Mixed Early News from FX Platforms

The first trio of FX platforms to report FX volumes for October indicate little change from September’s numbers although they were clearly helped by increased activity surrounding the Cable flash crash on October 7. Bats Hotspot reports average daily volume (ADV) of $25.3 billion, a 10.6% decline from September, while FastMatch FX says its ADV was $13.6 billion, a fraction down from September’s $13.7 billion. Gain GTX handled $8.7 billion per day, up 3.5% month-on-month. Hotspot and FastMatch can be thankful for a very busy day on October 7, the day of the Cable flash crash, the former handling $37 billion that day and the latter $20.6 billion.
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WM Fix Trading Still Predictable, But Less So: Pragma

New research by Pragma Trading shows that while the situation has eased, there is still a degree of predictability around the direction of the London 4pm WM/Reuters Fix. In research last year, Pragma showed that the widespread use of TWAP (trade weighted average price) algorithms by executing agents during the Fix, had led to predictable trading patterns that were not only observable but also tradable, however it now says that the momentum pattern has “deteriorated to the point it provides no value”.
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Exclusive: Currenex Launches X2 Platform for Institutional Clients

Currenex has launched a new trading platform, X2, designed in response to the changing liquidity profile of the FX market and the evolving requirements of institutional FX traders. One important feature of the new platform is that it is based on HTML5 technology, in contrast to the Java-based multibank front ends that populate the market today. Speaking exclusively to Profit & Loss Rick Schonberg, global head of product for trading and clearing and the North American head of trading solutions at Currenex, says that although Java “serves its purpose today and will for many years”, there are advantages to having an HTML5-based front end.
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Icap and Wind Add Treasury, Spot, Data to Service

Chinese financial data provider Wind Information, has extended its joint service with Icap Information Services to provide market data that includes real-time US Treasury pricing and global FX spot rates. Following the partnership signed in early 2015 between the two parties to provide offshore Chinese renminbi (CNH) and end-of-day US Treasury data in China, the new offering now includes real-time benchmark data for US Treasury yield curves. Together with the data already available, Wind Info's client base can now gain access to timely, accurate data via the Wind terminal to enable more accurate price discovery and pre-trade analysis.
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Expecting the Unexpected in FX

The now infamous “SNB Day” forced a number of FX market participants to re-assess some of their long-held assumptions and business practices. As liquidity evaporated fresh concerns were raised about the lack of risk taking experience and appetite amongst some sell side institutions and the impact of technology on liquidity in stressed market conditions. As some firms reportedly attempted to re-paper certain trades it also added fuel to the ongoing debate about whether or not the practice of last look still has a place in the modern FX market. This is debate that has continued to rage on, notably at a very lively debate at Profit & Loss’ Forex Network New York conference in May.
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Concerns Remain About Algo Adoption in FX

When discussing the future of the FX industry finding consensus amongst market participants about what the market will look like and how it will function can be challenging. Yet one thing that appears to be broadly agreed upon is that the use of algorithms for executing trades is likely to continue growing in the coming years, as technology continues to evolve and firms look for new ways to minimise their market impact when trading. Indeed, the use of algos is often prescribed as the answer to a market where it is becoming harder to execute in size and buy side firms are increasingly concerned about this issue of market impact.
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Firms Launch FX Consulting Service

Institutional FX Advisory Partners (IFXAP) is partnering with ITG Analytics to bring the latter’s FX TCA product to middle-tier asset managers and pension funds in Europe. The new consultancy service will review the complete FX transaction lifecycle to ensure an efficient and transparent process, and, the firms say, seek to minimise cost and risk and maximise portfolio performance. The consultancy covers the entire FX trade lifecycle, including use of third-party trading platforms, data delivery and connectivity, assessment of pricing and service provided by FX dealers, evaluation of front and back office process efficiency, and monitoring of execution costs using ITG’s FX TCA.
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CLS Volumes Ease in July

The average daily input volume of instructions submitted to CLS, combining the settlement and aggregation services, fell 9.7% month on month in July, standing at 1,050,046. However, year on year volumes were less changed, decreasing by just over 1.7%. Meanwhile, the average daily input value submitted to CLS in July 2016 was $4.69 trillion, falling […]
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