Platform FX Volumes July14: Double-digit falls for most platforms

Major platforms have reported July FX volumes, with double-digit falls across the board, with Thomson Reuters (TR) spot vols down -14.5%  to $98.8bln/day – a record low, whilst taken in total all Reuters FX products are down -11.4%, although still up some 7.6% on a year ago. Overall spot volumes across all platforms are down between -16% and -21% compared to a year ago.

This drop in FX volumes is also reflected in CLS settlement system which reported a -13.7% drop in trades submitted to their platform at $4,710bln/day down from $5,460bln/day in June, although still up 5.4% on a year ago, whilst the number of trades submitted for clearing is down -20.2% over the year.

From this month, TR has changed their reporting methodology, reporting aggregated volume for Reuters Matching, FXall and the Thomson Reuters SEF. Only splitting out volumes for FX spot and aggregating all other products covering: forwards, swaps, options and non-deliverable forwards traded on those platforms. FXall volumes shown in previous months post here.

Individual platform volumes are as follows: Continue reading

New investment banking models: ‘capital-lite’, ‘agency’ and ‘client-clearing’

Regulation is driving change in capital market structure, and as highlighted in the future of investment banking, banks continue to move towards a ‘capital-lite’ business model, as they seek to ‘optimise’ use of and return on capital.

The introduction of mandatory trading and clearing for standardised swaps (SEFs in US and OTF and MTFs in Europe) has resulted in higher capital charges for OTC bilateral trades, and reduced the appetite of banks to warehouse and hold inventory which is moving more banks towards a ‘capital lite’ model.

This is the backdrop to the announcement that JP Morgan the setting up a 150 strong fixed income agency execution desk called JP Morgan Execution Services (JPMES), to run alongside its principal trading operations.

At first sight, it looks as if JP Morgan is simply hedging its bets and backing both agency and principal business models. However,
Continue reading

Tibco Streambase 2014 FX Trading Technology survey

After a two-year break, during which Tibco acquired Streambase, it’s good to see that they are continuing the excellent FX Trading and Technology Trends survey, that Streambase published between 2010-12 (see here for 2011 and 2012 surveys).

I haven’t yet seen this years report, but if it’s similar to previous survey’s then it will focus on buy-side and sell-side traders and their use of electronic FX platforms.

Key findings being:

  • Share of FX participants trading electronically remains steady at 80%
  • Regulation seen as providing opportunities for innovation and competitive differentiation
  • Traders prefer executing on SDP to MDP
  • Expectation that bilateral relationship pricing from liquidity providers enhances execution quality
  • Fragmentation driving more firms are add additional liquidity providers via aggregation services

Top banks Continue reading

FX Sales practices

As reported last week by Bloomberg, the NY Department of Justice (DOJ) appears to be questioning a number of banks about the practice by sales desks to add ‘hard’ mark-ups to client FX trades.

The article suggests the DOJ is exploring whether the banks have committed fraud by failing to disclose the practice properly to customers.

Indeed, David Woolcock of the ACI is quoted as saying;

“Banks should always be transparent with their clients on pricing mechanisms…… This does not sound like it is consistent with best practice nor ethical behavior.”

What we are talking about here is the possibility that Continue reading

World’s Strongest banks

Bloomberg has released their latest and very interesting “World’s Strongest Bank” analysis, that ranked 97 banks with assets of at least $100bln in assets.

Rankings were determined by five criteria, in order of importance:

1. Ratio of Tier 1 capital to risk-weighted assets
2. Ratio of nonperforming assets to total assets
3. Ratio of reserves for loan losses to nonperforming assets
4. Ratio of deposits to funding
5. Ratio of costs to revenues

EMEA has 9 of the top banks followed by Asia with 8 and Americas with only 4, of which three are Canadian.

The actual rankings are as follows:

Continue reading

EBS, Reuters/FXall and CLS Mar14 FX vols (FXall record high)

The three main OTC FX platforms have now reported their Mar 2014 volumes.

Whilst Reuters matching saw a small drop in volumes and EBS a small rise, FXall saw strong growth. Hitting a new all time high, driven by record volumes in Chinese CNH on the back of recent intervention by the Chinese authorities to halt the one way bet on a continually rising Yuan.

FXall: $132bln/day, up 8.2% on the $122bln/day in Feb 2014, and some 20% up compared to Mar 2013 level of $110bln/day.

Reuters Matching: $110bln/day, down 2.7% on the $113bln/day in Feb 2014, and still some 16% down compared to Mar 2013 level of $131bln/day.

EBS: $88.4bln/day, up 5.9% on the $83.4bln/day in Feb 2014, but still a 26.6% down compared to Mar 2013 level of $120.4bln/day.

Hotspot: to be added once released.


FX Platform Volumes indexed Mar 2014

 FX volumes for Reuters, FXall and EBS- March 2014
(Chart indexed based at Jan 2011)


CLS value of trades submitted: $2,675bln/day, up 3.9% on the $2,575bln/day in Feb 2014, and 3.68% up compared to Mar 2013 level of $2,580bln/day.

CLS number of instructions submitted: 1,155,507, up 0.4% on the 1,150,663 in Feb 2014, and -5.12% down compared to Mar 2013 level of 1,217,817.

CLS Mar 14



Reuters overhauls spot matching rule book

Thomson Reuters has today announced an overhaul of the rule book which sets out acceptable behavior and practice within their FX Matching platform.

The changes, first mooted in December follow a long period of consultation and are designed to make the platform fairer and remove the ‘technology advantages’ that some electronic market makers and high frequency trading firms (HFT) have benefited from, and will help to level the playing field. The changes follow similar moves last year by rival EBS.

Amongst the changes are which will affect different currency pairs are:

Randomizing matching algorithm (which will prevent firms controlling ‘top of order book’)

Minimum  Quote Life (‘time in force’) (designed to reduce ‘order flashing’ and allow traders time to hit prices)

Minimum Tick Size (to reduce the amount of price updates and needless ‘gaming’ of the system)

Increase the quote to trade ratio (designed to promote intention to trade when quoting)

The moves, come as both Reuters Matching and EBS struggle to regain volumes to their platforms. With Reuters matching volumes in Feb 14 down 17.5% on Feb 13, whilst EBS Feb 14 volumes were down 44% on Feb 13.

FX Platform Volumes Feb 2014




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