Platforms Suffer Mense Horribilis

Most major trading venues will be glad to
see the back of August – following the downbeat results from FastMatch and
Hotspot, four other venues have reported a decline in FX volumes – two
registering historic lows and a third the lowest in seven years.

After FastMatch (-20.1%), Gain’s GTX
(-21.7%), and Hotspot (-13.7%) reported
lower month-on-month data
last week, this week has seen EBS and Thomson
Reuters report average daily volume (ADV) at its lowest level since both began
reporting data and CME Group register what is thought to be the lowest notional
ADV since mid-2009. Additionally, FX SpotStream saw its lowest activity levels
since it started reporting data at the start of this year.

EBS Brokertec’s spot FX volumes were $68.4
billion in August, down 18% from July and off 32% from August 2015. This is
only the second time since it started reporting data in 2007 that EBS has
fallen below the $70 billion per day mark for ADV – in April 2014 it set what
was then it’s low mark of $68.5 billion.

Thomson Reuters meanwhile saw spot ADV of
$83 billion across its platforms, a 14.4% decline from July and a 30.3% decline
from the previous August. Again, this is the lowest recorded since the firm
started reporting numbers in 2009 and it is easily the lowest ADV since it
started reporting joint FXall/Thomson Reuters data at the start of 2013. The
previous low was November 2015’s $90 billion per day.

On a broader note, Thomson Reuters’ volumes in all FX products also fell to the lowest level this year. ADV of $342 billion per day represents a 4.7% decrease month-on-month and 6% decline from August 2015.

Moreover, on the listed side, CME Group says the average number
of FX contracts traded was 632,000, down 12.7% from July 2016 and 28.9% lower
than August 2015. Profit & Loss
estimates the notional ADV at CME to be in region of $66.5 billion, the lowest
since April 2009. This also marks only the second time this decade that CME has
fallen below $70 billion, in April 2014 it registered $68 billion.

FX SpotStream meanwhile reports ADV of
$12.4 billion, down 36.8% on July and down 20.6% year-on-year. The firm’s data
include all streaming and matching products.

All in all, the numbers add up to a horrible
month for the platforms and, by association, for the wider foreign exchange
industry as activity levels continue to dive following June’s Brexit-inspired
spike.

Colin_lambert@profit-loss.com

Twitter @lamboPnL

Twitter @Profit_and_Loss    

Colin Lambert

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