Caplin’s ‘award winning technology’ helping regional banks accelerate delivery of SDPs


We have discussed before how regional (commercial) banks have been ‘upping their game’, investing in talented e-commerce people, enhancing their back-end pricing technology and importantly investing in new client facing single-dealer platforms (SDPs).

As a result of this focused investment, regional banks have been steadily gaining market share, sometimes at the expense of the large global banks as they deliver ever greater value to their client franchise through their SDPs.

This trend can be clearly seen in the chart below Continue reading

Fixing the Fix


The Swiss based Financial Stability Board (FSB), has published an interesting consultative paper, Foreign Exchange Benchmarks Consultative Report.

The paper looks at FX market structure, and how that created incentives for market malpractice – mainly in the form of allegations of front running client orders, collusion between bank dealers sharing information on client orders, and manipulation of rates during fixing – linked to the structure of trading around the benchmark fixings. The paper makes recommendations to address these adverse incentives as well as examining how to improve the construction of the benchmarks themselves.

The main FX benchmarks used by market participants are the WM/Reuters London and ECB reference rate. Unlike Libor, these benchmarks are based on actual trading activity during a fixing window. FX benchmarks are used by market participants for a variety of purposes, but most notably for valuing, transferring and rebalancing multi-currency asset portfolios.

This market structure creates what the report terms as an: Continue reading

Platform FX Volumes Jun14: Record vols at FXall, with all platforms showing gains


The main OTC FX platforms have now reported their June 2014 volumes.

Volumes up across the board, led by FXall which continues to power ahead delivering a new record volumes of $141bln/day up 11pct on May, compared to more modest gains for other platform ranging from +5% to +8%. In terms of YoY changes, FXall is still the only platform showing gains with a 14.6% gain on Jun 13, whereas all the other platforms are still showing hefty falls ranging from down -25% to -40% on a year ago.

The uptick in volumes is reflected in the CLS settlement platform, which also reported a 13% increase to $5.46trn/day in terms of the value of trades submitted by banks for settlement.

Continue reading

Tibco Streambase 2014 FX Trading Technology survey


After a two-year break, during which Tibco acquired Streambase, it’s good to see that they are continuing the excellent FX Trading and Technology Trends survey, that Streambase published between 2010-12 (see here for 2011 and 2012 surveys).

I haven’t yet seen this years report, but if it’s similar to previous survey’s then it will focus on buy-side and sell-side traders and their use of electronic FX platforms.

Key findings being:

  • Share of FX participants trading electronically remains steady at 80%
  • Regulation seen as providing opportunities for innovation and competitive differentiation
  • Traders prefer executing on SDP to MDP
  • Expectation that bilateral relationship pricing from liquidity providers enhances execution quality
  • Fragmentation driving more firms are add additional liquidity providers via aggregation services

Top banks Continue reading

FX Sales practices


As reported last week by Bloomberg, the NY Department of Justice (DOJ) appears to be questioning a number of banks about the practice by sales desks to add ‘hard’ mark-ups to client FX trades.

The article suggests the DOJ is exploring whether the banks have committed fraud by failing to disclose the practice properly to customers.

Indeed, David Woolcock of the ACI is quoted as saying;

“Banks should always be transparent with their clients on pricing mechanisms…… This does not sound like it is consistent with best practice nor ethical behavior.”

What we are talking about here is the possibility that Continue reading

CLS FX volumes barely changed in May $4.82trn/day


Data from CLS for May 2014 shows a 0.65% rise in the value of FX trades submitted to CLS for settlement at $4.82trn/day up from April’s figure of $4.79trn/day, which was the lowest since Aug 13.

CLS value of instructions submitted: $4.820trn/day, up 0.65% on the $4.79trn/day in Apr 2014, and some 1% lower than the May 2013 level of $4.87trn/day.

CLS number of instructions submitted: 977,460, was down 0.6% on the 983,850 in Apr 2014, and still some -26.5% down compared to May 2013 level of 1,329.316.

 

CLS May 14

Platform FX Volumes May 14: Reuters/FXall down & EBS up


The main OTC FX platforms have now reported their May 2014 volumes.

EBS had a good May, with a 7.3% rebound in volumes following the steep -22.3% decline in April – would be interesting to see whether the increase was from the main EBS Markets, or their new disclosed relationship offering EBSDirect as discussed in previous post.

FXall however, saw a modest -4% drop in May following an almost unchanged April. By contrast, Reuters matching continued the January decline, with a -3.3% drop in May following an -18.2% drop in April and bringing the year to date decline to some -25.6%.

Full details of volumes are as follows: Continue reading

Hotspot move to release daily FX volumes


just caught my eye that HotSpot ECN is moving from monthly to publishing daily FX volumes.

This is a great move in terms of improved transparency, and no real technical reason why the other major platforms such as FXall, Reuters and EBS shouldn’t follow suite (they all release monthly volumes over the next couple of weeks).

Interestingly the peak daily volume on Hotspot of $41.3bln/day on 8th May was close to 60% average daily volumes of $68.5bln/day that EBS saw over the month of April.

Hotspot Daily FX May 14

Hotspot ECN Daily FX volumes for May 14

CLS reports 10.5% drop in value of FX trades Apr 14 to $4.79trn/day


Data from CLS for April 2014 shows a 10.5% drop in the value of FX trades submitted to CLS for settlement, down from $5,350bln/day in Mar 2014 to $4,790bln/day in April. The lowest since Aug 13 ($4,490bln/day).

CLS value of trades submitted: $4,790bln/day, down 10.5% on the $5,350bln/day in Mar 2014, and -4.2% compared to Apr 2013 level of $5,000bln/day.

CLS number of instructions submitted: 983,850, was down 14.9% on the 1,155,507 in Mar 2014, and -23.01% down compared to Apr 2013 level of 1,277,911.

CLS Apr 14

The above tables and charts show CLS data and contract to FX Multibank volumes as released last week.

Here is full CLS Monthly Market Report April 2014

Reuters/FXall Apr 14 vols (FXall steady at record high)


The three main OTC FX platforms have now reported their Apr 2014 volumes.

FXall volumes although virtually unchanged, are still a new record high at $132.3bln/day. Whilst Reuters matching vols were off -18.2%  at $90bln/day, and last week, EBS reported a -22.3% drop in volumes.

Last week ICAP also released figures for EBSDirect their new disclosed relationship based price streaming service, which has shown strong growth since its official launch late last year. With EBSDirect volumes in early May 14 hitting $9bln/day, which would equate to some 10% of total EBS monthly volumes. Continue reading

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