EBS sees November FX volumes tick up by 3% to $79.5bln/day from October’s multi-year low of $77bln/day, but still some -23.4% lower than a year ago.
Reuters to report FX volumes later this week.
Caplin are at FXWeek Europe today, so if you at the event, please come on over and say hi to the team.
Paul Caplin, CEO will be speaking in the 11.30 Panel discussion on “The future of e-FX: taking advantage of key trends and serving the client“. which will look at:
Paul Caplin (center) speaking at FXWeek Europe panel discussion this morning
Elsewhere, looking at the program, the last panel discussion of the day also looks interesting: View from the top: in conversation with the FX business heads. and includes
The three main OTC FX platforms have now reported their Oct 13 volumes.
All three platforms saw decline in daily volumes in October, with Reuters and EBS both recording multi year (record low) trading volumes.
Reuters matching and conversational dealing platforms showing the largest fall, down $13bln/day (-11.8%) at $97bln/day from $110bln/day in September, and also showing the largest YoY drop of -19.2%.
EBS which as we reported earlier this week, also hit new all time lows in daily volumes which were down $4bln/day ( -5.2%) at a new low of $77bln/day, a drop of -16.8% YOY.
Whilst FXAll volumes were $5bln/day (-4.5%) lower at $106bln/day down from $111bln/day in September, although still up some 12.8% YOY.
We will show comparisons to Reuters once announce volumes for FXAll and Reuters matching later this week.
Last Friday the CFTC issued a ‘no action letter’ extending until 29th November the ‘time-limited’ relief from certain Swap Data Reporting Requirements for FX Swaps, the products in focus being NDFs and FX Options.
The extension comes on the back of representations, including a very compelling letter from James Kemp, MD of The Global Foreign Exchange Division, setting out the reasons for requesting the extension. Reading the arguments, you can see how ill prepared the majority of SEFs are to assume their obligations, and why market participants are reluctant to migrate trading onto SEFs.
According to the letter:
Key risks which have materialized for the NDF and Options markets since October 2nd including:
In contrast to the practices developed and implemented by market participants over the past fifteen years to provide legal certainty (more…)
The FT reports London is now the largest RMB trading centre outside of China and Hong Kong. Overall global RMB trading volumes have grown over 100% this year due to increased deregulation in China and the goal of China’s policy makers to internationalize their currency.
Here is the link -
The three main OTC FX platforms have now reported their Sept 13 volumes.
All three major platforms saw a recovery in volumes, led by FXAll which saw a 14% increase to $111bln/day (32% YOY increase), overtaking for the first time Reuters traditional platforms (matching and conversational dealing) at $110bln/day. EBS showed a small 3% increase to $81.2bln, although still down some -27% YoY.
Emerging regulations under Dodd-Frank’s execution and clearing mandates and the higher capital requirement ratios under Basel, are driving huge changes in the business models for investment banks.
Under Dodd Frank, following the introduction of SEFs, banks will be prohibited from trading directly with clients on a bilateral basis in standardised swaps. Instead, bank Single-Dealer Platforms will provide SEF aggregation and routing capabilities of client orders through to one of the now 17 registered SEFs.
Whilst for capital-intensive markets like credits, banks are moving away from providing costly inventory based principal trading and moving to an agency model such as UBS PIN. In these markets, the value proposition for the bank shifts downstream, where the bank will provide value added smart order routing (SOR), clearing and collateral management and optimization services, to offset the reduction in trading profits from these products.
But what about FX? Lightly regulated (in comparison), and by far the largest and most liquid of all the global markets, with latest BIS Triennial data showing that daily volumes have grown 34% to reach $5,345 bln/day.
Is there still money to be made here, and if so by whom, and what’s the competition like?
The FXPB platform provides suite of client-driven solutions including access to position and trade rolling, trade matching, credit monitoring, live trade search and intra-day valuation reporting. (more…)
A recent Bloomberg article showing Singapore has overtaken Tokyo as Asia’s largest foreign exchange trading center
From Paul Blank’s previous post on BIS Triennial FX Survey