Nasdaq prepares to launch own FX platform


Exchanges can’t seem to get enough of FX!

Following the recent spate of exchanges buying FX platforms (Deutsche Boerse buying 360T, BATS Global Trading buying Hotspot, and talk of ICE buying FastMatch), we now hear Nasdaq is readying the launch of their new FX platform.

NasdaqSo, what’s the attraction?

Well, for one thing size, at $5.3tn/day, it’s by far the largest globally traded market. It’s predominantly a bilaterally traded OTC market, highly liquid and although decentralized and fragmented into multiple liquidity pools, is nonetheless very efficient and increasingly electronically executed.

The size and liquid nature of the market play to the scale and efficiency of exchange infrastructure.

But, this is about more than size. Continue reading

Markit to consolidate position in FX Trade processing with Dealhub acquisition


Just spotted this on Bobsguide, a very interesting development.

Markit Markit has agreed to acquire Dealhub, the 55 strong UK company that provide FX solutions to banks, brokers and other financial market participants around market connectivity, trading services and trade processing.

The acquisition comes less than two weeks after Markit’s own MarkitSERV announced the launch of its new ‘centralised FX trade confirmation service’. The Dealhub transaction, looks highly complementary, and will enable Markit to rapidly consolidate its position in this space.

As the industry continues to innovate, and in response to evolving FX regulations, there will naturally be increased demand for efficient, scalable and innovative centralised FX solutions, that provide the market connectivity to the various venues, credit-hubs, settlement systems, trade repositories, clearing houses with the associated regulatory reporting needed to enable participants to effectively manage their FX business.

According to the press release; the acquisition will enable Markit to offer customers a comprehensive solution for FX across venue connectivity, trading services, trade confirmation and management, clearing and regulatory reporting.  It will also expand Markit’s customer base among banks, brokers and asset managers in the FX markets.

Brad Levy, managing director and head of Markit’s Processing division, said:

“DealHub is a great company and highly complementary to Markit’s growing FX processing business.  This acquisition adds depth to our FX offering while bringing an exciting set of trading solutions to Markit.  Connecting DealHub’s technology to our network will accelerate centralisation of FX trade processes, making it easier for customers to transact.”

Dealhub

Peter Kriskinans, founder and chief executive officer of DealHub, said:

“We are excited about joining Markit since our businesses are so complementary.  Markit’s scale and global reach will allow us to better support our customers and will also accelerate innovation and further development of our technology.”

DealHub’s customers include global banks, regional banks, interdealer brokers, FX electronic trading venues and asset managers.  The company has approximately 55 people based primarily in London, with additional offices in New York and Singapore.

FX SpotStream goes live with new HTML5 GUI from smartTrade.


FXSPotStreamFX SpotStream the multi-bank platform has joined the growing number of platforms that are releasing new HTML5 trading GUIs.

The platform, which runs as a market utility is owned by a consortium of leading FX banks, providing multi-bank direct Api and GUI infrastructure to enable top-tier liquidity providers to easily and at low-cost distribute their liquidity to downstream price takers.

 

Alan Schwarz, CEO FXSPotStreamAccording to Alan Schwarz, SpotStream CEO: Continue reading

Corporate Bond platform Bondcube closes (after only 3mths)


Higher costs of regulatory capital, has resulted in a massive reduction in bond inventory held by primary dealers, and as a result, banks have been withdrawing from capital-intensive market making operations and embracing so-called ‘capital lite’ agency type operating model.

According to a report from McKinsey and Greenwich Associates, 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’. As can be seen from the graph below Continue reading

Why SDPs should provide TCA tools for buy-side clients


The majority of single-dealer platforms (SDPs) – especially those of regional banks, provide mainly principal (rather than agency) based pricing to clients. That’s where the bank takes the other side of the trade (even if the bank covers the trades by back-to-back hedging with their liquidity providers), making their money on the spread, rather than helping the client achieve the best execution for the transaction, and charging a commission for the service.

Whilst corporate and non-financial clients will happily use SDPs, we are seeing Continue reading

FX Platforms Jun 15 vols: EBS and FastMatch spot show decent gains, whilst Reuters spot hit low for 2015


The major OTC FX platforms have now reported their Jun 15 volumes.

In terms of spot FX, EBS and FastMatch show decent 5%+ gains, whilst Reuters spot volumes fall 1.8% to their lowest levels of 2015. The Reuters-EBS gap continues to narrow (smallest gap of 2015), showing spot flows continuing to move from Reuters to EBS. And I would suspect the gains show continued attraction of EBSDirect, providing banks with tailored disclosed liquidity aggregation feeds for their pricing engines.

Notably, EBSDirect has just added two new regional bank liquidity contributors, (Standard Bank and Metallinvestbank), broadening the appeal of the EBSDirect feed outside of G10 to include EM currencies.

Commenting on the contributions from the respective banks Continue reading

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

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