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European Union’s Markets in Financial Instruments Directive (Mifid) provided the regulatory landscape for multi-lateral trading facilities (MTFs) such as London- based Chi-X to flourish, resulting in a significant shift in share-dealing volumes away from the incumbent exchanges. Rapidly emerging from marginal niche players in equities trading, BATS Europe and Chi-X Europe accounted for 25.4 per cent combined market share of European equities trading in December 2011.
Foster points out that Mifid II is expected to broaden best execution rules to a wider variety of asset classes including FX which she expects to result in the formation of more FX quote aggregation services. Tese services will fulfill a similar role to that of smart order routers in equities markets. FX aggregators will assist FX trading firms seeking enough liquidity in currencies across an increasingly global market to make timely transactions at the best price.
“You will see fewer single dealer platforms and more aggregators. Tis means that you need a provider who can get you to a multiple venues making quotes and providing data, so that you can transact quickly,” says Foster. “You need someone to be able to provide both the pull and push in a very low-latency environment.”
Financial communities
Foster expects this trend to benefit BT Global Services, as a specialist in the provision of managed networked IT services, which already has well-established “community clusters” on its network. “In terms of how network connectivity can enhance the delivery of FX data, it is about having breadth and reach. It is about having enough FX platforms and data providers and all the aggregators accessible on your network,” says Foster.
IPC Systems, a leading provider of trading communications systems and network services for the capital markets based in Jersey City, has a global community of FX trading venues. IPC recently launched its flagship managed network services offering – Connexus™ – an extranet service for the financial markets. Connexus enables the global community of foreign exchange counterparties to access trade lifecycle services. Trough a single connection, FX providers, brokers and institutional investors in the IPC community can link to one another and seamlessly receive and distribute applications and real-time and historical FX market data in a secure and reliable trading ecosystem.
“We have numerous FX liquidity providers, brokers and institutional investors connecting to each other by
Alexandra Foster
“In terms of how network connectivity can enhance the delivery of FX data, it is about having breadth and reach. It is about having enough FX platforms and data providers and all the aggregators accessible on your network,”
leveraging Connexus, our financial extranet service. By being part of IPC’s community of global capital market participants, members can execute spot, forward, non-deliverable forward (NDF) and cross currency swap trades with any other counterparty on Connexus. Members also have round-the clock access to mission- critical FX applications and market data through Connexus,” says Jonathan Morton, vice president product marketing at the global headquarters of IPC Systems in Jersey City, New Jersey.
Data feeding off soaring FX volumes
Alan Schwartz, president of the financial services division at Transaction Network Services (TNS), a global provider of data communications and interoperability solutions based in Reston, Virginia, points out that the provision of efficient FX market data services has become all the more important, as the volumes of currency transactions grow and global markets become more interconnected. “Tere is an incredible need in this space for solid delivery of market data services for this market place,” says Schwartz. “It is very dynamic and more so than any market we have served historically. It is so global where as other securities types are more regional.”
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