e-Forex-May-23

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Stacking up the USPs of FX ECNs SPECIAL REPORT “ECNs are able to provide an advanced level of sophistication in speed, technology and functionality. The flexibility in trading solutions and diversification is the appeal,” Clinton Norton potential to reduce costs compared to traditional futures trading,” says Norton. TECHNOLOGY AND FLEXIBILITY To maintain a competitive edge and to attract new clients, ECNs must evolve in technology and flexibility, says Norton. “Speed and technology are at the core of Euronext FX. Our development team allocates time and resources to ensure the ECN operates at peak performance. We are proud of our platform latency with order-to-ack and quote-to-feed latencies sub 25 milliseconds. This is particularly important in times of volatility where price discovery tends to occur on our ECN first,” says Norton. With so many execution venues available, ECNs need to be nimble and flexible in what they offer new and existing clients, says Norton. This means a greater focus on customisation – something that Norton believes Euronext has demonstrated with two of its most recently developed offerings – 1. P&L Control which provides realtime P&L monitoring and subsequent interaction management for liquidity providers and 2. Full Amount Lock-In which routes back to back trades to the same liquidity provider for a set period of time to allow time for hedging time and avoid impact. A global footprint also attracts new clients, says Norton. “Euronext FX, together with Euronext Markets Singapore, operates matching engines in New York, London, Tokyo and Singapore, each managed by local experts. Pricing in each matching engine is different and for niche currencies, pricing is ameliorated by local makers with natural interest.” Liquidity management has also become a source of benefit for ECNs in terms of avoiding liquidity abuse and creating custom liquidity pools. “Optimal fill rates and positive liquidity provider yield vary from client to client,” says Norton. “Even for a single client, these thresholds can be different for specific sessions, depending on their strategic P&L outlook.” Euronext FX’s liquidity management team works with takers and makers to curate custom pools where counterparty performance matches client expectations, says Norton. “Our liquidity managers meet with clients regularly to manage trading interactions and new opportunities. To support clients in their own pool curation, we deliver granular data per tag per currency pair.” Euronext FX also has in place several safeguards against liquidity abuse, says Norton. “These include speedbumps for consecutive rejections, and automated protections around fill rates where we halt trading from LPs when they breach the required fill rate of the end client. We recently rolled out Full Amount Lock-In to avoid rapid fire and sweeping, and P&L control for makers to automatically limit intraday losses per client,” he adds. In contrast to the data from US and UK FX Committees showing a decline in execution volume for ECNs, Euronext FX has seen its activity increase. In 2022, its average daily volume (ADV) grew by 17% year-on-year while ECN ADV is up by 4% from the period between Q4 2022 and Q1 2023. Norton attributes this to a combination of new clients and special attention to growth areas such as firm, full amount, and SkewSafe trading. EXPANDING PRODUCT RANGE However, more can be done to make the ECN model more attractive by developing new technology, enhancing liquidity, expanding the product range and aligning with the FX Global Code, says Norton. “At the start of 2023, our new FX Global Code policy came into effect whereby all taker sessions were defaulted to Codeonly liquidity unless a taker specifically opts out. We allowed the taker to make their own liquidity choice based on enhanced data we provided. As a result, by the end of Q1, +90% of platform volumes were generated by Codesignatory LPs compared to 78% in Q3 2022,” says Norton. “While Euronext FX has no immediate plans to go beyond FX, we have expanded our product offering with NDFs, first launched in Singapore, and now available in London,” says Norton. “Through Euronext Markets Singapore, clients can interact with local and global liquidity in Asian NDF pairs. We have also recently expanded into the quantitative data space with the launch of our FX Market Flow, which offers subscribers daily metrics that reflect market trends. metrics are designed to be used by quant funds to assist in the implementation of overnight trading strategies.” 54 MAY 2023 e-FOREX
NDF trading at Euronext Markets Singapore SPECIAL REPORT Euronext FX is a leading ECN for Spot FX and Precious Metals, as well as NDFs through its Singapore subsidiary Euronext Markets Singapore. Powered by award winning FastMatch ® technology, Euronext FX with Euronext Markets Singapore has matching engines in London, New York, Tokyo and Singapore. This bestin-class technology is leveraged to deliver flexible execution solutions and quantitative market data products. Clients can trade FX NDFs through its subsidiary, Euronext Markets Singapore, a Regulated Market Operator (RMO) licensed by the Monetary Authority of Singapore (MAS). As the first FX ECN to launch in SG1, Euronext Markets Singapore enables clients to access local Asia-centric trading partners with reduced latency. NDF liquidity pools are locally managed, leveraging the same unique functionalities and FastMatch ® technology as in our Spot market. KEY FEATURES • NDF Currencies Available • CNY, IDR, INR, KRW, PHP, TWD, BRL • 1 month tenor, IMM, and BMF for BRL • Customised liquidity pools: Including firm and last look, anonymous and semi-disclosed, sweepable and full amount, SkewSafe • Full range of order types including market and limit orders, pegged algos and icebergs • Unparalleled speed powered by award winning FastMatch ® technology and functionality • Clients of Euronext Markets Singapore may connect through our data centres in Singapore (SG1), New York (NY4), London (LD4) and Tokyo (TY3) • Connect via FIX API • Euronext Markets Singapore has been granted SEF equivalency by the CFTC • Protection variants including leak/sweep protection and full amount lock-in Euronext FX is a company of Euronext, the leading multi-asset and pan-European exchange with markets in Amsterdam, Brussels, Dublin, Lisbon, Oslo, Paris and Italy. sales_fx@euronext.com This publication is for information purposes only and is not a recommendation to engage in investment activities. This publication is provided “as is” without representation or warranty of any kind. Whilst all reasonable care has been taken to ensure the accuracy of the content, Euronext does not guarantee its accuracy or completeness. Euronext will not be held liable for any loss or damages of any nature ensuing from using, trusting or acting on information provided. No information set out or referred to in this publication shall form the basis of any contract. The creation of rights and obligations in respect of financial products that are traded on the exchanges operated by Euronext’s subsidiaries shall depend solely on the applicable rules of the market operator. All proprietary rights and interest in or connected with this publication shall vest in Euronext. No part of it may be redistributed or reproduced in any form without the prior written permission of Euronext. Euronext refers to Euronext N.V. and its affiliates. © 2023 Euronext N.V. – All rights reserved. MAY 2023 e-FOREX 55
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transforming global foreign exchang
Page 3 and 4: Welcome to e-FOREX transforming glo
Page 5 and 6: Order Management System Supercharge
Page 7 and 8: Institutional EMBARK POWERFUL LIQUI
Page 9 and 10: Evolving with the Market Added Func
Page 11 and 12: TRADE SMARTER, FASTER AND SAFER Ref
Page 13 and 14: Next level financial markets A new
Page 15 and 16: MARKET COMMENTARY Image by Shutters
Page 17 and 18: MARKET COMMENTARY “P2P liquidity
Page 19 and 20: YOUR PIONEERING PARTNER FOR INSTITU
Page 21 and 22: MARKET COMMENTARY BRINGING BANKS IN
Page 23 and 24: REGIONAL E-FX PERSPECTIVE The Nordi
Page 25 and 26: Exotic to some. Home market to us.
Page 27 and 28: REGIONAL E-FX PERSPECTIVE THE STATE
Page 29 and 30: REGIONAL E-FX PERSPECTIVE Nordic co
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Page 33 and 34: PLATFORM REVIEW volatile markets, a
Page 35 and 36: EXPERT OPINION DIFFERENTIATORS Not
Page 37 and 38: THE e-FOREX INTERVIEW A new chapter
Page 39 and 40: THE e-FOREX INTERVIEW Our London of
Page 41 and 42: THE e-FOREX INTERVIEW FXSpotStream
Page 43 and 44: THE e-FOREX INTERVIEW THE CORE MODE
Page 45 and 46: RISK MANAGEMENT extended effort tha
Page 47 and 48: PRODUCT DEVELOPMENT Rum reped qui d
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Page 51 and 52: SPECIAL REPORT Nicholas Pratt exami
Page 53: Your gateway to the global FX ecosy
Page 57 and 58: VIEWPOINT frameworks are robust, ef
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e-Forex-May-23

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