Articles tagged by buy side
Whether more buy side FX trading activity will shift into order books, and how long this shift could take, was a key discussion point in a webinar examining FX market structure on Tuesday.
During the webinar, hosted by Greenwich Associates, ...
As client requirements evolve in response to changes in FX
market structure, services providers need to be ready to adapt to these new
demands, said panelists at Profit &
Loss Forex Network Toronto conference last month.
Liquidity has been a big ...
In recent years the sell side has justifiably been criticised for its behaviour in the FX market. But should regulators and market participants be taking a closer look at how the buy side operates in this market? Galen Stops reports.
The FX industry has been rocked by a number of scandals in recent years and in many cases the implications of these scandals is only now coming home to roost.
Two of the largest custodian banks in the world, BNY Mellon and State Street, have agreed $714 million and $530 million settlements, respectively, related to allegations they systematically set disadvantageous rates for their customers in contrast to their claims to be achieving best execution for them.
XTX Markets has made XTX-ray, a tool designed to replicate how sell-side market makers analyse spot FX liquidity, available to buy side market participants.
XTX-ray looks at a wide range of data, including fill ratios, the cost of rejected trades in USD, spreads and market impact, to reveal “hidden” costs embedded in firms’ spot FX execution with the aim of enabling them to more effectively analyse the liquidity they are accessing.
“XTX-ray makes state-of-the-art sell side execution analysis available to buy side firms, and counterparties will be able to evaluate the execution quality of their liquidity providers.
A new whitepaper issued by Contango Markets, a consultancy firm based in London, warns that buy side firms are increasingly being dumped by derivatives clearing firms that are re-evaluating their business models following changing cost pressures.
“Regulation, higher capital requirements and constraints on revenue models in derivatives clearing are changing the way banks in particular look at their clients. In line with a trend that started some years ago, the number of derivatives clearing firms is shrinking further.
“Bank must earn more from their clients or be faced with exiting the listed derivatives brokerage business (unwelcome), a
On the day that the second and final phase of the FX Global Code of Conduct was released, panellists at Forex Network New York debated whether it puts an unnecessary burden on buy side firms.
Philip Weisberg, a member of the Market Participants Group (MPG) that helped craft the Code, stated that it “puts an enormous responsibility on the buy side”.
Giving an example of this responsibility, he pointed to last look, a practice that some platforms do not allow and others allow to be implemented in a variety of ways. The platforms must disclose their last look policies, meaning that buy side firms need “to have some type of framework for evaluating the efficacy of a venue or liquidity provider choice or execution choice”, Weisberg explained.
new rules, according to a survey by the Alternative Investment Management Association (AIMA).
Fund managers globally that responded to the survey said that their biggest challenge regarding Mifid II is uncertainty about what the rules contained within the regulation actually mean – both their scope and substance – as well as what they perceived to be a lack of clarity relating to the cost and nature of services provided by brokers.
The survey showed that 34% of alternative asset managers are undecided about how they will pay for research following the implementation of Mifid II. Of those that have made decisions around how to pay for research, 80% plan to charge investors and the remaining 20% intend to absorb the costs themselves.
Market and regulatory reforms are forcing buy side firms to look for new ways of accessing collateral, funding and liquidity, according to a new report from BNY Mellon and PWC.
Based on a survey that 120 buy side respondents with a combined $12 trillion in AUM participated in, the report claims that “access to high-quality collateral, funding and liquidity is not only a pressing concern, but has emerged as the essential new performance driver for the buy side”.
The current challenge with accessing these is twofold.
Managed futures traders lost -0.98% in June, according to the Barclay CTA Index compiled by BarclayHedge.
This was the largest monthly decline so far this year as the index is down -1.65% through the first two quarters of 2017.
The BTOP50 Index, which tracks the 50 largest investable CTAs, also fell, registering a loss of -2.60% in June, and is down -4.77% for the year as well.
“The first half of 2017 has been difficult for the CTA industry,” says Sol Waksman, founder and president of BarclayHedge. “The combination of low volatility and sharp trend reversals has helped to suppress returns for managed futures.”
Managed futures traders slipped after two months of gains, losing 0.72% in September, according to the flash estimate for the Barclay CTA Index, which is compiled by BarclayHedge.
“The Fed’s mid-month confirmation that it was unwinding QE precipitated trend reversals in bond yields, the US Dollar Index, and gold,” says Sol Waksman, founder and president of BarclayHedge. “In spite of the ongoing rally in global equities, there were several treacherous crosscurrents in motion during September and successful navigation was difficult.”
Eva Connors has joined Nex Markets as director of buy side sales for the East Coast of the US.
In this role, Connors will be responsible for client acquisition and retention while representing the various Nex Markets solutions – such as EBS Institutional and Nex Treasury – to the buy side community.
Connors will be reporting into Timothy Johnson, head of buy side sales for the Americas.
Prior to joining, Connors spent 10 years working at FX Connect, initially as a senior sales executive before being relocated to Frankfurt in 2013 to establish a sales team dedicated to Continental Europe. Then in 2015, she moved back to Boston and assumed a role as head of US and LatAm sales for the platform provider.
Two and a half years on from acquiring Molten Markets, EBS is beginning to claim some tangible traction amongst the asset management community.
When Molten Markets, founded in 2012 by State Street alumni, was acquired by then-EBS-BrokerTec in 2015, there was a clear logic to both sides of the deal. For EBS, the move was part of a broader strategy to diversify the brokerage’s existing client base, while for Molten Markets being part of a larger, more established company with superior financial resources made its platform a more attractive proposition for the asset managers that it was targeting.
However, while the logic was clear from the start, progress in getting asset managers live on the platform, now branded EBS Institutional (EBSI), has been slow.
The flash estimate for the Barclay CTA Index, compiled by BarclayHedge, indicates a 0.34% loss in March. Year to date, the index is down 1.71%.
“Concerns of a US/China trade war and a data hacking scandal at Facebook helped fuel a second month of declines in global equities and a flight to quality that drove fixed income yields lower,” says Sol Waksman, founder and president of BarclayHedge.
The Financials and Metals Traders Index was down 0.71% in March, diversified traders lost 0.55%, and systematic traders gave up 0.50%.
“Although aluminum and other base metals gave up ground on the month, the recovery in energy markets helped to offset some of those losses,” says Waksman.
State Street’s FX Connect rolled-out a new piece of functionality in the form of its Automated Order Router (AOR).
The platform says that this AOR will allow buy side firms to further streamline their current execution process by allowing for rules-based trading for Request for Stream (RFS) sessions; where buy side firms can establish a rule-set inclusive of defined attributes, which will determine the submission and/or acceptance of orders with minimal human involvement. Users can monitor these automated orders in real time in their ‘Active Orders’ view and take manual action to accept or cancel the orders as needed.
Much has been made of the low buy side sign up to the FX Global Code, but as Colin Lambert finds out, it is likely only to be a matter of time.
Talk to senior members of the Global FX Committee and one can discern a sense of exasperation when they are asked (probably for the tenth time that day) about the lack of buy side adoption of the FX Global Code. The exasperation stems from what is the thorn in the side of the GFXC that is low adoption rates.
Roger Boehler and Kevin Nay Yaung have launched a new currency fund called Limmat Currency Partners (LCP).
LCP is headquartered in Westport, Connecticut, with Boehler serving as the firm’s CEO and Yuang operating as a general partner.
According to the firm’s website: “The Limmat Currency Partners (LCP) LLC investment program applies a range of quantitative and systematic techniques to the most liquid currencies in the global foreign exchange markets. We use transparent and robust investment inputs combining momentum, relative value and risk parity elements in a clearly defined repeatable process.”
LCP looks to approach the currency markets by combining algorithmic programming, unbiased and robust trade entry and exit signals and a rigorous risk management framework. The firm is registered as a Commodity Trading Advisor (CTA) with the US Commodity Futures Trading Commission (CFTC) and is a member of the National Futures Association (NFA).
The band is back together again in this week’s podcast as Galen Stops returns from a short holiday to join Colin Lambert to discuss all things currency – this week (much to the relief of P&L’s audio engineers) with no interruptions from wildlife or pool attendants!
Listen is as they highlight growing concerns in the industry that it may be harder to spread the word about the FX Global Code than previously thought, thanks to the realities of life on buy side and vendor side. On the subject of transparency and ethics, Lambert is keen to talk about the new phenomena of “full amount” trading in FX markets and Stops expresses his feelings about the proposed Code of Conduct for cryptocurrency markets.
As always there is room for the random, so why does Lambert want a merger between the new digital assets association and the recently renamed Wholesale Markets Brokers Association? Listen in to find out.