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 are:
Sergey Romanchuk, Head of FX&MM at Metallinvestbank, commented: “As the first local Russian LP for EBS Direct we will be able to offer our counterparties enhanced liquidity in the ruble and other key currencies. Access to EBS Direct’s global distribution network will allow us to support our customers with customised liquidity at a time when reliable pricing and execution is more important than ever.”
Tim Hutchinson, Head of eFX, Global Markets at Standard Bank, said: “As a leading market maker in the South African rand, it is vital for us to be present where our customers choose to transact, and EBS Direct is a significant avenue which is continuing to grow in popularity. Based in Johannesburg, our 24 hour trading desk is well positioned to provide customers with access to the best liquidity and our regional expertise.”
EBSDirect provides relationship (disclosed) pricing alongside its anonymous EBSMarkets pricing to banks to improve their liquidity provision capabilities.
ICAP in their trading statement released in 15th July stated that with regard to EBS:
…..EBS Direct, the disclosed, relationship-based liquidity service, continued to expand with over 250 new customers in the pipeline. Average daily volume for the quarter was $17 billion (Q1 2014/15 $8 billion). EBS Direct is expected to beta launch FX Outrights and Swaps in Q3, a significant part of the FX market in which EBS has never participated.
ThomsonReuters has recently responded to enhance the liquidity offering for Reuters RET, now renamed Reuters Electronic Trading (ET), by adding Reuters FXall liquidity to enhance the ability of banks to offer liquidity to their customers.
According to Phil Weisberg, managing director and global head of FX at Thomson Reuters, in a recent FXweek interview:
The addition of FXall liquidity will allow banks to access all of Thomson Reuters’s liquidity, including anonymous and relationship-based pools. The integration of both types of liquidity into pricing and risk management will give banks better risk management tools and the ability to offer customers more competitive prices.
This increased focus on enhancing the ability of banks to distribute quality liquidity, ties in nicely with the latest publication from Greyspark, the UK consultancy, who have just released their Buyer’s Guide: FX E-trading Systems.
The guide looks at a number of complete single vendor FX etrading solutions including (Apama/Software AG, Broadway Technology, Dion Global Solutions, FlexTrade, SmartTrade). Although I haven’t seen a copy of the report, from the summary, it appears the report excludes companies such as Caplin, who provide an e-distribution layer that sits on-top of any number of back-end e-Trading platforms, enabling banks to easily create an eFX platform comprising best-of-breed vendor solutions.
In terms of numbers, the volumes of the platforms are as follows:
Top tier Platforms
EBS $100.8bn/day in Jun, up +5.1% on May, and still up +30.9% compared to Jun 14 level of $77bn/day.
Reuters Spot: $108bn/day in Jun, down -1.8% on May, and down –6.5% compared to the Jun 14 level of $115bn/day.
Reuters Other Products: $267bn/day in Jun, up a decent 9.9% on May, although down -2.1% compared to Jun 14 level of $273bn/day.
Reuters total: $375bn/day in Jun, up +6.2% on May, although still down -3.4% compared to Jun 14 level of $388bn/day.
As can be seen from the chart below, the gap between Reuters and EBS continues to fall, as the chart drops away from the downward sloping resistance line at the points highlighted by black circles, showing continued strength of EBS at the expense of Reuters.
Chart showing the gap between Reuters and EBS spot FX (Reuters-EBS) vols for Jun 2015
Second tier Platforms
HotSpot: $25.7bn/day in Jun, down -4% on May, and down –6.7% compared to Jun 14 level of $27.5bn/day.
Fastmatch: $9.2bn/day in Jun, up +5.7% on May, and still an impressive+47.5% up compared to Jun 14 level of $6.2bn/day.
FXCM: awaiting data to be released
Now let’s look at the second tier of FX Platforms. Hotspot, and Fastmatch. Although Fastmatch volumes are small compared to the other major platforms, they have shown strong growth and with FXCM divesting their 30% stake and a batch of new innovative product offerings being rolled out, it looks like Fastmatch could be due for further volume increases as it continues to gain traction.
Like with EBS above, we can see from the chart below, the gap between Hotspot and Fastmatch continues to fall, as the chart drops away from the downward sloping resistance line at the points highlighted by black circles, showing continued strength of Fastmatch the expense of Hotspot.