Tag: ECNs

ECNs

E-Ratios Rise, Channels Change in FX Turnover Data

Data from the latest UK and US FX committee turnover surveys indicate that customers went through disclosed channels in April 2020, however dealers internalised less risk. The UK’s FX Joint Standing Committee report has one enigma – a change in the report that has seen the share of the multi-dealer platforms in spot trading apparently […]

And Another Thing…

I mentioned in a recent column the increasing noise around fragmentation in equity markets, specifically end user frustration and unhappiness with it, but it is noticeable to me that the same discussion is gaining more volume in FX. Now I need to stress that this is not me (for about the 10th time) predicting consolidation […]

And Finally…

The very fact that more and more people from the platform/connectivity world are talking to me about FX swaps tells me that, as I have suggested many times before, change could be coming to this segment of our industry. Ideas and initiatives are all fine, however, but will they translate into definitive market structure change? […]

In the FICC of It

In this week’s lively and extended podcast Colin Lambert and Galen Stops mange to disagree on just about everything as they dig into the details around the announcement that Citi has given notice to four of the biggest non-bank market makers in FX and discuss the potential implications for the industry as a whole. They […]

Multi-Dealer Liquidity on the Rise

Although the latest FX committee turnover data hold no terrors for other channels, a longer term trend does seem to be confirmed that more volume is heading towards the multi-dealer model, especially those on a disclosed basis. Colin Lambert takes a look.The historically clichéd method for a customer to execute an FX hedge was to call three or four banks and ask for a price. Surprisingly, even as relatively recently as late 2017 customers were still telling Profit & Loss and other industry surveys that they still preferred to pick up the phone, but more recent data suggest this is no longer the case and that customers are moving to the e-channel for their FX needs.

Multi-Dealer Liquidity on the Rise

Although the latest FX committee turnover data hold no terrors for other channels, a longer term trend does seem to be confirmed that more volume is heading towards the multi-dealer model, especially those on a disclosed basis. Colin Lambert takes a look.The historically clichéd method for a customer to execute an FX hedge was to call three or four banks and ask for a price. Surprisingly, even as relatively recently as late 2017 customers were still telling Profit & Loss and other industry surveys that they still preferred to pick up the phone, but more recent data suggest this is no longer the case and that customers are moving to the e-channel for their FX needs.

And Finally…

If you ever wanted an example of how an enhanced market structure – specifically around electronic trading – helps to build volumes, one need look no further than NDFs. Volumes have been climbing steadily over the past five years, indeed I am starting to think they may eclipse FX options soon, and how people trade them also appears to be shifting, to the degree that I wonder if the NDF market is giving us a glimpse into the market structure of the foreseeable future?

Some Initial Thoughts on the 360T/GTX Deal….

So the big news this week was that 360T has agreed to buy the GTX ECN for $100 million. This is obviously an interesting deal in a number of ways, and here are some of my initial thoughts.

Firstly, let’s look at the price per $1 billion of spot FX average daily volume (ADV).

We did a very rudimentary analysis of this when Deutsche Börse announced the purchase of 360T back in 2015 and found that it paid about $11.36 million per $1 billion dollars of spot FX ADV, compared to about $12.7 million per $1 billion of ADV paid by then-BATS Global Markets for Hotspot.

Not Necessarily Consolidation But…

There isn’t much left up for grabs, but 2018 will see a deal in the platform world, says Colin Lambert.

In all the history of the Profit & Loss Crystal Ball, platform consolidation has been the most fertile ground…..mainly for critics! If viewed in terms of the number of deals, however, the story is a little different.

The headline has been in demand from exchange groups for an OTC presence, culminating in deals for Hotspot, 360T and Fastmatch, and it is hard not to see this continuing – in spite of CME finally deciding to do something about further penetrating the OTC space by launching a service itself rather than entering partnerships.

The Great Divide

Colin Lambert believes data will become a commodity and will generate a divide between the “haves” and the “have nots”.

There is little doubt that data drives most things in foreign exchange. Pricing is the obvious area, but client business is now also analysed to great depth as service providers seek to more clearly define the value they extract from their franchises. Throw in operating metrics as well as reporting, and data permeates just about every part of the business.