P&L Report Card

This award has historically been about information and interaction – providing traders with the right information in an easy to read format, preferably on the same desktop (or mobile device) as their pricing. Traders have always relied upon analytics because their decision making process has to be as informed as it can be if they are to succeed, especially in today’s event-driven markets.

This means a clean dealing tile – the origins of this award – remains important for GUI traders, and we would highlight that GUI traders typically offer better value to a provider bank than a fully automated client. It equally means interactive execution tools, backed up by great analytics.

Previously we have noted the challenge of having traders use algo execution tools that only require the metaphorical push of a button and patience while the algo does its thing. Such a model inevitably leads to a tap on the shoulder because the trader is not offering too much in the way of value add.

Thankfully for traders, more banks than ever are putting the choice of strategy, and the ability to interact with that strategy while it is operating, in the hands of the user, meaning traders can exhibit their value add (most algo providers also conveniently show where the user interacted to show their added value in an empirical way).

Not all traders require an algo they can interact with, of course, because some are just “clickers” – equally others decide on a strategy and then use an algo to get into and out of it. More though, like to feel they are making a difference, and that means interaction.

Historically the range of products for those wishing to be more proactive has been limited, however the last year has changed that, with most major banks now allowing changing “on the fly”, including BNP Paribas, whose algo execution business was initially built solely along agency lines and relied upon the algo’s artificial intelligence to adjust the strategy.

We continue to like NatWest Markets’ Gamma trading functionality, BNP Paribas and Credit Suisse are two other institutions that offer this, as are Goldman Sachs.

JP Morgan, with its algo canister has also made a great leap forward, especially with the ability to break down an order by using different strategies for portions of the execution. This is the embodiment of putting the best tools in the hands of the trader.

Another factor we feel needs to be judged here is the ease with which a client can access information across asset classes – whilst accepting that correlations come and go one thing that remains constant is that correlations in some shape or form, will continue to exist across FX and other asset classes.

As such, the quality of the data and the analytical tools provided can be a differentiator and here Goldman Sachs, with its silo-less approach, may be onto a winner when the new model is rolled out over the coming year. The firm already offers great visualisation tools that offer a great insight into market conditions on the dealing tile – if this model is extended across asset classes, traders could find they have a new favourite.

Winner – Morgan Stanley

This is another repeat winner, because last year’s top dog actually got even better over the past 12 months. Morgan Stanley has won several awards from Profit & Loss for its work in helping the manual trader – most notably the virtual and physical keyboards.

The former was developed to ensure the manual trader remains an important part of the FX market’s ecosystem by empowering them, especially around critical events, when speed becomes all important.

Last year we noted the release of the physical keyboard, which offers the same function but with the familiarity of the dealer’s keyboard. Using function keys, manual traders can execute pre-loaded strategies in up to four markets. They are also able to trigger correlated orders, for example, if commodities markets move in a particular direction then execute the prearranged FX strategy.

To this in the past year, Morgan Stanley has developed a series of internal quasiCLOBs (central limit order books) that allow smart matching, by putting together different types of flow into what amounts to local dark rooms.

This means the trader can be protected from some of the more predatory firms out there as well as those that seek to gain a few pips here and there by effectively spoiling another’s execution quality.

So when it comes to actually getting the deal done, Morgan Stanley has undertaken years of hard work and development to assist in that process and to protect what is a valuable commodity in FX markets – the human trader. Fusion Edge is, in many ways, made for the “clicker”.

On the more prosaic side of the equation, good information and analytics remain vital and Matrix, with its excellent content delivery and analytics continues to thrive. We noted last year that the bank had reduced the amount of “flicker” on its screen, this was confirmed this year by a much easier visual experience when viewing the platform.

If a dealer wants basic analytics, they are available, we continue to like the idea, first rolled out by Goldman Sachs, of each dealing tile having a graph of the day’s range with the volume traded at each level.

When it comes to more sophisticated analytics, Morgan Stanley scores strongly again thanks to the work of its excellent and well-respected QSI team. The analytics are superb, being sharp, easy to understand and very intuitive. Graphical representation is so much easier to read than data tables when it comes to analysis and pre-trade TCA is no different – it can provide an instant, easy-to-understand, view of the market that all traders require.

Of all the providers out there, Morgan Stanley appears to have thought the longest and hardest about the trading experience for the human being – and the results of that process are plain to see on Fusion Edge and Matrix in general – it is a trader’s platform.

Galen Stops

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