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

MTS new HTML BondsPro platform


I seem to have missed this last month, but interesting nonetheless to see that MTS has relaunched and re-branded the Bonds.com platform they acquired for $15m last year as MTSBondsPro and have now launched a HTML5 version of the platform.

Here are a couple of comments from an interview with MTS Markets CEO, Mark Monahan in Waters Technology that bring a smile: Continue reading

Talk of FX multi-dealer platform 360T may be sold for $750m. How does that compare to FXall sale price?


The WSJ ran a story last week that privately held FX multi-dealer platform 360T which provides FX trading services to over 1,700 institutional clients, and which back in 2012 sold a stake to private equity firm Summit Partners, could be in the process of being sold, with a suggested price tag of around €600m ($750m). Reuters carries a story saying that Jefferies have been hired to handle the sale, which is expected to complete before the summer.

Unlike the other major platforms, 360T does not publish average daily volumes (ADV), so it’s a little difficult to compare them.

However, back in 2103, Carlo Kolzer, CEO of 360T was quoted in FX Week saying that Continue reading

FX Platforms – May 15 vol: All major platforms report falls of between -1% and -6.8%


The major OTC FX platforms have now reported their May 15 volumes. All the platforms bar one, reported falls ranging from -1% for EBS to -6.8% for Reuters Spot, with only FastMatch registering an increase up 8.5% (although on much smaller volume than the other major platforms).

Looking in more detail we see the individual platform figures as follows: Continue reading

CLS FX Settlement Service: Apr 15 vol figures -9.9% broadly inline with other platforms


The CLS FX settlement system has reported a -9.9% drop in the average daily value of FX trades settled through their platform in Apr 15, taking volumes back down to $4.64trillion/day.

The monthly drop is slightly below falls reported last week by the major FX spot platforms which saw falls ranging from -10.6% for Reuters to -15.4% for EBS.

Details from the platform and charts are as follows: Continue reading

ICAP results, refocus of business on facilitating market efficiency and access to liquidity


The regulatory reforms of Dodd Frank, MiFID II, EMIR and Basel III, are fundamentally changing the structure of Global OTC markets. As a result, participants face higher costs for regulatory capital, mandatory trading of standardised derivatives, increased pre-trade transparency and post-trade reporting and a drive to central clearing.

On top of which banks have been hit with multi-billion dollar fines for manipulation of LIBOR rate fixings, and market collusion around FX manipulation.

As a consequence, banks are re-engineering their businesses, shifting from capital intense (balance sheet consuming) activities to ‘capital light’ business models, driving down costs by moving from voice to electronic execution, from bilateral to cleared and from principal to agency – capital efficiency, low risk, client servicing is the name of the game.

Whilst challenging traditional business models, the regulatory reforms have also created opportunities for innovative new trading platforms, regulatory compliant market infrastructure, and services that facilitate the ‘capital-light’ business models.

Inter-Dealer Brokers (IDBs), the middle men matching buyers and sellers in the OTC markets, have been quick to spot opportunities to re-invent themselves, and invest in new technology solutions that will enable them to remain at the centre of execution in the new market order.

ICAP, the biggest of the IDBs, gave a glimpse under the hood of these changes in their full year results which were released yesterday, and although overall revenues are down 7%, they make fascinating reading in the trends that they reflect, and the speed by which IDBs are re-positioning the business to benefit from the changes in market structures and drive to market efficiency.

  • Overall revenues down 7%
  • Electronic Markets & Post Trade services account for 75% of profits (70% prev)
  • Post-Trade revenues up 8% driven by Tri-Optima and Traiana
  • Merger of FX (EBS) and Rates (BrokerTec) into a single offering (accounting for 64% of group revenues) took six months: EBSBrokertec
  • Electronic markets revenue split: EBS 48% (46%prev), Brokertec 49% (50% prev)
  • Headcount changes: Global broking -24%, Electronic markets +12%, Post-Trade +10%
  • Moving outside the traditional inter-dealer market, to service segments traditionally seen as customers (buy-side firms) such as hedge funds, asset managers, retail brokers
  • Spend on new initiatives £43mln
  • Including EBS Direct, EBS Select, eFIX, new HTML5 platforms,

ICAP investmentInvestment in new Products by ICAP

EBSDirect, the new relationship based FX platform from EBS has proved a huge success, as can be seen from the volume figures below:

EBS Direct VolumesEBSDirect Monthly Volumes

Interestingly, Tradition another major IDB, has also been exploring opportunities from new market structures, and recently announced the launch of a new electronic repo-market DBV-X to facilitate the efficient use of collateral.

Regional banks upping their game, as Standard Bank rolls out an award winning SDP


We often comment on how regional banks are upping their game, and investing in new single-dealer platforms (SDPs) to enable them to better serve, protect and grow their client franchise.

With that in mind, it was great to see that Standard Bank’s newly upgraded SDP eMarketTrader has just been voted Best Super Regional Bank SDP’ in the Profit & Loss 2015 Digital FX Awards.

According to Profit & Loss editor Colin Lambert:

For the first time in three years a new entrant joined the winners’ circle: Standard Bank.

Banks continued to invest in what remains their number one channel for connecting with clients.

It is heartening to see so many banks outside the top 10 investing in their technology also – a single dealer platform will be vitally important for these institutions if they are to service their core client base going forward.”

This is a big achievement for Standard Bank, as the ‘winners circle’ is made up of Continue reading

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