Emerging market liquidity faces capital charge crossroads

Emerging
market
(EM)
currencies
hold
both
promise
and
peril
for
hedge
funds
and
market-makers
alike.
Despite
their
potential
for
lucrative
returns,
they
are
susceptible
to
changes
in
global
risk
appetite,
as
well
as
political
and
economic
uncertainty,
which
leads
to
heightened
volatility.

To
safeguard
against
extreme
losses,
local
governments
have
implemented
various
regulatory
regimes
designed
to
ensure
financial
stability
while
protecting
their
over-the-counter
spot
currencies
from
massive