Amidst a generally challenging year for OTC FX trading platforms, Cboe FX saw a significant increase in full amount trading on its platform in 2019.
The average daily volume (ADV) of trading on Cboe FX in 2019 was $32.3 billion, down 13.6% from the ADV of $37.4 billion that it recorded in 2018. However, it’s worth putting these figures into context.
The 2018 number represents Cboe FX’s highest ever yearly ADV, while the 2019 ADV is its second highest. Moreover, in percentage terms other platforms saw a similar slump in volumes last year against a backdrop of muted trading activity.
Source: Cboe FX
Cboe FX believes that a key driver of the volume growth that it has seen over the past two years is enhancements that it has made in its customised liquidity offering, as well as its transparency regarding firm and non-firm liquidity on the platform.
Last year Cboe FX began publishing more granular volume and liquidity statistics on its website, including 30-day rolling firm volumes and hourly/daily non-firm fill rates. Firm trading accounted for 39.2% of total volume executed on the Cboe FX ECN at its peak, and 35.5% on average in 2019, while non-firm fill rates were consistently above 85% throughout the year.
A perhaps more interesting statistic is the amount by which full amount trading has increased on the platform. The ADV of full amount trading on Cboe FX last year was $6.3 billion, a 197% year-on-year increase, while it hit an all-time monthly high ADV in December of $7.5 billion traded.
Source: Cboe FX
Indeed, looking at a graph of the monthly ADV figures and it becomes immediately apparent that the growth in full amount FX trading on Cboe FX over the past two years has been noticeably consistent and broadly linear.
The way that the offering works is that Cboe FX’s technology consolidates streaming price feeds from liquidity providers into a single best price at each desired size level that market participants can then trade on. The advantage of trading in full amount with a single liquidity provider is that it can help ensure minimal information leakage and reduce slippage. This is one of the reasons why Profit & Loss staff predicted at the beginning of 2019 that full amount trading would increase over the course of the year.