e-Forex-Nov-23

TRADING OPERATIONS
robust, standardised data and highperformance
infrastructure, there
is a huge opportunity in this area.”
He cites an example. “One area that
is getting a lot of focus currently is
AI-driven alerting, informing users
about things happening in their
trading business that they might
not otherwise be aware of. With
the huge amount of data available
individuals cannot check all potential
factors that might impact their
business. AI will play an essential role
in pointing them to the issues that
need attention.”
BidFX’s McGrath talks about a few
initiatives. “We already have a team
working on this developing product at
BidFX and although the industry is still
in the early phase of rolling out these
features there could be some real
efficiency and quantifiable benefits for
the sellside and buyside in how MIS,
data, and analytics are accessed and
actioned upon,” he says.
ION’s Liew adds, “The role of the
Liquidity Manager can be automated
to a certain extent by AI, such as
finding optimum combinations of
Market Takers, Liquidity Providers, and
Currency Pairs quickly. This can be a
tedious manual process.”
COLLABORATION AND THE
EVOLUTION OF FX ANALYTICS
While solutions providers are offering
innovative solutions, they’re hampered
by the sheer number of touchpoints
in the execution workflow. Reactive
Markets’ Morris lays out the issue.
“Market participants often have
many market-facing execution touch
points within a given workflow,” he
says, “whether an execution protocol
(ESP, RFQ or Algo,) or platform being
used. Consolidating that into a single,
normalised view of the world can be
complex, with specific benchmarks
and analytical requirements by each
individual counterparty.”
“It’s difficult to put a monetary cost on rejected orders as
there is no guarantee that another LP would have filled
them, especially in a volatile environment,”
Collaboration and integration
between platforms is the best way to
solve this roadblock, Morris says. “By
collaborating and having connectivity
to the leading analytics and TCA
providers in the market, clients have
the flexibility and opportunity to
automate much of their data and
algo analytics while we complement
the workflow by providing leading
execution performance and
connectivity to liquidity providers. This
superset of independent data from
a variety of sources allows clients to
make informed, data-driven decisions,
something which we encourage and
actively facilitate in providing our
clients access to.”
Hopkins adds to this view. “Without
collaboration through data, firms are
solely restricted to their own view of
the world,” he says. “FairXchange
was conceived purely to facilitate
collaborative dialogue between
trading counterparties. It is even the
inspiration of our name – the fair
exchange of data between trading
firms to arrive at the optimal mutual
outcome.”
Lambert thinks our daily conditioning
to data readily available on
smartphones makes it obvious
that FX analytics providers will
face similar demands. “The most
popular ecosystem will be the one
that provides its users with the best
experience by offering the most choice
and highest quality of applications to
manage the FX workflow from end-toend,”
he says. “That means bringing
together all required components.
Each part of the workflow demands
different attributes, whether its
technology, liquidity provision,
independence, or analytical power,
and we believe that no single provider
can be all things to all.”
Moving forward, Shevelenko thinks
integration and collaboration’s benefits
are too obvious to ignore. “As resource
constraints and cost pressures continue
to present challenges for the industry,
the platforms offering front-to-back
execution and analytics services are
likely to continue to gain traction with
clients,” he says. He believes these
conditions will create a virtuous circle
where platforms and LPs come to
rely on each other, pointing to how
the execution analytics space will
evolve. “Advances in technology are
going to continue to drive innovation
including data and analytics,” he
says. “Platforms are going to further
rely on liquidity providers to share
aggregate data sets to power analytics.
Liquidity providers are likely to leverage
platforms for independent and
objective evaluation of their liquidity
and algorithms.”
Ultimately, every trader aims to
reduce market impact from their
trading. Execution analytics are quickly
evolving, and with more AI use cases
emerging, traders do not have to fly
blind.
Paul Liew
NOVEMBER 2023 e-FOREX 31