News | FX FX comes into its own
Activity in the third quarter last year may have spluttered but foreign exchange has staged a strong comeback, according to the latest research from research consultancy Aite Group. It predicts that global FX retail trading volume will reach $380 bn a day in 2013, up 36% from last year while spot FX is estimated to climb to $2.2 bn in daily turnover by 2016, a 35% hike from 2010 levels. According to Aite Group’s
‘Global FX Market Update 2013: Increased Market Transparency, More Competition’, growth in the spot FX volumes are being driven by prime-brokered clients – retail FX brokers and hedge funds as well high frequency trading firms. It also expects other FX
Evolution of trading models in spot FX RFQ/RFS
FX Connect FXall
Currenex 360T
Molten markets
• First generation client-to- dealer price discovery/ trading mechanism
• Focus on post-trade support and netting; popular with asset managers and corporates
on both sides of the Atlantic will temper volume growth due to new margin requirements. This could result in industry participants choosing to let FX swaps expire or looking towards FX swap futures which offer alternative hedges on the futures/ on-exchange side of the market. As for the surge in retail
Howard Tai, Alte
products not impacted directly by regulations, such as outright forwards and FX swaps, to enjoy a similar growth trajectory. The largest daily trading
volume in FX has traditionally emanated from the swap part of the market, but there are clear signs that new regulations
Order book with last look
FXall
Hotspot FX Currenex FastMatch GAIN GTX FXCM Pro
• Second generation client-to- dealer price discovery/ trading mechanism
• Attractive for actively trading clients
• Typically linked with introduction of FX prime brokerage service
• Pre-trade anonymity with limited post-trade disclosure
Order book with no last look
EBS
Reuters matching LMAX exchange Molten markets ParFX
• Traditional interbank price discovery/trading mechanism
• Third generation client-to- dealer price discovery/ trading mechanism
• Pre-trade anonymity with varying degrees of post-trade transparency
Source: Aite Group, ‘Global FX Market Update 2013: Increased Market Transparency, More Competition’ 12
trading, the main driver is strong demand from Japan – the biggest FX retail trading hub. Aite believes it will account for around a third of all volume traded in the market, with a daily average of $130 bn expected this year. These two trends combined
with technological innovations and market structure changes will only help cement FX as an asset class for both retail and institutional investors. It is also expected to give rise to additional trading outlets. As Howard Tai, senior analyst in institutional securities & investments at Aite Group, noted, “FX customers now have more choices than ever in electronic trading venues. They can trade electronically via RFQ/ RFS in single- or multi-bank platforms, electronic crossing networks with streaming quotes and central limit order books, or exchange-style trading that supports pre-trade anonymity and full post-trade transparency. n
Best Execution | Summer 2013
Details
Sample FX venues
Page 1 |
Page 2 |
Page 3 |
Page 4 |
Page 5 |
Page 6 |
Page 7 |
Page 8 |
Page 9 |
Page 10 |
Page 11 |
Page 12 |
Page 13 |
Page 14 |
Page 15 |
Page 16 |
Page 17 |
Page 18 |
Page 19 |
Page 20 |
Page 21 |
Page 22 |
Page 23 |
Page 24 |
Page 25 |
Page 26 |
Page 27 |
Page 28 |
Page 29 |
Page 30 |
Page 31 |
Page 32 |
Page 33 |
Page 34 |
Page 35 |
Page 36 |
Page 37 |
Page 38 |
Page 39 |
Page 40 |
Page 41 |
Page 42 |
Page 43 |
Page 44 |
Page 45 |
Page 46 |
Page 47 |
Page 48 |
Page 49 |
Page 50 |
Page 51 |
Page 52 |
Page 53 |
Page 54 |
Page 55 |
Page 56 |
Page 57 |
Page 58 |
Page 59 |
Page 60 |
Page 61 |
Page 62 |
Page 63 |
Page 64 |
Page 65 |
Page 66 |
Page 67 |
Page 68 |
Page 69 |
Page 70 |
Page 71 |
Page 72 |
Page 73 |
Page 74 |
Page 75 |
Page 76 |
Page 77 |
Page 78 |
Page 79 |
Page 80 |
Page 81 |
Page 82 |
Page 83 |
Page 84 |
Page 85 |
Page 86 |
Page 87 |
Page 88 |
Page 89 |
Page 90 |
Page 91 |
Page 92