Why are there way more macro funds in London than the US?
Why are there way more macro funds in London than the US? Whenever I read about star performers in the macro space, they happen to be London-based managers.
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If this is actually true, it's probably due to London's fortuitous location and convenient time zone...
Ditto on Martinghoul's time zone point. Also, what can begin as random differentials can feed path dependence, i.e. I know people who have opted for London over NYC/CT for macro funds, just by virtue of the City having more access to macro talent and colleagues nearby. Though, I should say that I don't think the difference is that significant in prominence of macro funds...
There are lots of trading opportunities in the macro products (Rates, FX) at 2-3am NewYork Time that disappear by 6-7am. So either you need to wake up at 2am in NY, or live in London and wakeup at 7am.
Why is the open in Europe so important for Rates and FX?
its not a very sexy answer....but...its because that's when the Europe traders/Fund managers wake up and get to work. You generally don't make trading decisions while you are sleeping. Volume picks up at the Europe open, and then volume picks up again at the NY open. This is just because these are the times that large traders get to work.
So whenever he first few guys make some large traders, some HFT algos will piggy back off those flows, trying to follow the volume. If the market is not positioned in a way that makes the move self-fulfilling, then the market mean reverts until NY comes in...and the process starts all over again.
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