Today’s release of
Virtu’s financials, as well as the deal it has signed with JP Morgan, probably
make this the appropriate time to share my thoughts on the non-bank market
making sector in general, in particular the value ...
That we are still debating the positive or negative impact of non-bank market makers on the FX market doesn’t surprise me – what does is the simplistic level of debate over what I consider to be a fairly complex issue.
Yes the big prime brokers could shut these firms down with a hefty rise in prime brokerage fees or a withdrawal of credit totally - that would send most of them back to where they first emerged – the cleared world with its very limited spot foreign exchange market opportunities.
This is normally the column where I “entertain” you with my own semi-annual complaint about the FX committees’ semi-annual turnover reports all being different (perhaps this is a task for the GFXC – produce uniform reporting?) I have, though, given up on that crusade for a while and prefer to take the data for what it is – an interesting snapshot into the FX market on a regional basis.
The surveys in the UK and US are the most comprehensive (but still structured differently!) and I wonder if we are starting to see evidence of the impact democratisation in FX markets?
Forex Network Chicago features two panels looking at the most important subject of liquidity provision in FX markets through two very different prisms. The first looks at the issue from the perspective of FX banks; how are they prioritising where they send liquidity and how are data capabilities changing how clients are evaluated? It will also look at the role of buy side as genuine liquidity providers and look at the impact on market conditions if what some consider to be a withdrawal from the market by the banks takes place.
The Bank for International Settlements’ Markets Committee has released a report by a recently-formed study group, which looks at the evolution of what it terms fast-paced electronic markets, focusing mainly on spot FX, and the challenges this evolution has for central banks.
The report says the market structure changes have implications for central banks’ approaches to market monitoring, including the range of participants with which they engage, the types of data they collect, and the tools and technologies they utilise.