Last look, lack of time-stamp and internalisation of flows – Which practice is most open to abuse?


Last month’s publication by The Fair and Effective Markets Review FEMR, set out 21 recommendations to help restore trust in the wholesale Fixed Income, Currency and Commodity (FICC) markets.

Recommendation 4b stated:

….”As part of that work, improve the controls and transparency around FX market practices, including ‘last look’, ‘time stamping’ and ‘internalisation’

the report suggested that the Bank of International Settlements (BIS), and national central banks including the Bank of England lead that effort, fully covered in section 4.3.3 of the report.

I thought it would be worth briefly looking at these three practices and then gathering some very unscientific feedback from readers in the form of quick poll, and so below I have set up a poll, asking the same question to both buyside and sellside readers, with probably too simplistic a question, which is: “Which of the following practices are most open to abuse, resulting in sub-optimal client execution?”. Continue reading

Fair and Effective Markets Review (FEMR) releases Final Report


The Fair and Effective Markets Review today published its Final Report (see link at bottom of post), which sets out 21 recommendations to help restore trust in the wholesale Fixed Income, Currency and Commodity (FICC) markets.  The Review was established by the Chancellor of the Exchequer and Governor of the Bank of England in June 2014 to help to restore trust in those markets in the wake of a number of recent high-profile abuses. Back in October the FEMR published a consultation document, (available on the Bank of England website), on what needs to be done to reinforce confidence in the fairness and effectiveness of the FICC markets.

The final report from the FEMR is centred on the following principles: Continue reading

Talk of FX multi-dealer platform 360T may be sold for $750m. How does that compare to FXall sale price?


The WSJ ran a story last week that privately held FX multi-dealer platform 360T which provides FX trading services to over 1,700 institutional clients, and which back in 2012 sold a stake to private equity firm Summit Partners, could be in the process of being sold, with a suggested price tag of around €600m ($750m). Reuters carries a story saying that Jefferies have been hired to handle the sale, which is expected to complete before the summer.

Unlike the other major platforms, 360T does not publish average daily volumes (ADV), so it’s a little difficult to compare them.

However, back in 2103, Carlo Kolzer, CEO of 360T was quoted in FX Week saying that Continue reading

FX Platforms – May 15 vol: All major platforms report falls of between -1% and -6.8%


The major OTC FX platforms have now reported their May 15 volumes. All the platforms bar one, reported falls ranging from -1% for EBS to -6.8% for Reuters Spot, with only FastMatch registering an increase up 8.5% (although on much smaller volume than the other major platforms).

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

The end of ‘last look’ in FX?


It’s about time, that the practice in FX of liquidity providers having a ‘last look’ before accepting a trade – a legacy from the old days of phone quoting, when the dealer took one ‘last look’ at pricing before accepting a trade – may at last be on its way out.

In the electronic platform era, last look, was a way to encourage banks to increase their liquidity provision and provide request for quote (RFQ) and executable streaming prices (ESP) where they may not know who was asking for the price, or who might hit their streaming prices.

In order to protect themselves from Continue reading

CLS FX Settlement Service: Apr 15 vol figures -9.9% broadly inline with other platforms


The CLS FX settlement system has reported a -9.9% drop in the average daily value of FX trades settled through their platform in Apr 15, taking volumes back down to $4.64trillion/day.

The monthly drop is slightly below falls reported last week by the major FX spot platforms which saw falls ranging from -10.6% for Reuters to -15.4% for EBS.

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

EuroMoney 2015 FX Rankings: Citi #1 again, but top banks continue to lose market share


The annual EuroMoney FX ranking for 2015 have just been released, and they make interesting reading.

Key findings from the EuroMoney 2015 survey:

  • Citi takes 1st place, for the 2nd year running, with a market share of 16.11% (slightly up from 16.04% in 2014) and more than doubling its 7.49% share from 2008. (see here for Citi Velocity post which is built using Caplin technology)
  • JPM sees largest gain in market share of top 15 up 2.1% to 7.65% (5.55% in 2014)
  • UBS see biggest fall in market share of top 15 down -3.58% to 7.3% (10.88% in 2014)
  • Share of top 5 banks shows largest fall down -5.34% to 53.71% (59.05% in 2014)
  • Share of client volume executed electronically 53.2% (up from 40% in 2011) and first time a majority executed electronically
  • HSBC #1 in corporate FX flow (Citi loses top place held since 1976)

But what stands out again, is that the Continue reading

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