SingleDealerPlatforms.Org

The Bank of England has JUST released their latest semi-annual FX turnover survey results for October 2011.

Highlights

• Daily FX vols $1,972bln, down 3% on April 2011, some 17% higher on the year

• Spot vols rose 2% to a record survey high of $802bln/day (42% of total vol)

Multi-Dealer Platforms see huge 26% drop in vols compared to April 2011

• MDP overall vols down 26% compared with April 2011 (SDP vol -3% over same period)
  
• MDP spot vol down 30% (SDP down 13% on same period)
• Non-Bank Financial Institutions vols down 39% (SDP unchanged on same period)
• Ratio of overall FX execution on SDP vs MDP rises to 119% from 90% in April 2011

The data paints a picture of big absolute loses for Multi Dealer Platforms (MDP), as well as large relative loses compared to Single Dealer Platforms (SDP), as the ratio of SDP/MDP vols rises from a 90% low to stand at 119% (see red line in chart below).This seems to be alignment with findings from the EuroMoney FXNews survey that sees SDPs as the biggest winners in continued client adoption of eFX Trading.

The biggest drop of all, comes from a whopping 39% fall in volumes from non-bank financial clients (the leveraged funds, and asset managers), whilst SDP flows for the same segment were unchanged over the same period.

Below are some charts based on my own analysis of the Bank of England data source here

a) Single Dealer vs Multi Dealer FX vols

Bar charts showing FX volumes on single vs multi dealer platforms, with red line showing the ratio of vols, which is back on the rise at 119% from a low of 90% in April 2011

Single vs Multi Dealer FX vols data here

b) Daily FX volumes by instrument

The chart below shows total FX vols by instrument type across all channels and all counterparties. FX Spot and FX swaps each being equal, and together account for just over 84% of all FX volumes

Daily FX volumes by instrument

c) Daily FX volumes by Counterparty Segment on Single Dealer Platforms

Daily FX flows by counterparty over SDPs broadly unchanged over past six months
Source, Bank of England Data Feb 2012

d) Daily FX volumes by Counterparty Segment on Multi Dealer Platforms

The chart below shows the massive drop in vols on MDPs from non-bank financial institutions. This may be a blip, as this segment includes asset managers, who are required to demonstrate some form of BestEx, and traditionally tended to use MDP (as well as for the post trade allocation services). Although, that may be changing, as mentioned here. It is certainly something to watch in future survey’s to see if this blip or becomes a trend.

Daily FX flows by counterparty over MDP shows huge drop of 39pct for Non-Bank Financial Segment
Source, Bank of England Data Feb 2012

Of course one set of data does not a trend make. However, could it be possible, that FXall, the ‘poster child’ for MDPs, and their forthcoming IPO may well be calling the top on the MDP market? Afterall, shareholder banks are selling their holdings at the IPO, and as the FXall CEO, Phil Weisberg says in the FXall “roadshow pitch”  (click the FX alliance inc (IPO) link):

FXall is a “pure play on the institutional FX market”

Although, one could rephrase that to say

FXall is a “pure play on the institutional Multi-Dealer FX Platform market”

or maybe not?

Filed under: FX, MDP, Paul Blank, Regulation, Single-Dealer Platforms, Survey Results |