Posted on March 7, 2014 by Paul Blank
Earlier this week I looked at how the adoption of eFX was accelerating and commented on the huge increase in the e-FX ratios at RBS in particular, which has risen from 8% of flows being electronic in 2010 to some 53% in 2013. A whopping 511% increase in their e-FX ratios.
So, it’s interesting to see in today’s FX week an article talking about how RBS is now ‘internalising’ upwards of Continue reading
Filed under: FX, Internalisation, Paul Blank, Single-Dealer Platforms, Web trading technology | Leave a comment »
Posted on February 28, 2014 by Paul Blank
Interesting article in FX Week, about banks pulling their liquidity provision back from a number of multi-bank platforms due to the high cost fee structures on those platforms.
According to Kurt Vom Scheidt, COO of Markets in Saxo Bank, speaking on a conference panel at FX Invest Europe in Frankfurt…
“With banks struggling to make adequate returns across the board, connections to expensive trading platforms are on the chopping board”
He further commented that…. Continue reading
Filed under: FX, MDP, Paul Blank, Single-Dealer Platforms | 3 Comments »
Posted on January 28, 2014 by Paul Blank
The Bank of England today released their latest semi-annual FX turnover survey results for October 2013.
Highlights on overall London FX volumes
- Total FX vols down 12% since Apr at $2,234bln/day (up 11% YoY)
- FX Swaps account for 50% of total FX vols (up from 42% in Apr), highest share since Apr 09
- FX Spot account for 34% of total FX vols (down from 39% in Apr), lowest share since Apr 09
- Spot FX vol down 24% from Apr at 767bln/day (5% higher YoY)
- Spot USD/JPY vols 48% lower than Apr at $119bln/day (still 2nd most traded curr pair)
Execution via Multi-Dealer Platforms (MDP) and Single-Dealer Platforms (SDPs) both down approx 9% since Apr
- SDP vols – 9% (still up 21% YoY), driven by +31% increase in use by Reporting Dealers and +14% by other banks
- MDP vols -10% (up 53% YoY), driven by +77% rise in Non-Bank Financial Institutions
Detailed analysis and charts on the figures follows below. Continue reading
Filed under: FX, MDP, Paul Blank, Single-Dealer Platforms, Survey Results | 1 Comment »
Posted on December 10, 2013 by Paul Blank
McKinsey and Greenwich Associates have produced a joint report on the challenges for the corporate bond market as it transitions from a capital intensive inventory based model to what they refer to as a ‘capital-light’ agency model, where broker-dealers hold less inventory.
The report discusses how broker-dealers will need to leverage e-trading technology far more to assist their clients in liquidity discovery and help them with trade execution, as it has become increasingly difficult to find the ‘other side of the trade’.
Filed under: Corporate Bonds, Paul Blank, Single-Dealer Platforms | 1 Comment »
Posted on December 9, 2013 by Paul Blank
The Bank of International Settlements (BIS), has just released a in-depth analysis of the recently released 2013 Triennial FX Survey, looking at the changing structure of the FX market, and drawing some conclusions.
Some of this was covered in our recent coverage of the 2013 Triennial FX Survey, some of the key points of which are shown here, but worth reading the report in full.
- Non-dealer financial institutions were the major drivers of FX turnover (much through the use of prime brokers)
- The reporting dealer market, by contrast, has grown more slowly (partly due to internalisation of flow by top tier banks), and
- Trading volume of non-financials (mostly corporates) has actually contracted
- In today’s market structure, electronic trading dominates. It is the preferred trading channel, with a share above 50% for all customer segments.
- Non-financial institutions mostly prefer direct contact with their relationship bank, either via the phone or via a single-bank platform.
- Financial customers are less loyal to their dealer often trade either directly with dealers electronically direct electronic price streams), or indirectly via multi-bank platforms and electronic brokerage systems that were previously the exclusive venues of inter-dealer trading
- Retail accounts for some 3.5-3.8% of daily FX volumes
The climb in FX turnover between 2010 and 2013 appears to have been mostly Continue reading
Filed under: BIS, FX, Paul Blank, Single-Dealer Platforms, Survey Results, Web trading technology | 3 Comments »
Posted on November 27, 2013 by Paul Blank
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:
- Understanding the key systematic trends driving the e-FX market
- Is it possible to have a standalone e-FX strategy?
- How you can take advantage of the booming technological innovation
- The platform debate-which will better suit your needs, SDP or MDP?
- Sourcing low latency, 24 hour liquidity
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
Filed under: FX, Paul Blank, Single-Dealer Platforms | Leave a comment »
Posted on November 6, 2013 by Paul Blank
The evolving global regulatory landscape is fundamentally changing how banks operate, the returns available, the business lines and markets in which they can effectively compete, and the way in which they interact with and service their clients via their Single-Dealer Platforms.
For example, under Dodd Frank, standardised swaps trading with clients will migrate from OTC bilateral trading, over to regulated venues such as SEFs. This will see the value proposition and revenue generated for banks likewise shift from a Continue reading
Filed under: OTC, Paul Blank, Regulation, SEF, Single-Dealer Platforms, SWAPS, Technology Trends | 7 Comments »
Posted on October 9, 2013 by Paul Blank
Interesting article in the FT about how banks are starting to copy Amazon’s data mining capabilities to help cross sell research on listed companies.
Banks are analysing how clients read and use research documents in order to help them sell additional ‘targeted products’, based on what they and their peer groups have previously bought.
The article quotes Neil Shah, director at Edison Investment Research, who talks about how banks are starting to adopt technology that: Continue reading
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Posted on October 2, 2013 by Paul Blank
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?
Filed under: FX, Paul Blank, Single-Dealer Platforms, Web trading technology | 4 Comments »
Posted on September 13, 2013 by Paul Blank
Bank of America Merrill Lynch (BAML), has launched a new FX Prime Broker Service (FXPB) on their Silverlight Mercury Platform.
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. Continue reading
Filed under: FX, Paul Blank, Single-Dealer Platforms | Leave a comment »