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CLS and Quandl to Distribute Aggregated FX Trade Data CLS and Quandl, a data platform for economic and financial data, have made standardised and aggregated FX trade reports available via subscription.   This new service will allow CLS to distribute its set of executed trade data to the broader market ...
Firms Explore Blockchain for Reference Data R3 and Axoni, along with seven buy and sell side firms, are working to explore ways that blockchain technology can be used to simplify reference data processes. The group, which includes Alliance Bernstein, Citi, Credit Suisse and HSBC, recently completed a multi-month proof of concept (PoC) exercise aimed at building a distributed ledger prototype that can enhance the risk management, cost and efficiency issues inherent in managing financial reference data. The prototype was created using Axoni Core, the firm’s proprietary distributed ledger software, to simulate the collaborative management of reference data, as well as the use of that reference data for corporate bond issuance. The technology is designed to enable participants to interact with reference data after issuance, with any proposed changes requiring validation by the underwriter to ensure the ledger provided a single, immutable record of all data related to the bond.
Thomson Reuters Launches Managed Services in NY4 Thomson Reuters has launched Elektron Managed Services in the Equinix NY4 data centre in Secaucus, New Jersey. The concept behind this move is that financial institutions will be able to free up resources to focus more on their core activities by outsourcing the management and support of Thomson Reuters Enterprise Platform (TREP) and Elektron Real-Time from customer managed to Thomson Reuters managed services, in addition to the procuring market data infrastructure, networking, space and power. “Access to reliable, time sensitive financial information is crucial to market participants who are automating and outsourcing wherever possible to improve performance and reduce costs,” says Paras Sidapara, global head of managed services at Thomson Reuters.
Redline Releases Feed Handler for EBS Live Ultra Redline Trading Solutions has announced the availability of a new InRush feed handler for the new high performance EBS Live Ultra market data feed. “What’s significant about this announcement is that we now have a key FX market venue delivering this high performance market data feed and this means that firms can use a solution like Redline to exploit that gain in performance,” comments Mark Skalabrin, CEO of Redline. He says that he views this as part of a broader trend that is occurring in the FX market whereby banks, hedge funds and proprietary trading firms are increasingly looking for ways to increase their performance and reduce their latency.
Duco Streamlines Fee Processes for CME Members Duco Technologies will offer its data control and reconciliation services to CME Group members starting January 2017, the two firms announced. The launch follows a six-month trial period with a limited number of futures commission merchants (FCMs). Duco's service is designed to enable CME member firms to simplify processes around fee structures without investing in infrastructure or IT resources. CME chief commercial officer Bryan Durkin comments: "We're pleased to offer our member firms an innovative solution to help streamline their current fee processes. Duco's service will reduce manual work, drive efficiency and ensure accuracy between parties."
NEX Data, Tradition Agree Global Data Partnership NEX Data (Nex Data), a NEX Group business that provides global pricing data and information solutions, and Tradition, one of the largest interdealer brokers in over-the-counter commodity and financial products, announce today that they have agreed a distribution partnership. Nex Data will become a key distributor for Tradition’s market data and information services division, TraditionDATA. The agreement includes real-time and end-of-day prices sourced directly from Tradition’s global electronic, hybrid and voice broking operations in all asset classes to include: interest rate derivatives, money markets, energy and commodities and fixed income products. It also covers data from Trad-X, Tradition’s electronic trading platform for OTC derivatives, and Tradition Asia, the interdealer broker’s Japanese and pan-Asian division.
EBS Announces New 5ms Data Feed EBS BrokerTec will now be offering data via EBS Live Ultra at 5 millisecond intervals. Last year, EBS BrokerTec launched EBS Live Ultra with two data publication intervals – 100ms and 20ms – with the intention that the faster service would be available to all market participants that meet certain trading criteria. With the launch of the 5ms data feed in addition to these original two, the same participation criteria will apply for those wishing to access this, while the 20ms data feed will be available to all EBS Live Ultra customers.
FX TCA Won’t Resemble Equities Any Time Soon The structure of the FX market means that transaction cost analysis (TCA) within this asset class is unlikely to look like it does equities for the foreseeable future, according Dan Torrey, global head of FX e-commerce sales at Northern Trust. TCA is clearly much easier to perform in the equities market because it has a consolidated tape, which provides one uniform data set from which firms can analyse the cost and effectiveness of their execution. This, says Torrey, turned equities TCA into “more of a science that’s very hard to dispute”. By contrast, he points out that, not only is FX an OTC market without a central tape, but that the reference points for pricing has become more diverse over the past decade.
And Another Thing... 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.
CLS to Launch Same-Day Settlement CLS Group plans to launch a same-day settlement service in the second half of 2018, subject to regulatory approvals. The new service, CLSNow, will offer bilateral, same-day, payment-versus-payment gross settlement in CAD, CHF, EUR, GBP and USD, with plans to extend the service to additional currencies in the future, based on client demand. The aim is to enable counterparties to optimise the use of available liquidity in the same-day market, while mitigating settlement risk. Currently, some of CLS’s largest clients have in excess of 10% of their daily euro business being transacted on a same-day basis, and the expectation is that the launch of CLSNow will further facilitate the growth of this same-day market.
The FX Tape, What’s Different This Time Round? The consolidated tape for FX launched by FastMatch today looks very different to the one initially proposed by its CEO, Dmitri Galinov. Galen Stops takes a look at what's changed. FastMatch has today announced plans to launch a consolidated tape for FX, something that its CEO, Dmitri Galinov, has been working towards for some time. Profit & Loss previously reported on an earlier proposed iteration of this tape back in May 2016, but the one launched today looks significantly different.
FastMatch Launches FX Consolidated Tape FastMatch has launched a consolidated tape for FX in a bid to bring more transparency to the market. Speaking exclusively to Profit & Loss about the new venture, FastMatch CEO, Dmitri Galinov, explains that any type of FX market participant is welcome to contribute to the new tape, subject to certain stipulations. The first such condition is that there is a minimum requirement of $2 billion per day in notional volume for those wishing to contribute to the tape. Contributors must also sign a contract with FastMatch confirming that they own the rights to the trades that they are submitting to the tape and agreeing to independent audits of the trades being submitted. 
Data: The Fuel That Powers the FX Market The role of data in FX markets is becoming even more important, from the numbers that drive a pricing engine, through the analysis that underpins the risk management procedures, to the data that provides post-trade execution analysis, it is now, more than ever, at the heart of the FX industry. The Q4 issue of Profit & Loss will include the latest of our in-depth special reports, this quarter looking at how data is changing the FX industry. As part of this, we are conducting our quarterly survey, which asks for your view on a variety of data-related topics from TCA to data mining.
New Change FX Adds Forwards, NDFs, to Service New Change FX (NCFX) has extended its independent data service to include forward points across standard tenors, non-deliverable forwards and restricted currencies. Alongside the existing NCFX Spot service, the firm says the roll out ensures it is able to provide independent FX data for analysis of any FX deal. Ahead of the implementation of the PRIIPs rules on 1 January 2018 it is obligatory for FX market users to obtain a consolidated feed of data that cannot be derived from a single dealer or platform.
Drowning in Data A panel of buy side market participants at Profit & Loss Scandinavia in Stockholm shared their insights into their FX activities and discussed how data has come a long way in terms of helping them measure best execution; however, analysing that data isn’t as easy as they’d like. Is the availability of data and technology changing how the industry assesses execution quality? That’s the question addressed by Marcus Samuelsson, portfolio manager at Ericsson; Andreas Wollheim, head of trading and treasury at SEB Investment Management; and James Koutoulas, CEO at Typhon Capital Management, speaking at Profit & Loss Scandinavia in September.
Data: The Lifeblood of the FX Market Probably the biggest change in the FX market over the past 10 years has been the availability of data. This is not to say that we never had data before, most voice traders relied upon their brokers to tell them where the market was – and although it was (very!) unreconstructed, it was data. In terms of hard numbers on a screen, the market was revolutionised by Reuters terminals in the 1970s, enhanced by the launch of rival offerings (nearly all borne out of a news service), and then again with the launch of electronic trading and mobile apps.
A Slow Burn TCA in FX has long been viewed as the ultimate box-ticking exercise, but that is now changing as asset owners and oversight functions focus more keenly on the value they leave on the table when hedging their currency exposures. But what, Colin Lambert asks, should good FX TCA look like? Several years ago at a Profit & Loss Forex Network New York conference, the then head of an execution desk at a major Canadian pension fund recounted an experience he had earlier that year. Five weeks of meetings and conference calls had taken place to decide whether or not to sell USD/CAD 500 million, during which time the market had drifted some 200 points lower. Once the decision was taken to sell, another week went by as the method of execution was debated, during which Funds fell another 50 points. When the deal was finally executed,
The Human Problem The wealth of data and predominance of electronic trading mean TCA in spot FX should be a relatively straightforward process. But what happens when a market is mainly voice traded and data is sporadic? Colin Lambert finds out. Among the many upheavals created by the impending MiFID II regulation is the requirement to timestamp all trades in compass of the regulation. In FX markets this has created a paradox, for while it is easy to timestamp a spot FX trade, this product is not “in scope”. FX forwards and swaps, on the other hand, are in scope and they are mainly traded over voice channels and no public central limit order book (CLOB) has enough volume or data to provide a “market” price.
The Franchise Builder? TCA can be about more than measuring execution quality. Colin Lambert talks to a firm that believes it can be the genesis of a new type of bank-client relationship in FX. A TCA report has been analysed and the lessons learned – time to file it away, never to be seen again right? Wrong, according to Andy Woolmer, CEO of NewChangeFX, who believes the data offers a tremendous opportunity to build a new type of FX franchise. “Clients originally used our data for TCA, but it has moved beyond that and it needed to,” he explains. “Too many times the TCA provided to a client was based upon execution from the algo that was used – that circularity represented a problem for the asset manager and, by association, the bank. Why would they want to get involved in something where the trade feeds the analysis?
CLS Enters the Market Data Fray Galen Stops takes a look at the new data service launched by CLS Group. In September, CLS announced the launch of its new data service, CLSData. Speaking to Profit & Loss at the time of the launch, the firm’s CEO, David Puth, explained that CLS was “now entering the data market space in a very comprehensive way”. Since its launch in 2002, CLS has recorded every single transaction submitted to it, and considering that an average daily volume (ADV) of over $1 trillion is processed by CLS each day, this represents a massive and rather unique data set.
Drilling for the New Oil If data is the new oil, then how trading firms “drill” it in order to generate alpha becomes increasingly important. Galen Stops reports. So often has the phrase been used recently that it’s in danger of becoming something of a cliché but, apparently, data is the new oil. To see evidence of this, look no further than the technology giants that have emerged out of Silicon Valley. Yes, Facebook doesn’t charge users money for the social media platform it provides, but is it free? Arguably, users “pay” with the data that they create via their interactions on the platform, which Facebook is then free to use and sell to generate profits.
Spreading the Wealth With more information becoming increasingly accessible to a wider set of FX market participants, are we witnessing the democratisation of data? Galen Stops takes a look. The starting point for claiming that data is being democratised in FX, and in the financial markets more broadly, is to point out how much more accessible data has become to a wider range of market participants.  At the retail level, people can use smartphones to find out a currency exchange rate at any time in just seconds. At the professional level, trading firms can now access high-speed market data from numerous sources at affordable prices, while aggregators allow them to rapidly compare the data coming on from these sources. 
A New Brokerage Model Following the launch of the consolidated tape in September, Dmitri Galinov, CEO of FastMatch, is envisaging a new business model whereby the platform will not charge firms at all for brokerage. Looking ahead in 2018 Galinov explains that the focus for FastMatch is going to be on expanding its market data business, which he predicts could grow large enough that it will be unnecessary to charge market participants a brokerage fee for trading on the FastMatch platform.  The analogous business model to this, according to Galinov, is Facebook.
Duco Secures $28m Investment Duco, a data engineering technology company, has completed a $28m investment round by Insight Venture Partners, Nex Opportunities and Eight Roads Ventures. The round also includes an investment by entrepreneur and former CEO of SunGard, Cristóbal Conde. Duco provides technology that enables banks, brokers, asset managers and exchanges to normalise, validate and reconcile any type of data in Duco’s cloud, providing firms with on-demand data integrity and insight. Duco says that it will use the investment to expand its global footprint, with headcount growth in Europe and the US, the launch of an Asia office and an expansion of its product set.
CLS Releases FX Forecast Data Product CLS is releasing a new foreign exchange (FX) forecast data report as part of its suite of data products. CLS's FX Forecast data will provide subscribers with a forward looking view of FX markets on an hourly basis, which the firms says will enable them to quickly detect potential price movements and identify times to trade with greater liquidity, reducing market impact and signalling risk. In addition, CLS's claims that this data will offer significant benefits to risk and compliance teams, enabling market participants to better predict volume and rate changes, which can help inform their models and views around volume surges.