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

 

 

Regional Banks investing in SDPs


We have discussed here a number of times how regional (commercial) banks have been ‘upping their game’, and investing in talented e-commerce people, better back-end pricing technology and importantly investing in new client facing single-dealer platforms (SDPs).

This investment enables the regional banks to better service their commercial clients and provide differentiated ‘workflow’ based solutions, that not only protects, but has been instrumental to them growing their client franchise, and gaining market share at the expense of the top global FX banks.

So, it’s interesting to see this theme is being picked up by Continue reading

Internalisation of FX flows


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

FX revenue significantly higher, yet Deutsche Bank reports lower Q4 revenues due to “challenging markets”


Deutsche Bank released preliminary 2013 full year figures today, together with details of 4th quarter figures. Net revenues in the 4th quarter were EUR 6.6 billion, 16% below the prior year period. The decline largely reflecting weaker results in Corporate Banking & Securities (CB&S) and a smaller decrease in Global Transaction Banking (GTB) revenues, and the impact of regulatory fines (some EUR1.3bln).

The Corporate Banking & Securities (CB&S) division are home to the FX and fixed income businesses. Reading through the accompanying investor presentation, it seems that within Debt Sales & Trading, FX was the only Continue reading

UBS to outsource Fixed Income platform to Murex & ION


Interesting news just out that UBS is to outsource part of their fixed income technology infrastructure to Murex for booking trades and running valuations and to ION for market connectivity gateways and pricing tools.

This decision seems a direct consequence of  the increasing costs of in-house development and ongoing support and enhancement of numerous legacy platforms, and the regulatory pressure and higher capital costs that banks are facing, and that has resulted in Continue reading

What’s happening with ECNs?


Last year saw a proliferation of new FX venues with no less than five FX ECNs going live, as well as some important changes to trading protocols of existing ECN venues.

These changes and new venues reflect the heterogeneous nature of the $5.3trn/day global FX market, as venues setup to attract, retain or exclude certain types of market participant, or level the technology playing field and redress the balance between the needs of their core liquidity providers and the requirements of their customers.

Existing FX ECNs have also been feeling the pain over the past year, with both EBS and Reuters Spot matching daily volumes dropping to new multi-year lows in December.

The fall in Reuters and EBS volumes is in part due to Continue reading

Markit enters the OMS space


Interesting to see Markit extend it’s enterprise data and processing integrated solutions into the buy-side with the announcement of its acquisition of  OMS provider ThinkFolio.

The move comes as Markit prepares for an IPO, which based on a $500mln investment by Singapore based Temasek last year, valued the group at some $5bln.

More here and here

Top blog posts for 2013


Thanks to everyone for taking time to read our blog posts this year, its been fun writing them and we look forward to finding more interesting relevant topics to cover in the new year.

Below is a list of this years top 20 posts we published this year.

Not surprisingly, the top posts were those that focused on the value proposition of Continue reading

Key themes of 2013 as seen through the SDP blog


This has been the year of regulation, with the birth of the SEF, introduction of clearing/reporting mandates, and next year the move to mandatory trading, with the introduction of MAT rules. And only last week, the final version of the rules governing proprietary trading, the so-called ‘Volcker Rules‘. All of which has been a huge burden for banks and vendors as they prepare the connectivity required to support their clients.

It has also been the year that has seen banks re-examine their business models, in the face of higher regulatory capital costs, and in some cases, pull back from more capital-intensive operations such as corporate bonds, and for certain products move from principal to an agency execution model.

However, despite the regulatory drive, bank’s are still investing in their client facing offerings, and are  Continue reading

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