Description
Following the release of the Bank for International Settlements’ (BIS) triennial FX survey in 2016, which found spot volumes dropped 19% since 2013, this report explores the changing dynamics of the spot FX market. In doing so, the report illuminates a market structure that is moving from broker-dealer-dominated dealer-to-dealer (D2D) and dealer-to-client (D2C) structure to an all-to-all (A2A) structure.
GreySpark analysis of the BIS 2016 FX survey data shows that the low spot FX volumes recorded in 2016 are in line with a number of secular trading trends identified by previous iterations of GreySpark’s FX market research. These findings include:
- the continued shrinking of inter-dealer trading volumes;
- the wide-scale commodification of prime brokerage and direct market access or sponsored access services;
- algorithmic and high-frequency trading technology, which is driving trade volume variation; and
- the increasing importance of non-bank liquidity providers in providing spot FX liquidity in venue environments that were once dominated by bank liquidity providers.
Trends in FX Trading 2017 – Table of Contents
- 1.0 The Current Structure of the Spot FX Market
- 1.1 Analysis of 2016 Bank for International Settlement Statistics
- 1.2 Banks Become Less Central
- 1.3 Splitting of the Buyside
- 1.4 Big Dives in Shallow Pools
- 2.0 Implications for the Sellside Spot FX Trading Business
- 2.1 Agents of Change
- 2.2 Agency-Principal Hybrid FX Trading: Advantageous but Doomed?
- 3.0 Implications for the Buyside Spot FX Trading Business
- 3.1 Buyside Liquidity Aggregation
- 3.2 Beware the Pied Pipers of TCA
- 4.0 The Implications for the Spot FX Trading Venue Landscape
- 4.1 Liquidity Providers on Multi-Dealer Platforms and Other Exchange-like Venues
- 4.2 A2A in All But Name
- 4.3 Quo Vadis Nunc?
- 5.0 Appendices
- 5.1 Glossary of Terms
- 5.2 Table of Figures
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