FEATURE
and Morgan Stanley, together with the six biggest FX platforms, Bloomberg Tradebook, Currenex, EBS, FXCM, Hotspot FX and Tomson Reuters, to launch an industry-wide initiative to centrally monitor and manage FX ECN trading activity and trading limits globally.
Mandelzis says that the FX industry now has a consolidated, real-time, limit monitor dashboard solution for high-frequency trading that can show prime brokers their client activity across electronic. Te monitoring solution looks for counterparty risk, either from approaching or breaching limits, as well any technology problems that need to be addressed in real-time, and give brokers the ability to kill client activity, across all their platforms, instantly if there is any indication of significant risk.
Steven Zieselman
“Even before 2008, smaller ticket sizes and higher volumes have prompted market participants to scale up their back office processes. Te changes needed to accommodate new regulatory requirements are likely to make it necessary to increase capacity and scale even further.”
and certainty of delivery. Tere is a lot more ground to cover in terms of the number of participants who use post-trade, real-time services.”
Addressing risk
Gil Mandelzis, co-founder and chief executive officer of Traiana, believes the FX industry has been very proactive in terms of looking at the risks in the industry and addressing them. Te establishment of CLS is a great example of many of the initiatives as well as the work Traiana has been doing with the FX prime brokers for some years to develop the next generation back office tools. “Other asset classes do not have an infrastructure like CLS, and the FX industry has certainly fared the recent financial crisis exceptionally well both objectively and relatively speaking”.
“We and our customers continuously work to identify risks in the FX market and proactively address them as opposed to waiting for someone else to intervene,” he says.
To this end Traiana has recently partnered with leading FX prime brokers, Citi, Deutsche Bank, JP Morgan
50 | october 2011 e-FOREX
He says: “Tis is a very big industry initiative, that is generating a lot of excitement, and we believe is very necessary and will change the landscape. It is another example of the FX industry being very proactive, rather than reactive, in addressing risk. We believe the FX market is already is way ahead of the rest of the asset classes and here it has taken a significant leap further.
“Tis comes on the back of these banks already using our real-time risk monitoring solutions for prime brokerage trades. Managing real-time risks that are associated with prime brokerage and high frequency trading is very high on our agenda. ”
By connecting prime brokers and ECNs in real-time, the service will provide the FX industry with the control and real-time risk management capabilities to manage risks from algorithmic and high frequency trading. Te launch of the new version of Harmony CreditLink culminates a comprehensive effort by all partners over many months, and is now live and available to all Harmony members.
High frequency and algorithmic FX trading
Te increase in high frequency and algorithmic FX trading has made the provision of adequate controls and real-time risk capability critically important to prime brokers managing risk across clients trading on ECNs. Using Harmony CreditLink, prime brokers now have the ability to monitor their clients’ credit risk across multiple ECNs on a real-time basis, act on exceptions in a single integrated dashboard, and open, change, or close credit lines to manage risk while maximising clients’ trading ability.
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