New management team at merged EBS BrokerTec


Back in Dec 14, ICAP announced they were merging their two leading trading platform business divisions EBS (FX) and BrokerTec (Rates) into a single operation called EBS Brokertec Markets. Today the firm announced a new executive management team to drive the combined business forward.

According to the company, this will allow the business to leverage key functions across the division, including combined product, technology and sales groups. As a result, the central limit order book (CLOB) businesses of EBS Market and BrokerTec have been combined into a single business division now referred to as EBS BrokerTec Markets. In addition, the BrokerTec CLOB business will now be referred to as BrokerTec Market.

EBS BrokerTec Markets will be led jointly by Dan Cleaves and Darryl Hooker as Co-Heads. Dan most recently served as Continue reading

Central Bank FX Survey data: What’s happening to eFX ratios? Comparing London and NY


In my previous post, I looked at the Bank of England (BofE) FX semi-annual FX survey data.

In this post, I want to look at some of the interesting changes in eFX ratios – the proportion of total FX that is traded electronically, that is the sum of single+Multi-dealer+ECN as a percentage of total volume. We will look at London and NY, and compare and contrast overall eFX ratios, and eFX ratios by product and by client segment. Continue reading

BofE FX Survey data: London FX vols down 8% in Apr 15, whilst USD/CNY vols +25% (now 9th largest curr pair)


The Bank of England today released their latest semi-annual FX turnover survey results for Apr 2015.

Highlights on London FX volumes for Apr 2015

  • Total FX vol  of $2,481bn/day, fell -8% compared to the record level seen in Oct 2014, but still showed a +5% YoY gain
  • Spot FX vol fell -13% to $973bln/day compared to Oct 2014, although still up some +24% YonY
  • USD/CNY activity increased by 25% in April 2015 to $43bln/day, a new record high, and is now the 9th largest FX pair.
  • USD/JPY vol fell -25%, returning back to October 2013 levels.
  • MDP vol fell –16% compared to Oct 2014 at $406bn/day (+12% YonY)
  • SDP vol fell -12% from Oct 2014 at $276bln/day (still down -11% YonY)
  • Ratio of SDP/MDP vols rose slightly (in favor of SDPs) to 68%, compared to the low of 65% seen in Oct 2014

Volumes never really recovered following the Swiss National Bank’s EURCHF event in January. Below are full details, charts and some interesting observations on the data. Continue reading

BIS establishes working group to strengthen code of conduct standards and principles in FX markets


In the recent release of ‘The Fair and Effective Markets Review’ FEMR, into how to restore trust in FICC markets, the report made the following recommendations in sections 4a and 4b:

4. Launch international action to raise standards in global FICC markets

a. Agree a single global FX code, providing: principles to govern trading practices and standards for venues; examples and guidelines for behaviors; and tools for promoting adherence. The Review strongly welcomes the recent announcement by central banks to work towards those goals; (BIS and national central banks including the Bank of England 4.3.3)

b. As part of that work, improve the controls and transparency around FX market practices, including ‘last look’, ‘time stamping’ and ‘internalisation’ (BIS and national central banks including the Bank of England 4.3.3)

Following the recommendations The Bank of International Settlements (BIS), has now Continue reading

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


A few weeks ago, we explored last look’, ‘time stamping’ and ‘internalisation’three practices that The Fair and Effective Markets Review FEMR, felt needed improved controls to help restore trust in FICC markets.

At the end of the post, I opened a poll asking buyside and sellside readers: “Which of the three practices are most open to abuse, resulting in sub-optimal client execution?”

The results, though limited and highly unscientific, are nonetheless interesting, as they highlight the almost diametrically opposite opinions of buyside and sellside. Buyside readers, overwhelmingly thought that the practice of ‘last-look’ was most open to abuse.

Whereas sellside readers, who are at the sharper end of this, felt that although last-look was open to abuse, ‘lack of time stamping orders/trades ‘was far more likely to result in sub-optimal client execution.

Poll results on Sellside practicesPoll results from unscientific and limited study asking “Which of the three practices are most open to abuse, resulting in sub-optimal client execution?”

FX Platform consolidation: 360T sold to Deutsche Boerse for €750m (as previously mentioned)


As first mentioned last month, the multi-bank FX platform 360T has now been sold to exchange operator, Deutsche Boerse for €750m ($805m), beating off interest from rival exchange operator CME Group.

360TThe transaction, which was announced today (Sunday), is the latest in a string of recent FX platform transactions, which I guess started with FXall being bought by ThomsonReuters back in 2012, and which may well see FastMatch as the next target, with exchange operator ICE as rumored suitor.

Platform costs based on daily volumes2Table showing relative costs of platforms in terms of (A) $bln daily vol, (B) cost/institutional client

Although not confirmed, I would think CME group was attracted to 360T’s dealer-client franchise. As it played to the client clearing capital efficiency proposition that CME has been developing, helping to facilitate bank-client trading relationships by mitigating counter-party risk, rather than competing for the execution of the transaction.

So, having lost out on 360T, it’s certainly possible that CME may cast an eye over Fastmatch as it would also open new clearing opportunities.

Talk of ICE exchange to buy Fastmatch


Interesting to see that Profit&Loss running a story today that the US futures Exchange ICE may be preparing to buy our all three shareholders (Credit Suisse, BNY Mellon and FXCM) of FX platform Fastmatch for around $200m-$250m.

As the FX market continues to fragment, and higher regulatory costs for bilateral trades start to bite, exchanges are no doubt eyeing an opportunity to get closer to the FX market by offering capital efficient client clearing/counter-party risk mitigation solutions to the OTC markets.

It would therefore make sense for ICE as a vertically integrated exchange with a strong clearing capability, to look to enhance their position by buying a relatively small but growing FX platform like Fastmatch.

Last month, Deutsche Bourse was rumored to be about to buy 360T for around $750m. At the time, I looked at the relative costs of platforms in terms of purchase price divided by average daily volumes.

Revisiting that analysis now, although Fastmatch is the smallest of the four platforms, the proposed $250m price would make it by far the most expensive of the four platforms coming in at $27.2mln per $bln of daily volume, making it almost three times more expensive than the 360T/Deutsche Bourse transaction (see column with yellow heading below). But, as has been mentioned before, FX platforms are consolidating and each platform sale, raises the scarcity premium for the next transaction.

Platform costs based on daily volumesTable comparing FX platform purchase costs

 Nevertheless, this would still be a smart deal for ICE, as Fastmatch has good technology, is nimble and is growing fast.

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