FX Platforms – Apr 15 vol: All platforms showing falls, with EBS off most at -15%

The major OTC FX platforms have now reported their April 15 volumes. All the platforms reported falls ranging from -2% for FastMatch to -15% for EBS, following strong gains in March.

Looking in more detail we see the individual platform figures as follows: Continue reading

ICAP results, refocus of business on facilitating market efficiency and access to liquidity

The regulatory reforms of Dodd Frank, MiFID II, EMIR and Basel III, are fundamentally changing the structure of Global OTC markets. As a result, participants face higher costs for regulatory capital, mandatory trading of standardised derivatives, increased pre-trade transparency and post-trade reporting and a drive to central clearing.

On top of which banks have been hit with multi-billion dollar fines for manipulation of LIBOR rate fixings, and market collusion around FX manipulation.

As a consequence, banks are re-engineering their businesses, shifting from capital intense (balance sheet consuming) activities to ‘capital light’ business models, driving down costs by moving from voice to electronic execution, from bilateral to cleared and from principal to agency – capital efficiency, low risk, client servicing is the name of the game.

Whilst challenging traditional business models, the regulatory reforms have also created opportunities for innovative new trading platforms, regulatory compliant market infrastructure, and services that facilitate the ‘capital-light’ business models.

Inter-Dealer Brokers (IDBs), the middle men matching buyers and sellers in the OTC markets, have been quick to spot opportunities to re-invent themselves, and invest in new technology solutions that will enable them to remain at the centre of execution in the new market order.

ICAP, the biggest of the IDBs, gave a glimpse under the hood of these changes in their full year results which were released yesterday, and although overall revenues are down 7%, they make fascinating reading in the trends that they reflect, and the speed by which IDBs are re-positioning the business to benefit from the changes in market structures and drive to market efficiency.

  • Overall revenues down 7%
  • Electronic Markets & Post Trade services account for 75% of profits (70% prev)
  • Post-Trade revenues up 8% driven by Tri-Optima and Traiana
  • Merger of FX (EBS) and Rates (BrokerTec) into a single offering (accounting for 64% of group revenues) took six months: EBSBrokertec
  • Electronic markets revenue split: EBS 48% (46%prev), Brokertec 49% (50% prev)
  • Headcount changes: Global broking -24%, Electronic markets +12%, Post-Trade +10%
  • Moving outside the traditional inter-dealer market, to service segments traditionally seen as customers (buy-side firms) such as hedge funds, asset managers, retail brokers
  • Spend on new initiatives £43mln
  • Including EBS Direct, EBS Select, eFIX, new HTML5 platforms,

ICAP investmentInvestment in new Products by ICAP

EBSDirect, the new relationship based FX platform from EBS has proved a huge success, as can be seen from the volume figures below:

EBS Direct VolumesEBSDirect Monthly Volumes

Interestingly, Tradition another major IDB, has also been exploring opportunities from new market structures, and recently announced the launch of a new electronic repo-market DBV-X to facilitate the efficient use of collateral.

Regional banks upping their game, as Standard Bank rolls out an award winning SDP

We often comment on how regional banks are upping their game, and investing in new single-dealer platforms (SDPs) to enable them to better serve, protect and grow their client franchise.

With that in mind, it was great to see that Standard Bank’s newly upgraded SDP eMarketTrader has just been voted Best Super Regional Bank SDP’ in the Profit & Loss 2015 Digital FX Awards.

According to Profit & Loss editor Colin Lambert:

For the first time in three years a new entrant joined the winners’ circle: Standard Bank.

Banks continued to invest in what remains their number one channel for connecting with clients.

It is heartening to see so many banks outside the top 10 investing in their technology also – a single dealer platform will be vitally important for these institutions if they are to service their core client base going forward.”

This is a big achievement for Standard Bank, as the ‘winners circle’ is made up of Continue reading

CLS FX Settlement platform Feb15: Vols up +5.7% to $5,150bln/day

The CLS settlement system has reported an +5.7% increase in the average daily value of FX trades settled through their platform in Mar 15, taking volumes back up to $5,150bln/day.

The monthly increase being far lower than that reported last week by the major FX spot platforms which saw increases ranging from 15% to 22% for the major platforms.

Details from the platform and charts are as follows: Continue reading

CLS FX Settlement platform Feb15: Vols down -8.3% to $4,870bln/day

The CLS settlement system has reported an -8.3% drop in the average daily value of FX trades settled through their platform in Feb 15, taking volumes back to the Dec 14 levels of $4,870bln/day.

The monthly drop is to far lower than that reported last week by the major FX spot platforms which saw falls ranging from down -15% to -27%.

Details from the platform and charts are as follows:

CLS value of instructions submitted: $4,870bln/day, down -8.3% on the $5,310bln/day in Jan 15, and down -5.4% compared to Feb 14.

CLS number of instructions submitted: 1,185,696 was down -16.5% on the 1,,419,369 in Jan 15, although still +3% up on Feb 14 level of 1,150,663.

Average Trade size: $4.1mln was up 10% on the $3.74mln in Jan 15 although still down -8.2% compared to the $4.48mln in Feb 14.

David Puth, CEO of CLS, commented: Continue reading

FX Platforms – Feb 15 vol: Reuters spot vol down 15%

The major FX platforms have now reported Feb 15 volumes. Following the very strong Jan figures, volumes for February are down across the board, with EBS showing the biggest drop, down -27.4%, with Reuters  reporting a smaller -15.6% fall.

Looking in more detail we see the individual platform figures as follows: Continue reading

When liquidity disappeared – FXCM account of EURCHF liquidity in 40mins following SNB announcement

FXCM has published a very interesting account of what they saw in terms of pricing in EURCHF from their bank liquidity providers in the seconds and minutes following the SNB decision to remove the 1.2000 peg at 04:30 on January 15th.

January 15 Was A Market Flash Crash – The Institutional FX Market Failed And Did Not Function: The SNB’s surprise announcement caused a complete institutional FX market breakdown impacting liquidity, volatility, spreads, and execution. Unlike other recent major market events where FXCM’s liquidity providers continued quoting and providing consistent levels of liquidity, January 15 saw an extreme lack of liquidity and pricing

  • No Liquidity – There was almost no available liquidity for approximately 40 minutes
  • Dramatically Low Pricing – External ECN prices went as low as 0.2000 and 0.5000
  • Extreme Spreads – The average spreads of EUR/CHF were more than 2000-3000 pips
  • Extreme Range – The average range of EUR/CHF was 6000 pips

In the first 5 seconds after the EUR/CHF price Continue reading


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