Lmrkts, a compression provider which recently
facilitated the first multilateral FX compression designed to lower
counterparty exposures and consolidate cash flows, has agreed a strategic partnership
with Tradition to handle execution and compression processing for FX forwards.
A limited release is planned for August, while the full commercial
release takes place later this year with additional asset classes due to be
added to the service over time, the companies say.
In a release issued today, Lmrkts says that it has been
“discreetly” working on this FX solution with a select number of banks for over
a year. During this time, it says the focus has been on refining its technology
and product to ensure it is in tune with the market, by offering a solution
that is easily scalable and delivers risk efficiencies at a reduced cost.
The offering is an analytic that sits on top of existing
market infrastructure. Participants set bespoke constraints and objective
functions and Lmrkts determines an output that is designed to be both mutually
beneficial, but and lower systemic risk.
“The power of the new partnership is that instead of a
Chinese wall, Lmrkts paired with Tradition, offers a separation of church and
state,” says Lmrkts.
This means that Tradition’s broking business will have no
information regarding the positions or exposures of the banks, but can still be
employed to lower them. According to Lmrkts, the benefit of partnering with
Tradition is that it will enable the firm to scale its solution to meet the
needs of global banks.
“The combination of Lmrkts’
analytics with Tradition’s distribution, pipes and support allows both firms to
showcase and focus on what they offer best,” says Andy Coyne, Lmrkts’ interim
head of FX. “My role has been to help commercialise what has been in clinical
trials to wider release. Fostering introductions and watching new banks test
and sign on to the platform has been rewarding in and of itself, it speaks to
banks’ priority of lowering counterparty exposures and associated costs.”
Dan Marcus, global head of strategy and business
development at Tradition, adds, “We are delighted to be partnering with Lmrkts to
provide the execution venue for their compression service. Lmrkts is a trusted
and independent third-party that will enable our clients to retain sensitive
trade information, reduce costs and risk exposures without compromising trading
“In the current age of FinTech innovation, this partnership
demonstrates Tradition’s commitment to be at the forefront of technological
change and ensure we provide the best service to our customers.”