Tag: Liquidity

Liquidity

RBA Report Casts the Net Wide in Seeking Flash Crash Answers

A report in the Reserve Bank of Australia’s Statement on Monetary Policy looks at the flash event in FX markets on January 3 when the yen appreciated some 3% in a matter of seconds before falling back, but fails to discern a single factor behind the move.
Citing the fragmentation of the FX markets across an increasing number of different platforms, the RBA says “it is difficult to draw firm conclusions on the cause of the flash event”, adding that three factors are likely to have contributed to what it terms the “brief deterioration in market conditions”.

Survey: FX Traders Cite Liquidity as Top Daily Concern

The availability of liquidity is the biggest daily issue facing FX traders right now, according to a new survey by JP Morgan.The survey results come from 200 of JP Morgan’s largest Institutional clients, with the majority being FX traders and the rest being rates and commodities traders.In total, 40% of survey respondents cited liquidity availability as the biggest day-to-day issue facing traders in 2019, with 25% instead pointing to efficiency of process, 18% to best execution requirements and 17% to price transparency

And Another Thing…

The early signs from US bank reporting season is that FICC divisions haven’t done well at all and the admission from one bank that the decline in earnings was due to clients being reluctant to enter markets signals to me that the FICC business model has to change. Just as news outlets can’t have hundreds of reporters sitting around waiting for the Titanic to sink again, so banks need a better balanced FICC business – and that means more traders proactively taking risk.

OTCXN Continues Growing its Network

OTCXN, a blockchain-powered capital markets infrastructure company today announced that Fractal Wealth, a proprietary algorithmic trading firm that trades digital assets, has joined its network.This news comes just days after OTCXN revealed that OSL, an OTC digital asset brokerage company in Asia-Pacific, has also joined its network.“We are pleased to have Fractal Wealth join the OTCXN network. They represent a unique source of liquidity for our rapidly growing and diverse institutional client base. As an algorithmic trading firm, they will benefit from the ability to trade programmatically on OTCXN’s ECN, LiquiMatch. OTCXN’s aggregated liquidity spans both native, resting dark and lit orders, executable quote streams from major liquidity providers, plus institutional, as well as retail exchanges that have joined the network.

OTCXN Signs OSL as Crypto Liquidity Provider

OTCXN, a blockchain-powered capital markets infrastructure company, announced that OSL, an OTC digital asset brokerage company in Asia-Pacific, has joined its network as a liquidity provider. “We are extremely pleased to have OSL join our network as a core liquidity provider. Having a major market participant like OSL providing liquidity on our network is a testament to the strength of our core value proposition – eliminating trading counterparty and settlement risk. The presence of key market participants like OSL accelerates market adoption and expansion of the OTCXN network to reduce risks and efficiently scale crypto trading across the entire ecosystem. We look forward to working closely with OSL to serve our mutual clients,” says Rosario Ingargiola, CEO and founder of OTCXN.

In the FICC of it

In this week’s podcast Colin Lambert and Galen Stops tackle two big stories in the FX market: the recent flash crash in the Asia markets and the changes at Citi’s FX prime brokerage (FXPB) business.Both Lambert and Stops express skepticism that the news regarding Apple’s profits in China was the cause of the flash crash, although the former is equally unsure about an alternative theory put forward by the latter to explain the price moves. Both agree though that the event was symptomatic of changes in the nature of liquidity in the FX market, and note a disparity between what many market participants will say in private and in public on this matter.

Looking for Liquidity

As cryptoassets continue to endure a tough bear market, Profit & Loss hosted an event called OnTheBlock to discuss what impact this has had on liquidity conditions.“Right now, we haven’t seen the wave of institutional money that everybody talked about in 2017,” said Martin Garcia, managing director at Genesis Trading. “The narrative then was very much that this is just the retail sector trading these assets and that when the institutional funds come in, it will grow to yet another scale.”To be clear, Garcia still thinks that institutional-sized money and liquidity will enter the crypto space, but that it will do so at a much slower and steadier pace than many were previously predicting.

In the FICC of It

It may be his life-threatening illness (slight cold) but Colin Lambert is in punchy form in this week’s In the FICC of It podcast, so listen in as he and Galen Stops discuss a busy week in the FICC world.
Starting with the potential implications of Cboe’s agreement with UBS to help broaden the reach of its FX platform – and why Refinitiv might want to sit up and pay attention – they rampage through the multi-dealer platform world looking at how (if according to Lambert) platforms can differentiate themselves. Are these firms really taking the single dealer model and deploying it in a multi-dealer landscape? Will this work? What are the USPs of a single and multi-dealer platform?

Cboe Targets Regional Banks with UBS Credit Arrangement

Cboe FX announces today that UBS is acting as a Central Credit Intermediary (CCI) for certain counterparties wanting to access its platform, with an eye to bringing on more liquidity from regional banks.

Under the new arrangement, regional banks or other financial institutions that might have limited bilateral credit can leverage UBS as a spot FX intermediary to alleviate this hurdle, settling all trades exclusively with UBS. The potential benefit of this for these institutions, according to the exchange, is that they will gain exposure to a greater number of Cboe FX participants despite the absence of direct credit relationships.

Competition Continues to Heat Up Amongst Liquidity Providers

As more non-bank liquidity providers become active in the FX space, firms need to find ways to differentiate themselves to their counterparties, says Giovanni Pillitteri, portfolio manager at HC Technologies.

“I do think that there will be certain consolidation in some counterparties,” he said in response to a question about increased competition amongst liquidity providers. “If your edge is only based on speed, that’s going to be commoditised, so you need to have the full spectrum of solutions and offer that full spectrum of solutions to counterparties to be able to compete in this environment.”

Pillitteri also emphasised the importance of having a broader, cross-asset approach to trading in order to be a successful FX liquidity provider.