FX Platforms Oct 15 vols: Major platforms vols slightly lower, CME vols crash, whilst Fastmatch shines with double digit gains


Following weak Sept FX vols, the major OTC FX platforms reported further falls in October, with Reuters down -4.6% at $104bn/day, EBS down -6.5% at $83.6bn/day, whilst The CME futures exchange saw vols for all FX products collapse, down -22% at $92bn/day.

The only bright spot coming from second tier platform Fastmatch, which recorded a +15.4% gain to $9bn/day.

In terms of year on year changes, all platforms are now showing large falls, with Reuters Spot down -27.8% and EBS down -29.1% and CME down -36% compared to last Oct. Continue reading

Thoughts on ICAP – Tulletts discussions


The discussions between Tulletts and ICAP whereby Tulletts will buy ICAP’s global broking business is a great move on the part of ICAP. They will offload the high cost, low margin global broking voice business, and focus on the high margin and growing electronic broking (EBSBrokertec) and post trade services (including Traiana and TriOptima) divisions.

Update 11 Nov: Tullett confirmed acquisition of  ICAP’s Global Broking Business for £1.1bln here

Looking at these two slides from their last investor presentations Continue reading

Getting to grips with MiFID II


Following the release last month of the Draft Regulatory Technical Standards (RTS) and Regulatory technical and implementing standards Annex 1 for MiFID II / MIFIR firms and their regulatory experts and consultants will by now be deep into the technical details.

Whilst some firms have voiced concern that they will struggle to implement the technology changes required, others are already looking to turn regulatory compliance into competitive advantage. The clock’s ticking towards MiFID II implementation on 3rd Jan 2017, and the FCA has indicated that new authorisation could take up to six months, so really no time to lose.

As can be seen from the impact assessment heat-map below Continue reading

CLS FX Settlement: Value of transactions up modest 3.9% in Sept 15 (launches new FX fwds compression service)


The CLS FX settlement system has reported a modest +3.9% rise in the average daily value of FX trades settled through their platform in Sept 15, taking volumes back up to $4.8trillion/day (up from $4.6trillion/day in Aug 15), and the highest level since Jun 15, although still way below the high of the year of $5.3trillion/day in Jan 15.

The slight monthly rise, is slightly out of line with the modest falls in spot volumes reported by the major FX platforms earlier this month, which saw falls ranging from -8.4% for Reuters to -10.9% for EBS.

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

ICE exchange to buy IDC for $5.2bn (regulatory play around quality reference/market data?)


Interesting to see The ICE exchange is to buy IDC for $5.2bln.

According to ICE Chairman and CEO Jeffrey Sprecher, the acquisition:

“builds on ICE’s global market data growth strategy by expanding the markets served, adding technology platforms and increasing new data and valuation services

…. with IDC as the cornerstone in the next phase of extending our services, we will build on our track record of solid execution on integration and innovation by focusing on the needs of our customers in the evolving data services marketplace.”

IDC’s clients include banks and buyside firms such as Municipal funds, asset managers, hedge funds.

ICE’s data business covers Continue reading

LMAX FX report: Restoring trust in global FX markets (well worth reading)


Just finished reading a new report and survey from exchange operator LMAX, called “Restoring trust in global FX markets – Striking a balance between transparency and efficiency”.

It’s detailed, with lots of charts and tables and expert opinions, and covers much ground, including topics explored in recent posts around transparency, the FEMR report, and the issue of last look and more.

David Mercer, CEO of LMAX starts by stating:

Liquidity providers (LPs) and market makers need to be rewarded for the risks they take, and in order to enjoy the benefits of transparent price discovery and firm liquidity, customers must meet the costs of the service provided. Fair execution must come at a fair price, and transparency cannot come at the cost of destroying liquidity provision.

Customers have benefited from new technology, with spread compression and lower commissions. However, traditional LPs have had to invest heavily in technology to support globally distributed client base, whilst facing ever more sophisticated buy-side customers and smaller, more naturally agile competitors in the realm of liquidity provision (ie: non-bank market makers).

Mercer, adds that there is much that LPs can learn from these new entrants, including:

elements of exchange-style trading that create a fairer trading environment.

Proposals currently being considered to enhance transparency in the FX market risk disadvantaging Continue reading

Barclays discloses ‘Last Look’ guidelines (but can’t find any from other banks)


Back in June 15, the Bank of England’s Fair and Effective Markets Review (FEMR), published its final report, setting out 21 recommendations to help restore trust in the wholesale Fixed Income, Currency and Commodity (FICC) markets. Among them was the need to ‘improve the controls and transparency’ around FX market practices, including ‘last look’,

The report stated that the new global code should address the practice of ‘last look’, which gives market makers a final opportunity to reject an order after a client commits to trade at a quoted price. As set out in Section 2.4.1, this practice developed out of the need to protect market makers against unanticipated market movements and predatory trading practices.

“the global code should also set out clearer standards on the use of last look, including whether it should remain an acceptable market practice”.

However, Continue reading