Tag: Market Making

Market Making

And Finally…

My colleague Galen Stops and I were recording some material for our podcast series “In the FICC of It” late last week and during this hour or so we made the observation that one of the buzz phrases that seems to be used more and more in the industry (and that we dislike intensely) is “unique liquidity”.
I accept that the FX market does have unique characteristics, participants and flow, but am I sceptical of those claiming “unique liquidity”? You betcha!

Predictions on the Future of the FX Industry

Following his retirement from Citi, where he spent nearly 30 years and most recently served as global head of G10 FX, James Bindler, reflected at Forex Network London about the changes that he’s observed in the industry.

He’s also made a number of predictions regarding its future.

1. The line between banks and non-banks will continue to blur

“As always with all these things, it comes from both sides of the equation. Banks will get faster and high-frequency traders will seek capital to backstop their risk taking activities,” said Bindler.

Discussing the challenges facing market makers, Bindler noted that the cost of FX trading is generally rising, particularly for firms that need to use prime brokers to access the market.

And Finally…

Patchy liquidity and the lack of pre-positioning cannot alone account for why we get some wild moves in markets – sometimes the liquidity providers should wear some of the blame. How else do we explain spreads in Cable that are almost as wide as the entire range this decade?
The lack of incentive to take any risk doesn’t help, but what justification can a market maker have for quoting 50 big figures wide? At that spread, they might as well pull out of the market altogether.

Building New FX Strategies

Giovanni Pillitteri, global head of foreign exchange trading at GTS Securities, talks to Profit & Loss deputy editor, Galen Stops, about how his firm takes a holistic view of financial markets in order to build effective FX strategies.

In recent years there has been a well-documented trend of non-bank market makers expanding out of their traditional core equities business to trade FX. GTS Securities is one such firm, with Pillitteri explaining how its equities expertise can help inform and improve its FX strategies.

“We look at the various asset classes in a very holistic way and there are multiple strategies that we have that has correlations between FX and equities,” he says.

XTX Markets Partners with Prime Services Broker

Invast Global, an Australian-based non-bank prime services brokerage, has announced a deal with XTX Markets that will allow its clients to access XTX’s liquidity via its multi-asset prime services facility, PurePrime.

Invast claims that the partnership illustrates the rapidly growing stature of non-bank participants in the financial markets as banks continue to feel the effects of increasing regulatory constraints.

The firm says that this tie-up with XTX follows growing global demand for the PurePrime facility, which offers FX and CFD liquidity via multiple trading GUIs or APIs, backed by what it says are three tier-one prime brokers.

And Another Thing…

I am probably not the only person nervously awaiting the outcome of next week’s US election, although I suspect many have much different – and to them much more important – reasons.
My concern is that in spite of it being a “known-unknown” the FX market is facing a major event – and this is on a global scale not the relatively local affair of Brexit – and its recent form when it comes to handling a massive surge of business is not great.

Alpha Quest: Navigating the Storm

In many ways alpha seeking firms trading FX have endured something of a perfect storm of return reducing conditions over the past few years.
Interest rate differentials are still largely non-existent as central banks persist with low interest rate policies. Many banks have pulled back from both principal risk taking and credit provision in FX, making life harder for their buy side counterparts.
Regulations continue to take their toll on both buy and sell side firms, introducing new cost pressures and causing budgets to be increasingly diverted towards compliance functions.

XTX Markets Hires New Head of Sales for Asia

Electronic market-maker XTX Markets has appointed Chan Wai Kin as its new head of sales for Asia Kin was previously head of FICC ecommerce (APAC) at Morgan Stanley. Prior to that, he led the eFX sales team within the APAC (ex-Japan) region at Deutsche Bank, the company says. “With the opening of our Singapore office […]

And Another Thing…

I don’t think there is anyone out there who doesn’t think the FX market performed well under the stress of the surprise outcome from the UK referendum last week, but I suspect the real test is only just starting. Don’t get me wrong, this is not one of my contrarian columns that will say the […]