Liam Hagan of Ninety One discusses where he sees the areas of strongest growth across EMFX, highlighting rising participation, improving liquidity conditions, and his views on the key drivers behind these shifts in 2025. While market dynamics have turned more constructive, the FX and emerging markets trader explains that persistent data challenges remain a defining feature of the EM landscape.
As a result, he says trading teams are adapting their approaches to measuring execution quality, placing greater emphasis on broker relationships and the ability to internalise and recycle risk. Looking ahead, Hagan outlines his priorities for the remainder of 2025 and shares his outlook for EMFX as markets move into 2026.
Interview
Jo Gallagher – How have liquidity and trading conditions evolved across FX and EM markets this year?
Liam Hagan – Overall, over the course of 2025, we’ve definitely seen a concerted improvement across EMFX markets in general, and also incredibly constructive progress in emerging markets as an asset class more widely. Looking back, maybe this time last year, if not back into 2023, we were probably in something of a challenging environment where there are a number of structural dollar backlogs, particularly in the likes of Egypt and Nigeria. We’ve seen the underlying structural dynamics within those markets change for the better. Performance generally has been robust, and as a result, the number of market participants and underlying investors looking at not just those markets, but EMFX and frontier FX in general, has grown. That’s also been complemented by a general downward trend in FX volatility, absent the sharp pickup that we saw around “Liberation Day”. And as a result, the ability to get risk on in a manner that is timely, is greatly improved. And we’re also generally seeing bid-offer spreads and tightness of liquidity compress over the course of the last year as well.
Jo Gallagher – And what are some of the data challenges that traders face when trying to navigate EM markets?
Liam Hagan – Generally speaking, you’re deviating away from electronic workflows, and you’re becoming increasingly reliant on voice workflows. That introduces the challenge of timestamping, especially on trades and orders that are of block size and certainly larger than the available ADV. We may be looking to work those in clips over the course of maybe a couple of hours, if not maybe a couple of different trading sessions. So the need to qualify those timestamps, make sure that the reference point of execution is relevant versus the wider market data available to us, is increasingly prescient in EMFX. The quality of data is much more varied when it comes to emerging markets, and with that, there’s a greater reliance on the qualitative ability of us as a trading desk to decipher the quality of sources, making sure that any market data that we are consuming or putting into models that we have is firstly up to date, not referencing any stale broker runs or prices that potentially haven’t been changed before or after news events have come out, but also trying to take a step back and think more deeply as to what those data points potentially represent—i.e. if someone is putting a run out in a market or is showing an available axe, to what extent is that axe or that run actually representative of liquidity conditions? I.e., a run in one isn’t the same as a run in 10 million. So if we’re taking those both without the qualification, and taking both at face value, it potentially leads some of our models a little bit astray.
Jo Gallagher – So with that in mind, what is your process for evaluating quality execution and managing broker relationships in FX and EM?
Liam Hagan – So I’d say in general, we’re looking at a shallower pool of available brokers and liquidity providers versus the more developed and traditional FX markets. We’re having to qualify true liquidity and true pricing capabilities in a manner that you’re not having to with traditional G10 asset avenues. So with that, we look increasingly at the ability of banks to internalize risk in a manner that is real and tangible—i.e. if we are looking to trade a block size ticket that’s particularly high versus the ADV, take, for example, dollar Nigeria, to what degree is that bank going to be able to offset the risk versus their internal client base, and to what extent are they able to also access the onshore markets as well? That’s becoming increasingly important when it comes to being able to show us replenished risk prices on any follow-on clips as well.
Jo Gallagher – Finally, what’s on your radar for the last few weeks of 2025, and are there any market structure developments that we all need to be mindful of?
Liam Hagan – Naturally heading into the quieter period of the year, it’s always a useful opportunity for us as a trading desk to do some reflection, evaluate successes or identify potential improvements, as well as looking at some of the longer-term projects that we have in place of improving our execution models. Also, continuing to leverage improvements that we’ve seen on the data side over the last year or so. Insofar as looking forward to next year, heading into 2026, I think it’s an incredibly encouraging environment for EMFX, and especially frontier FX within that. The improvement in liquidity conditions overall has introduced and encouraged a number of new participants into frontier and EMFX markets, which in turn, has grown the size of the investable universe. The underlying positive structural changes that we’ve seen in country, alongside the positive performance this year has also peaked interest from a underlying investor and asset allocator perspective. So it’s definitely a space that we believe will continue to grow and perform well heading into 2026
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