Despite the rapid uptake of algorithmic trading and execution within all cash-centric capital markets globally since 2010, wide-ranging use of transparent, unbiased transaction cost analysis (TCA) services and software applications within electronic cash FX trading specifically remains problematic for buyside firm currencies liquidity consumers and sellside institution currencies liquidity providers.
The growing use of algorithms to automate trading activities is garnering increasing regulatory attention, which highlights the need for dedicated risk management processes and systems.
Over the past 18 months, GreySpark Partners has observed that the structure of the flow FX market – consisting of spot FX and vanilla OTC swaps, forwards and futures – has continued its incremental evolution.
High-performance algorithmic trading is no longer the privilege of a few high-tech trading firms leveraging cutting-edge, specialised infrastructure.
The growing ability of non-bank spot FX liquidity providers to service client demand in the marketplace came to the fore in 2016’s Euromoney annual spot FX volumes survey results, which showed that the amount of currencies volume supplied by the top-five market-makers was falling when compared to the ability of one proprietary trading firm – XTX Markets – that provides pricing to dealer-to-client currencies (D2C) venues.
Following a preliminary Pre-Trade Risk review done by GreySpark, this leading Australasian investment bank required GreySpark to perform the actual assessment for its entirety of Electronic Execution Systems (EES).
This is a survey summary for our annual research series: Trends in E-commerce and Electronic Trading.