovation for the FX markets around the turn of the century, he was one of the leading innovators. Surveying the changing landscape of the FX industry, Ogg challenged the perception that the buy side would not pay for trading, arguing that if the customers had access to the same tools as the sell side, the benefits would far outweigh the cost.
The result, in 2000, was Hotspot, the first institutional ECN, modelled to a degree on the major sell side market – EBS – and crucially bringing FX prime brokerage into the multi-participant space. More than one person in FX prime brokerage today could thank Ogg for showing the potential of the product!
Having delivered a product that brought sell side-style trading opportunities to the buy side – and given a boost to flagging PB revenues at several banks – Ogg was already thinking ahead and, more pertinently, he was also looking back.
The result was a move to Lava Trading to establish and run LavaFX. At Lava, Ogg tapped into his skills as a trader and drove the development of a suite of algorithmic execution tools that were available on LavaFX, ahead even, of the major banks. The words “TWAP”, “VWAP” and “Iceberg” – although known in financial markets – were not yet fully in the lexicon of the FX market, even though they easily described the voice trading tactics utilised by Ogg in his former career.
The innovation was not over by any means of course, and reinforcing his credentials for thinking ahead, Ogg was responsible for developing the FX market’s first dark pool and also for seeking to reverse the trend of all-to-all trading by rolling out an interbank platform. One wonders what the banks, in the era of “Pure” or “Clean” thinking, make of that.
Ogg is currently running another new venture, Ogg Trading, which was established to highlight and bring best execution tools to the real money segment of the market. In keeping with the man, the business was established before the current dispute between real money funds and certain banks over best execution.
Always has been, always will be, ahead of the market.
An opinion is one of the prerequisites for being in the currency markets and in FX Concepts’ chairman, CEO, and founder, John Taylor, we have a shining example of how someone put their money on the line to back their opinions.
Of course, there is opinion – and informed opinion – and with an FX career that started at Chemical Bank in 1972, Taylor’s opinions are well informed. Taylor founded Chemical’s FX advisory service before moving to Citibank to head that bank’s advisory services, and during this period he was witness to some of the more dramatic events in the currency markets. The breaking down of Bretton Woods and free floating of currencies, the European “Snake”, a forerunner of the Monetary System, were just some of the highlights of that volatile time in the markets, during which Taylor was tasked with guiding clients through very choppy waters.
Two related achievements from this time were Taylor’s authorship of Foreign Exchange Exposure Management, a guide published by Chemical Bank to educate treasurers and money managers in what was a very changeable environment, and his use of computer models to manage risk. The latter sowed the seeds of the systematic approach to currency investing that has epitomised the FX Concepts approach over the past 24 years.
In 1981, Taylor founded FX Concepts, originally as an analytical firm selling its research and strategies to others, but as the events of that equally turbulent decade wore on, the demand grew for Taylor to bring his approach to managing actual money. In 1988 the firm started managing money and the scene was set for it to build, through the quality of its research, insight and analysis, to become the biggest currency manager in the world.
A huge part of the firm’s success has been due to what is widely recognised as Taylor’s pioneering work on the cyclicality of foreign exchange markets – a view that understands the true influences of the carry trade and trend following and can predict the consequences of certain repeating events. He was also one of the first currency managers to really understand the value of using FX options as part of the investment strategy, culminating in FX Concepts becoming one of the biggest players in the market. It has also long believed in the value of investing in emerging markets to deliver the value proposition required by all clients – returns.
The success of Taylor’s intelligent approach to currency management – one that understands the importance of risk control and sensible diversification within a single asset class – can be found very simply: in the firm’s long and proud track record and the sheer weight of assets under management.
Taylor strongly believes that a systematic, highly analytical approach to currency markets brings rewards. But as his investors have shown over the years in their support for him and his team, you cannot place a value on a good analytical brain and a ton of experience.