e-Forex-May-23

PLATFORM REVIEW
volatile markets, as liquidity providers
typically decrease the amount of
electronic liquidity which they stream
on principal basis or widen bid-ask
spreads. During periods of volatility,
we observed a 15-20% increase
in the usage of algos, particularly
liquidity seeking strategies, as they
allow clients to lower execution costs
and market impact for their larger
orders.
We have also attracted additional algo
providers, including regional and nonbank
providers offering their unique
liquidity to our clients including local
currencies and peer-to-peer networks.
As clients require finer control over
their order execution, especially
in volatile markets, we enhanced
our algo suite to support more
advanced workflows such as strategy
amendments and rapid fills.
As far as derivatives trading,
the Standardized Approach to
Counterparty Credit Risk (SA-CCR)
and further waves of Uncleared
Margin Rules (UMR) impacting a
broader client base had an immediate
effect on the cost of dealing in
forwards and swaps. Asymmetry in
the global implementation of those
rules created further challenges for
clients. Access to new liquidity and
additional levels of price transparency
became key. Therefore, our clients
particularly welcomed the enrichment
of our forward pricing tools with new
price sources and pillar dates, offering
swaps pricing and trading via the
RFQ API as well as the expansion of
our orders suite to support limit and
benchmark orders in swaps.
Has demand changed for pre
and post-trade analytics and
reporting? How have you
responded to this?
Increased regulatory and best
execution standards are not only
driving the need for a systematic
approach to execution and increased
levels of automation but also require
firms to analyze resulting execution
costs and change their execution
process accordingly.
FXGO integration for both execution
and automation workflows with our
multi-asset, transaction cost analysis
tool (BTCA) allows clients to analyze
their trades alongside Bloomberg’s
market data to deliver powerful
analysis against a wide range of
benchmarks. Subsequently, post-trade
analytics becomes an input into pretrade
decision making including the
execution style and dealer selection
forming a very well-defined execution
process. As the FX market is bi-lateral
and relationship based, creating a
common framework allowing clients
to fully understand the insights of
the liquidity provision and offering
liquidity providers a detailed view
into the trading behavior of their
clients is key to improving the trading
experience for both sides.
FXGO’s new Pricing Quality Analytics
tools delivered through Bloomberg’s
multi-asset reporting tool for
electronic trading (MISX) offer those
insights and form a state-of-the-art
quantitative platform for bi-lateral
interaction and continuous liquidity
improvements.
What will be your areas of focus
looking ahead to this year and
beyond?
We believe that the FX market is
going to continue to develop at a
rapid pace. We are prioritizing our
development pipeline to accommodate
both anticipated changes in market
infrastructure, as well continuing
to offer disruptive technologies in
the areas of pre-trade optimization,
workflow automation and subsequent
data analysis. We are also going
to continue to offer innovative
solutions to bring more transparency
into derivatives and local markets
- including FX Options, NDFs and
onshore trading tools - to connect
participants and enhance the markets.
MAY 2023 e-FOREX 33