Articles tagged by analytics
SmartTrade Technologies has launched a new cross-asset big data analytics solution.
The new solution, smartAnalytics, is designed to enable firms to achieve a greater control and transparency by leveraging smartTrade’s ability to store, analyse and visualise all the data flowing through their trading infrastructure.
David Vincent, CEO of smartTrade, says that there are two distinct reasons why market participants need these tools.
“The first reason is because new in regulations such as Mifid II regulators are asking for much more transparency into the trading process. So for compliance purposes, it’s important to have the reporting capabilities to provide data explaining the way that they traded.
ITG has hired Ruben Costa-Santos as director and head of FX and Andre Nogueira as a director on its analytics team.
Costa-Santos most recently worked at Deutsche Bank, where he served as head of FX platforms for the Americas.
Prior to joining Deutsche Bank in 2004, Costa-Santos conducted physics research at Utrecht University and at Stony Brook University, where he received his Ph.D in mathematical physics.
Costa-Santos will oversee ITG’s foreign exchange activity across the analytics, execution and workflow technology product groups. He will be based in the New York office.
Firms are increasingly demanding more sophisticated tools around FX execution analysis, explains Petra Wikström, global head of execution and alpha solutions at BNP Paribas.
Wikström says that for some time, firms have been looking at post-trade analytics to help improve their FX execution but that, increasingly, they are shifting their focus towards pre-trade analytics.
“Now a lot of the demand is coming in the pre-trade understanding of market impact: how it trades over the trading day across currency pairs, across time zones, across trade sizes, but also coming into that are whether there any differences across different venues,” she says.
Back in the early years of this century the path to success for a multi-participant platform in the FX world was lined with customers – genuine buy siders. If a platform could get the customers on their venue the banks – for it was the banks alone back then that were providing the liquidity – would follow.
This has pretty much been the case ever since, however I sense that the next year could see the seeds sown leading to a significant shift in this landscape.
FXSpotStream has onboarded State Street as the latest liquidity provider to its service, hired a new CTO and revealed plans to make a new analytics suite available to its liquidity providing banks and clients.
State Street becomes the 13th bank to go live as a liquidity provider on FXSpotStream’s price aggregation service, after Bank of Tokyo-Mitsubishi UFJ (BTMU) was added in December 2015.
“We know from client requests that liquidity from State Street will be a welcome addition to FXSpotStream’s existing bank liquidity. Our service provides State Street an expanded e-distribution network through our global connectivity network and client base. With co-location sites in New York, Tokyo and London, clients can use either our GUI or single API connection to access State Street’s liquidity,” Alan Schwarz, CEO of FXSpotStream, tells Profit & Loss.
NEX Markets has raised brokerage on its Select and Direct platforms following last year’s release of NEX Analytics and what Tim Cartledge, head of FX at NEX Markets, terms, “a range of improvements” to the platform including better aggregation logic and sweeping capabilities.
Notification of the price rise is understood to be going out in Europe this week with the rise to come into effect in April, it will also apply in Asia and the Americas in coming months as the new functionality is embedded in those regions.
I must confess something I did not expect to come out of last week’s Forex Network London was people saying to me that they are worried about the influence of data. I should stress that they were not suggesting data was useless – rather the inference was that some of their service institutions are over-reliant upon it and, even worse, a few have seen it as a panacea and subsequently forgotten some of the more traditional values in a relationship.
David Wright, managing director and global head of FX electronic distribution, and Jian Chen, head of Quantitative Solutions and Innovations (QSI), at Morgan Stanley, talk about how Transaction Cost Analy- sis (TCA) is moving to real-time.
Profit & Loss: Given that all the major single-dealer platforms have a TCA component now, how do you look to differentiate yourself in this area?
David Wright: So where the post-trade TCA adds value from the client perspective is as a basic benchmarking tool for the algos that they’re running. Then on the pre- trade side where we initially differentiated ourselves was on calculating transaction costs under a number of regimes, giving clients the ability to better understand the expected execution costs of one algo versus another.
Hasan Amjad, head of algorithmic trading at GAM Systematic Cantab, explains how machine learning tools and techniques have enabled his firm to improve almost every aspect of its trading capabilities.
“It goes all the way really,” he says, “Starting with portfolio construction, all the way to the final trade and the post-trade analytics.”
For example, Amjad points out that machine learning can be used to improve pre-trade analytics by more effectively identifying what kind of trading the firm should be engaging in during current market conditions. He concedes that there are other techniques that enable firms to determine market conditions, but that “machine learning just takes it that one step further by being able to ingest a lot more data and give you the answer”.
The traditional Markets business model in banking is under pressure, Colin Lambert talks to Imed Souki, global head of FRC trading at UBS, and Christopher Purves, recently appointed head of UBS’ Strategic Development Lab for FRC, about how the bank is responding to a such a challenging environment.
Colin Lambert: UBS recently announced a change in structure for its FX, Rates and Credit (FRC) business, can you outline the new business model?
Imed Souki: There has not been a significant change in the structure of the business, it is really a continuation with me taking sole responsibility for the business today, whereas Chris is tasked with taking it where it needs to be in the future. The client relationship dynamic is changing and we want to ensure we are, and remain, relevant to our clients.
This increased focus on execution quality has not been industry-wide, however, predominantly these analytics packages have been used by top end banks and some (but by no means all) of the larger, more sophisticated asset managers. Beyond those groups the challenge of cost or complexity (or both) has limited access and the willingness to engage with the data. Financial technology provider MahiFX is seeking to redress the balance, however, with the launch of MFX Echo, a trade analysis, liquidity visualisation and price-explain tool.
Thomson Reuters has introduced Trade Performance Analytics (TPA) for FXall users, a new analytics solution aimed at helping FX traders assess the quality of their trade execution, identify new opportunities to improve performance, and demonstrate best execution to their stakeholders.
In a release issued today, Thomson Reuters says that the launch of TPA was driven by the growing sophistication and adoption of analytics to drive decision making amongst FX market participants. The firm says that some of the benefits of TPA are that it will allow users to assess the quality of their historical execution, conduct like-for-like comparisons of liquidity providers and make better informed trade planning decisions.
Currency management firm Record Currency Management has engaged New Change FX, an independent provider of FX data and transaction cost analysis (TCA), to further enhance Record’s commitment to deliver minimum cost and maximum transparency for clients.
Record says it has always placed a high value on minimising transaction costs for clients, and providing the greatest level of transparency and disclosure available in the OTC FX market. To this end, it has a dedicated trading team and maintains multiple routes to access market liquidity.
The podcast is still on the road this week as Colin Lambert and Galen Stops check in for the second time this week from Chicago – and they are joined by another guest podcaster, Caplin CEO John Ashworth.
Listen in as he “owns” them with a terrific name drop as they discuss crypto regulation, potential limits to the market’s growth and the shift from retail to institutional.
The podcast also discusses a real life use case of the FX Global Code and looks (and fails) for other uses, before moving onto data and a good slap down of the hype around AI.
Book-ending the podcast are a plea by Lambert for further evidence to be considered in his debate with Stops over trend following (hint: It involves the Naim and eFX video on YouTube) – and each podcaster revealing their best “swag” from the exhibition hall at Forex Network Chicago.
FX liquidity providers that use technology and data analytical tools are becoming more powerful in FX markets, but liquidity consumers are becoming better informed.
The role of data and the empowerment it brings FX market participants was a key theme of the first panel looking at liquidity at Profit & Loss Forex Network Chicago. Panellists agreed that generally speaking, liquidity in FX markets is fine, there is always a price; however, the question liquidity consumers need to ask is: “How high is that price?”
Refinitiv has formally launched Trade Performance Analytics (TPA), the new analytics solution for users of FXall. “TPA empowers users to assess the quality of their historical execution, conduct like-for-like comparisons of liquidity providers, as well as make better informed trade planning decisions. Leveraging highly interactive data visualisation technology, this comprehensive analytics solution offers several analytics views that are available for immediate use, with the ability for users to customise their analysis using a wide range of filters,” says Refinitiv in a release announcing the launch today.
Platform providers are becoming more conscious about the value of data, both for their businesses and their clients. Galen Stops takes a look at what this means for the FX industry.I f there is one consistent trend that emerges talking to all of the major OTC FX trading venues in 2019, it is that they’re all keen to emphasise the importance of data, both with regards to how they operate their businesses and how their clients operate theirs. On the one hand, FX trading venues are increasingly looking for ways to package and sell their market data, creating new revenue streams for the business. On the other, seemingly all of them are investing in developing trade analytics tools that will enable users of these platforms to derive greater insights from their trading activity and more effectively evaluate the liquidity and pricing available there.
2018 was undoubtedly a transitional year for Refinitiv. In the first half of the year, the firm was finishing off big initiatives that were started in 2017 – although everything was all ready internally for the MiFID II deadline on January 3 there were subsequent client enhancement requests to work through, while Matching was re-platformed and moved into the Equinix LD4 data centre in London. Meanwhile, in the second half of the year, the focus shifted onto new initiatives: announcing plans to launch an analytics suite and making more algos available to clients on FXall. Of course, the obvious transition for the firm was being rebranded as Refinitiv from Thomson Reuters’ Financial & Risk (F&R) after a consortium led by private equity firm Blackstone agreed a deal to acquire 55% of the business.
Despite a general uptick in trading volumes in 2018, G3 volumes were – from a historical perspective – relatively subdued. Once upon a time this would have spelled bad news for EBS, but it is a testament to how the business has evolved in recent years that its spot FX volumes were instead actually up 9.5% year-on-year. “It’s been a big story around emerging market currencies and last year we observed a big increase in volumes in Asian currencies in particular,” says Seth Johnson, CEO of cash markets at CME Group, which owns EBS. “Fortunately for us, that’s a pretty good part of our franchise now. Most of our growth in the last three years has been driven out of Asia, and offshore renminbi is now our third largest currency by volume.”
In terms of volumes, Cboe FX indisputably had a great year in 2018. It’s average daily volume for the year was $37.4 billion, it’s highest ever recorded and a 27% increase from 2017. Breaking down this figure further, the ADV on the London matching engine doubled, there was a 35% increase in trading activity during European or Asian hours, CNH trading on the platform doubled to become the sixth most actively traded currency on the platform and there was good growth in its full amount offering which accounted for $3.5 billion in Q4 of 2018, up 600% year-on-year. Discussing what prompted such an uptick in trading activity, senior staff at Cboe FX point to investments in technology and infrastructure that occurred in 2017, in addition to the fact that the full amount platform was re-built in 2018.
Throughout 2018 FXSpotStream experienced a very sizable increase in trading volumes, even though it made no trading product launches on its service last year. Yes, in 2017 it added NDF/NDS products to its trading suite, and yes, in percentage terms it saw a healthy increase in trading volumes in this segment, but this still only accounts for less than 1% of the overall volume on the service. Instead, FXSpotStream’s CEO, Alan Schwarz, attributes the uptick in trading volumes to a significant increase in business from existing clients and volumes coming on line from new clients in the pipeline. At the same time, a broader shift in the market towards disclosed trading is contributing to FXSpotStream’s volume growth as is the firm’s fee structure, which sees liquidity provider banks pay a flat monthly fee to trade on the service while liquidity takers are not charged at all.
MahiFX has announced its intention to sell its Financial Conduct Authority, Australian Securities and Investment Commission and New Zealand Financial Markets Authority licences.
The move signals an what the firm says is an “important strategic change” as it pivots away from providing retail FX brokerage services towards what it says is “core competency as a B2B technology provider to banks and brokers”.
David Cooney, co-founder and CEO of MahiFX, says, “The retail space is experiencing many of the challenges that the institutional space has been faced with for years.