Caplin Systems E-Trading Survey 2014 (please participate)

Caplin Systems E-Trading Survey 2014

As a reader of this blog, you have already demonstrated extreme good taste and sound judgement, and we would therefore value your feedback and participation in our survey.

Banks and brokers around the world use our technology to provide web-based trading services to their clients. We’d like to know what you think of those services and how they could be improved. To help us with our research, please click here to take our 2014 E-Trading Survey.

The survey should take around five minutes to complete. As a thank-you, we’ll send you an exclusive copy of the survey results, as well as our forthcoming white paper ‘Mobile trading trends in 2014 and beyond’.

Thanks in advance for your time.

Caplin Systems Research team

e-FX adoption seen accelerating (partly due to FX fixing problems)

The migration of foreign exchange trading from voice to electronic based trading has been gathering pace over the past few years.

Whilst exact e-FX ratios vary between banks, products, client segment and regions, recent research puts the e-FX ratio at anywhere between 50-70% of global totals (Greenwich Associates-70% and Aite Group -60%, and Bank of International Settlements at 50%)

Interestingly the adoption rate of e-FX is expected to accelerate as banks, in response to the ongoing investigations into irregularities around the FX fixing business (where traders are alleged to have colluded by sharing details of client order books) look to reduce the use of voice trading and migrate more flow over to the eFX channels.

There is much debate around how to ‘fix’ The Fix, including greater use of agency based algorithmic execution over a longer period of time, rather than the current limited ‘fixing window’, and some talk about moving to an exchange type model.

The FT has an article today talking about the migration to e-FX, and what was interesting for me was that for the first time, seeing actual bank FX volumes and their eFX ratios, which usually aren’t made available on a named basis, so below are some of the more interesting statistics. Continue reading

BofE FX Survey data: $2,234bln/day (12% down from Apr, but 11% up YonY) – worth reading

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

Reuters & EBS both sink to multi year low trading vols in Dec

The three main OTC FX platforms have now reported their end of year Dec 2013 volumes.

All three platforms saw falls in daily volumes in December, with Reuters Matching and EBS both recording multi-year lows, with EBS 12mth average vols dropping below that of FXAll for the first time. Continue reading

The anatomy of the global FX market (BIS research findings)

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

Global FX daily turnover reaches $5.345 trillion up 34% according to 2013 BIS Triennial Survey

The Bank of International Settlements (BIS), has released the latest 2013 Triennial Survey survey of global FX market volumes (the most authoritative survey of global FX market activity)

Headline items from the survey are:

  • Global FX turnover was 34% higher in April 2013 than in April 2010, with average daily turnover of $5.345 trillion/day compared to $3.971 trillion/day

BIS 2013 FX daily Volumes 1Daily FX volume by product ($ billions)

Continue reading

The value of FX Flows

What’s the value to a bank of seeing client FX flows?

Any FX trader worth their salt, will swear there is value in seeing ‘certain’ client flows, and greater value if you see it first, and can act on it fast!

Intuitively we know this value derives from the intelligence asymmetry gained by the trader or more correctly today, by the bank’s pricing engines, in terms of their ability to rapidly analyze client flows, and ‘deduce’ trends based on historic flows from that client, and the aggregate of flows from that client’s segment and integrating or matching those against uncorrelated flows from different client segments.

Continue reading

SEF Industry Barometer from Tabb Group

An excellent update to Tabb Group’s SEF barometer has just been published, which was based on a survey of over 150 participants (from dealers, buy-side and vendors).

Key findings are:

  • Discontent is high on the final outcome of the swap rules, but consensus is low on the reasons why
  • Exchanges are perceived to benefit the most from the new rules, as product standardization drives the swaps market closer to order book trading and accelerates the migration to swap futures Continue reading

BofE FX Survey Data shows record $2,547bln/day (very interesting read)

The Bank of England today released their latest semi-annual FX turnover survey results for April 2013.


  • Record Daily FX vol of $2,547bln, +26%  on Oct 2012, (+26% YoY)
  • Spot vols +38% to $1,006bln/day
  • Rise driven by huge increase in USD/JPY activity up over 100% to $503bln/day – 2nd most active curr pair traded

Execution via Single Dealer Platforms (SDPs) still exceeds Multi Dealer Platforms (MDPs), but MDP volumes surging

  • SDP vols + 32% driven by +58% increase in use by Reporting Dealers and +18% by banks
  • MDP vols +69% driven by +77% rise in Non-Bank Financial Institutions and +71% by reporting dealers

Continue reading

Is FX heading for Equity style ‘All-2-All’ market?

Latest research from GreySpark looks at the regulatory and structural changes that are impacting the global FX market, and draws some interesting conclusions.

The report Trends in FX Trading 2013 (which I haven’t seen, other than in abstract here) looks at the evolution of market structure and reasons behind the decline in dominance of the wholesale dealer-dealer platforms (D2D), and the rise in importance of the dealer-client (D2C) platforms, both Single-Dealer Platforms (SDP) and Multi-Dealer Platforms (MDP).

From what I can see, the paper draws the conclusion that these trends will lead to the development of an equity style All-to-All (A2A) market structure, presumably characterised by central limit order books (CLOBs). Possibly driven by regulation and capital efficiency needs, making it less attractive for banks to market make, although not sure that should follow?

As the abstract from the report states: Continue reading


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