Month: May 2018

Some Initial Thoughts on the 360T/GTX Deal….

So the big news this week was that 360T has agreed to buy the GTX ECN for $100 million. This is obviously an interesting deal in a number of ways, and here are some of my initial thoughts.

Firstly, let’s look at the price per $1 billion of spot FX average daily volume (ADV).

We did a very rudimentary analysis of this when Deutsche Börse announced the purchase of 360T back in 2015 and found that it paid about $11.36 million per $1 billion dollars of spot FX ADV, compared to about $12.7 million per $1 billion of ADV paid by then-BATS Global Markets for Hotspot.

Altunis, Madar Step Down at Deutsche?

Market sources tell Profit & Loss that Kenan Altunis, head of FX sales in the bank’s Institutional Clients Group, and Fabio Madar, global head of client coverage for FX, are stepping down from their roles at Deutsche Bank.
Altunis has been with Deutsche since 2009 having rejoined the bank from a four year stint as global head of FX sales at Unicredit.
Madar joined Deutsche in 2005 as a regional FX sales specialist after a five year spell in FX sales at Lehman Brothers.
Deutsche Bank declined to comment when approached.

CLS Invests in Blockchain Provider

CLS has made a strategic investment in R3 and is planning to explore how Corda, R3’s enterprise blockchain platform, can be deployed to improve efficiencies for its members.

David Rutter, CEO of R3, comments: “CLS is critically important to the functioning of one of the most important markets in the world. It is absolutely right that major infrastructure players like this look to technologies such as blockchain to continue making their products and services faster, easier, safer and more cost-effective for the end user. CLS’s investment is testament to Corda’s position as the enterprise blockchain platform of choice for the financial services industry. We look forward to working with them.”

The Need for a Better FX Benchmark

Philippe Bonnefoy, founder of Eleuthera Capital, explains why the FX industry suffers due to a lack of an effective industry benchmark.

Bonnefoy discusses why the 4pm Fix can be beneficial, but points out that it also suffers from potential gaming. He then adds that benchmarking remains a huge issue for investors trying to work out whether they should consider FX as an asset class or not.

“With an equity benchmark, you know what the index is doing, for fixed income you know what the composite bond or the bond benchmark in 10-year Treasury is. For FX, is it cash? Is it a three-month yield? Is it overnight pricing? How do I say that you created value for me in trading FX other than just saying whether you were positive or negative?,” asks Bonnefoy.

And Another Thing…

I have been reading through the application for bail lodged by Mark Johnson’s lawyers following his conviction and sentence to two years’ jail and not only do I think it previews his full appeal, but while I understand the job of the counsel is to make the best case they can by stretching facts to the limit, my natural reaction has also been that something went badly wrong during the trial for the verdict to be delivered the way it was.

CLS Welcomes First Mexican Settlement Member

Banco Monex has joined as a CLS settlement member, becoming the 70th firm to assume the status.
“I could not be more pleased to welcome Banco Monex as the first Mexican bank to participate directly in our settlement service,” says David Puth, CEO of CLS.
“Participation in CLS Settlement continues to grow, and our settlement members, such as Banco Monex, play a critical role in ensuring market participants have access to the highest standard of risk mitigation to support their trading operations and enable us to deliver a safer and more stable FX market. We look forward to continued growth in the Mexican market.”
Mauricio Naranjo, CEO of Grupo Financiero Monex adds, “Joining CLS as a member with direct participation in the CLS settlement service is an important milestone for Banco Monex. The Mexican peso is the most actively traded currency in the Latin American region and mitigating settlement risk is a key priority for many institutions. Participation within the CLS ecosystem will enable us to achieve this goal for our operations and through time for our clients as third parties, while significantly enhancing liquidity efficiencies for the Mexican market.”

P&L Talk Series with AirSwap’s Michael Oved

Michael Oved, co-founder of AirSwap, met with Profit & Loss to discuss his vision for the potential of a decentralised trading platform based on the Ethereum blockchain. Previously an algo trader at Virtu Financial, Oved explains how he took lessons from the FX market and applied them to crypto trading to create a peer-to-peer platform.

Profit & Loss: AirSwap was designed around an Indexer, which acts as a search engine, matching up buyers and sellers, rather than using an order book model. With your background as an algo trader at Virtu Financial, did you look to the FX market for ideas when developing AirSwap?

AirSwap: Decentralised Trading for Cryptoassets

AirSwap, a decentralised global marketplace for Ethereum tokens (ERC20), launched its peer-to-peer platform on April 25th, and saw $1 million worth of trades made over the platform within the first 24 hours.

AirSwap is a blockchain-based search engine that comprises a bulletin board that uses software known as smart contracts to facilitate direct, peer-to-peer trading of tokens on the Ethereum blockchain.

In 2017, AirSwap developed and released its core technology followed by a $36 million token sale using the platform, led by co-founders Don Mosites and Michael Oved, an algo trader previously at Virtu Financial. Advisors to AirSwap include veteran investor Michael Novogratz, venture capitalist Bill Tai, and co-founder of Ethereum, Joe Lubin.

Deutsche Börse Adds GTX to Stable

Deutsche Börse has further built out its OTC FX business with the announcement that its 360T unit, which is responsible for foreign exchange at the firm, has agreed to acquire the GTX ECN business from Gain Capital for $100 million – the deal is expected to close in the second quarter of 2018. The exchange group says, to reflect the importance of the GTX brand and its place in the 360T product suite, the company will be renamed to 360TGTX.

Clearing Mexican Peso Swaps Just Got a Little Easier

IHS Markit’s MarkitSERV has expanded its global network of derivatives clearinghouses by connecting to Asigna, the clearinghouse for Mexican listed and standardised derivatives.

With the new connection, it will provide standardised workflow and connectivity for matching, confirming and clearing Mexican peso TIIE 28 swaps.

“With the connection between MarkitSERV and Asigna, we can offer our clients an efficient and secure channel to transmit confirmed TIIE swap data to our clearinghouse,” says Catalina Clavé Almeida, CEO at Asigna.  “It also helps global banks on the MarkitSERV network do business in our market.”