EuroMoney 2018 FX Survey…Go XTX!

EuroMoney 2018 FX survey results released this week show JPMorgan are for the first time #1 in FX, but the real story is the absolutely astonishing performance from XTX Markets, now ranked #3 in global FX.

XTX Markets are the definitive ‘non-bank market maker’ (NBMM), using sophisticated  models and the latest technology to finely calibrate and distribute pricing, enabling them to more effectively manage liquidity to multiple electronic platforms, trading venues and directly to banks, acting as liquidity providers to ‘the liquidity providers’. The picture below is the entrance to the new XTX Markets London offices, a far cry from an investment bank!

XTX Markets recently left London's upmarket Mayfair neighbourhood for a new home in King's Cross, an area fast becoming one of the UK capital's main technology hubs.<br> The market-maker was spun out of the quantitative hedge fund GSA Capital in 2015 and <a href="" target="_blank" class="icon none" >has been doing rather well since</a>. Initially focused on foreign exchange, XTX has been expanding into new asset classes, growing headcount and <a href="" target="_blank" class="icon none" >making its opinions known on the future shape of financial markets</a>.<br> After launch, the firm appointed the design specialists at Peldon Rose to kit out a 22,000 square foot office in King's Cross — a job that has now been completed.<br> <em>Financial News</em> got the tour of the Sci-Fi and mathematics-inspired workspace.

As banks continue to be challenged by higher regulatory capital requirements, lower risk appetites and reduced leverage ratios, firms such as XTX and other NBMM including Jump Trading, Citadel and Virtu Financial have been increasingly stepping in to fill the gap.

XTX is co-run by Zar Amrolia, who was until 2015 the Global Head of FICC at Deutsche bank. Which under his watch developed the Autobahn FX platform which powered Deutsche Bank to #1 in FX from 2005-2013, with peak market share of 21% in 2008, as shown in the chart below, whereas now they are #8 with share of 5.4%

I met Zar back in 2015 when he just joined XTX, and he told me then that his mission to make the firm a #3 FX liquidity provider….he took his time!

Here is a summary of the top 20 FX bank by market share.


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Major platforms see increases in Feb volumes

All the major FX platforms have now reported their Feb 18 vols, with SpotStream leading the way up 10% to a new all time record of $28.8bn/day, whilst HotSpot also recorded a new all time record of $44.2bn/day.

Reuters Spot FX volumes recorded a 5% increase, although overall Reuters recorded a new record of $463bn/day driven by increased flows through their MiFID compliant MTF platform for Fwds, Swaps and NDFs.

Leading FX platforms ADV for Feb 18

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Major platforms deliver strong Jan volumes

All the major FX platforms I track reported strong Jan 18 vols, lead by EBS up a whopping 58% to $93.2bn/day (up from $65.5bn/day in Dec). Both Hotspot (now owned by CBOE) and SpotStream hitting new all time high volumes.

Leading FX platforms ADV for Jan 18

Looking at the Year on Year (YoY) trends, we see that Hotspot and SpotStream have delivered the strongest performances, up 37% and 39% respectively, as can be seen in the chart below. Continue reading

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Results of Oct 17 Semi Annual FX Surveys

Latest semi-annual FX survey data from top central banks (FX Joint Standing Committees) show that in Oct 17 FX average daily vols (ADVs) for the top six FX centres was $4.28tn/day, an drop of –6.2% from Apr 17, although up +3.4% year on year from Oct 16.

Top six global FX trading centres Oct 17
(central bank semi-annual FX survey)

London remains top trading centre, with 54% share of top 6 ADV at $2.23tn/day in Oct 17

% share of top six FX centres (central bank semi-annual FX survey date)

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Global FX code ‘Last-Look’ (Principal 17) updated.

As mentioned previously, The Global Foreign Exchange Committee (GFXC), has updated their guidance around ‘trading in the last-look window’ – Principal 17 of the Global Code of Conduct, as a result of market feedback.

Global Foreign Exchange Committee (GFXC), GLobal Code of Conduct

The previous version of the code included the phrase is likely inconsistent’ as shown below:

 During the last look window, trading activity that utilises the information from the Client’s trade request, including any related hedging activity, is likely inconsistent with good market practice because it may signal to other Market Participants the Client’s trading intent, skewing market prices against the Client, which (1) is not likely to benefit the Client, and (2) in the event that the Market Participant rejects the Client’s request to trade, constitutes use of Confidential Information in a manner not specified by the Client.

The revised code (here) replaces that with much stronger wording, clearly stating Continue reading

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Credit Suisse fined $135m for FX abuse

The New York State Department of Financial Services (DFS), has fined Credit Suisse $135m for ‘Unsafe, Unsound and Improper Conduct’.

The transcript of the order makes for depressing reading, when we see the extent of the improper conduct and abuse of information that went on. However it does show that the regulators are getting better at joining the dots and pull together a compelling case which sends another strong message to the market. Moving forward I am therefore encouraged that with the global code of conduct, increased monitoring and surveillance, the senior managers regime with risk of huge fines and imprisonment that we are likely to see less abuse of this type in the FX markets, at least at the business wide level.

The consent order published this week states that:

Between 2008 to 2015, Credit Suisse consistently engaged in improper, unsafe, and unsound conduct, in violation of New York laws and regulations, by failing to implement effective controls over its FX business.

Although Credit Suisse internal policies state that:

“Confidential or Proprietary Information: Employees should assume that all information about customer orders and transactions is confidential and or proprietary.”


“Employees are prohibited from front-running (trading ahead of customer or Firm transactions).”

Nonetheless, the order includes the following improper conduct: Continue reading

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GFXC to change Principal 17 (Trading in last-look window) after market feedback

In last week’s post, we looked at the feedback received from the market by the Global Foreign Exchange Committee (GFXC) to Principal 17 of the FX Global Code of Conduct, which discusses ‘trading in the last-look window’.

In light of the feedback, the GFXC has today issued a press release stating:

GFXC has concluded that Principle 17 should indicate that market participants should not undertake trading activity that utilises the information from the client’s trade request during the last look window.

At the same time, the GFXC also agreed that Principle 17 should clarify the conditions under which certain trading arrangements, often referred to as “cover and deal”, may be distinguished from the last look guidance.

The release went on further to state that: Continue reading

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