RETAIL e-FX CLIENT
Improved transparency
Another important feature of how ECN-STP systems benefit clients compared to the traditional trading model says Kisyov, is that each participant can act as a Market Maker, so that the other ECN participants compete for his offers. Tis allows clients to place orders within the spread. Te limit orders submitted by the clients in the order book are immediately visible to all. Tus traders can place trade orders among themselves; Avoiding intermediaries, as there is no dealing desk and execution is fast and error free; the identity of retail clients is not visible to other market participants, which ensures that they receive the same conditions as institutional players; since there is not only one company that provides quotes (offers), but a few large institutions, there is much higher liquidity and therefore better pricing and lower spreads, even during high market volatility.
Kisyov adds: “ECNs are a transparent way of trading as clients can see market depth, which gives them much better market insight. Tey also receive post trade information to the detail. One feature we provide that is not typical for most ECNs, is the ability to choose a specific counterparty to trade with (valid for market orders only).”
Market volume
Depending on the type of order, available market volume can influence the execution, states Droguett. “Banking holidays, or the overlaps of regional market opening times, can affect certain instruments. But the biggest drops in available volume are almost always the result of extremely volatile markets. In highly volatile markets, the few milliseconds separating the market orders from reaching the ECN servers can have great influence on the execution. Tanks to the possibility of selectively controlling slippage, a trader can adapt to any possible market condition.”
Salem states: “When we talk about retail clients, in which 90% of the trading tickets vary between 10,000 and 5 million, volume is not an issue; clients will always get executed and what matters the most is the technology behind the execution of large orders. Te question is what a broker would do if the order requested is higher than the volume available through liquidity on the specific price. In the traditional broker model, the order will be rejected or could be re-quoted three to five pips away from its current price.”
Salem continues that in the example in which a client has requested an order of 20 million (200 lots), and the liquidity available from Bank X is only 5 million, FXCC will execute the first 5 million on the requested price, and take the next 15 million to the next depth of level, and so on, to fulfill the full order, and once the order is fulfilled and fully executed the average price is given back to the client. “In many cases that next best-offered price could be better than the requested price,” contends Salem. “Terefore the average price could be better than the requested price. In short the client could be slipped in his favour or against his favour when a requested volume is larger than the available in one tier in the current market depth. Tis process is done within milliseconds. With our current structure, 99% of our orders up to 20 million (200 lots) have been executed within a range of less than 1.0 pips.”
Market execution Joan Droguett “Apart from the dramatic difference in
available liquidity, having Market Makers compete to offer their best prices can only be an
advantage to the retail trader, provided they are not penalised by any order size limitations.”
166 | october 2011 e-FOREX
In highly volatile markets, banks pull out their liquidity during high volatility or trading news, spreads are slightly increased and the volumes drop, says Salem. Clients that experience pending orders or try to trade during that period or event, will trade based on market execution. He adds: “Market execution is the ECN market in its simplest from; a client order is put into the system and the client will receive the best pricing available through all our liquidity pool. Clients may get slipped, although getting slipped in an ECN market is
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 |
Page 93 |
Page 94 |
Page 95 |
Page 96 |
Page 97 |
Page 98 |
Page 99 |
Page 100 |
Page 101 |
Page 102 |
Page 103 |
Page 104 |
Page 105 |
Page 106 |
Page 107 |
Page 108 |
Page 109 |
Page 110 |
Page 111 |
Page 112 |
Page 113 |
Page 114 |
Page 115 |
Page 116 |
Page 117 |
Page 118 |
Page 119 |
Page 120 |
Page 121 |
Page 122 |
Page 123 |
Page 124 |
Page 125 |
Page 126 |
Page 127 |
Page 128 |
Page 129 |
Page 130 |
Page 131 |
Page 132 |
Page 133 |
Page 134 |
Page 135 |
Page 136 |
Page 137 |
Page 138 |
Page 139 |
Page 140 |
Page 141 |
Page 142 |
Page 143 |
Page 144 |
Page 145 |
Page 146 |
Page 147 |
Page 148 |
Page 149 |
Page 150 |
Page 151 |
Page 152 |
Page 153 |
Page 154 |
Page 155 |
Page 156 |
Page 157 |
Page 158 |
Page 159 |
Page 160 |
Page 161 |
Page 162 |
Page 163 |
Page 164 |
Page 165 |
Page 166 |
Page 167 |
Page 168 |
Page 169 |
Page 170 |
Page 171 |
Page 172 |
Page 173 |
Page 174 |
Page 175 |
Page 176 |
Page 177 |
Page 178 |
Page 179 |
Page 180 |
Page 181 |
Page 182 |
Page 183 |
Page 184 |
Page 185 |
Page 186 |
Page 187 |
Page 188 |
Page 189 |
Page 190 |
Page 191 |
Page 192 |
Page 193 |
Page 194 |
Page 195 |
Page 196