etrading trends research by GreySpark


GreySpark (in conjunction with Best Execution) have released a detailed study on the trends in etrading.

It dispels some common industry myths… Continue reading

FXAll to register as SEF – my thoughts


Yesterday I blogged about how banks should be doing more to ‘future proof’ their single dealer platforms, by providing tools and services that would enable clients to continue dealing on SDPs with greater confidence, whilst complying with the evolving regulatory landscape.

I touched on the idea that bank SDPs should consider providing routing capabilities for client requests through to SEFs for products such as NDFs and FX Options if required: Continue reading

Growing number of FX Options platforms


Today BofA Merrill announced the launch of their new FX options platform, and joined a growing number of new FX options initiatives as shown below:

Single Bank Platforms:

BofA Merrill today announced their new FX Options offering integrated into their FX platform (here)

Credit Suisse, Merlin FX for i Phone (here)

Potential SEF Platforms

Multi Bank: Digital Vega (here) went live in Nov, and GFI rebranded their Fenics Trader as GFI Direct

Exchange model: SurfaceExchange launching SurfaceExchange (going live Q1, 2011)

No doubt more to follow.


Single Dealer Pages are NOT Single Dealer Platforms


It’s always a good sign, when your competition attempts to copy you.

Bond Vision, the bank to client arm of the MTS bond trading platform, today announced the launch of a suite of Single Dealer Pages for fixed income from six leading dealers – (similar to the single bank page concept that is already available on Bloomberg).

In both FX and FI, banks and clients seek a more customized “Relationship Channel”, and whilst MDPs seek to satisfy this demand, the nature of their model, means they can only really offer a ‘one size fits all’ single bank channel.

So, from what we see, whilst MDPs continue to deliver an important source of client execution flow, banks are nevertheless continuing to invest in their own Single Dealer Platforms, building highly differentiated, and targeted segment solution “Relationship Channels” for clients, through which clients can access the deepest liquidity, the finest prices, and the most compelling and actionable research.



Spending on Single Dealer Platforms


I recently attended an FX conference hoping to hear a spirited panel debate on the future of ‘Single Dealer Platforms (SDPs)’. I was therefore somewhat surprised to hear the chair suggest that the future was actually through multi dealer platforms (MDPs) – his plan worked, as the debate was pretty poor until that point, and certainly livened up after that!

Being in the audience and not on the panel, I bit my tongue as long as I could, in order to allow the panelists their ‘sponsored air time’ (one bank, one MDP, and two others).

But in the end, I had to raise my hand and proceed to explain why (in my opinion) that was not the case, and that volumes traded through single dealer platforms were running at twice the levels traded via the multi dealer platforms (see my previous blog on eFX volumes Single dealer vs multi dealer).

Continue reading

eFX volumes Single Dealer Platforms vs Multi Dealer Platforms


Research by Greenwich Associates (released in March 2010) states that around the world, multi-bank electronic trading platforms captured about 40% of overall FX trading volume in 2008-2009 and single-bank platforms captured another 15%.

However, the two most authoritative sources of actual empirical data on FX activity, namely the Bank of England (BoE) and the Bank of International Settlements (BIS) seem to paint a very different picture!

Bank of England (BofE): Empirical data released by the Bank of England (Oct 2009), covering FX activity between reporting dealers and clients in London (the largest global FX market), shows that single dealer platforms (SDPs) accounted for 25% of all electronic FX volume, compared with only 13% of electronic volume done through multi-dealer platforms (MDPs).

(BoE):London daily eFX volumes by SDP and MDP (2009)

Bank of International Settlements (BIS): The most definitive empirical data on global FX volumes is produced every three years by the BIS in their Triennial survey. Data from the 2007 triennial survey shows a similar picture to the BoE data. Whilst eFX accounted for 34% of all global daily FX volumes, SDPs accounted for nearly 30% of all electronic FX volume, compared with only 21% done through MDPs, as shown below:

(BIS): Global daily eFX volumes by SDP and MDP (2007)

The 2010 Triennial Central Bank Survey of FX activity will be released in August, and should prove fascinating reading in terms of the latest trends.

Two common misconceptions about Single-Dealer Platforms


One of the things that I’ve often been asked when talking to prospective customers, journalists or analysts about single-dealer platforms (SDPs) is, “Won’t using an SDP conflict with a buy-side client’s best execution requirements?”

This question highlights two commonly held, but erroneous, beliefs – first that a multi-dealer platform will always offer the best price, and that best price and best execution are the same thing. Let’s deal with these one at a time.

First: “Being able to see multiple prices (on a multi-dealer platform) will give a trader the best price at which to trade.”

Continue reading