Electronic FX Trading Intensifies
Foreign exchange continues its migration from a voice-based to an electronic market, driven by technology and market dynamics.
“Companies today are looking for innovative trading solutions that can increase execution quality, maximize workflow efficiencies and reduce operational risk,” said Harrell Smith, head of product strategy at trading system provider Portware. “They also are seeking analytical tools that can quantify their trading performance and help them make more informed trading decisions.”
The continued adoption of e-trading by large numbers of institutions and com¬panies is furthering the transformation of foreign exchange into a truly electronic marketplace.
Although a slowdown in global foreign exchange trading activity kept FX e-trading volumes stagnant last year, electronic trading systems continued to attract new users at a rapid pace, according to a report released by Greenwich Associates.
“Globally, two thirds of institutions most active in foreign exchange markets now trade electronically, including nearly 80% of participating financial institutions and over half of corporations,” said Greenwich Associates consultant Woody Canaday.
Electronic trading is already standard operating procedure for investors and many large corporations in the U.S. FX market, but even in the United States electronic trading platforms managed to expand their customer bases last year by meaningful margins, according to Greenwich Associates. The share of U.S. market partici¬pants trading foreign exchange electronically increased to 82% in 2012 from 76% in 2011.
Portware FX is a customizable FX trading platform that aggregates liquidity from all global providers, including banks, electronic communication networks (ECNs) and inter-dealer platforms. The trading technology streamlines complex workflows and gives traders maximum choice with respect to trading strategies and order routing destinations.
“Over the past two to three years, FX has been Portware’s fastest growing asset class, with rapid adoption across multiple client segments and geographic regions,” Smith said. “The diversity of our client base is a testament to the system’s flexibility, which allows us to customize Portware FX to meet our clients’ specific trading and workflow integration requirements.”
Portware FX addresses the needs of buy-side and sell-side firms alike, and each client segment uses the technology differently.
“Quant hedge funds clients rely on Portware’s advanced liquidity aggregation technology and event-based trade architecture to drive their proprietary strategies,” said Smith. “On the sell-side, brokers use Portware FX’s trade order management capabilities to automate incoming client flow and manage internal risk. As for traditional asset managers, they are increasingly turning to Portware FX to create custom workflow solutions that increase efficiencies, reduce operational risk and streamline trading processes.”
As a 24-hour market, foreign exchange trading has attracted the attention of trading software developers intent on porting desktop trading applications to mobile devices and in general making FX trading easier for both retail and institutional customers.
Oanda, a market maker and broker in FX trading which focuses primarily on the retail segment, has seen the number of customers and percentage of overall trading volumes executed on mobile devices soar as it rolls out technology for performing the same functions available on desktop computers on handheld devices such as iPad, iPhone and Android.
Mobile devices already account for 30% of logins and 15% of trades for Oanda clients, a number that has risen rapidly since the company introduced its first mobile trading app in 2010.
Upstart exchange has seen market share increase to near 4%.
Goldman Sachs Asset Management’s fundamental equity business manages over $20bn in thematic equities.
Data extraction and integration is the second stage of a digitization process.
With Ankit Mittal, Business Change Manager, Global Trading, Schroders
IIGCC and lead investors will launch a pilot with companies including BP, Eni, Repsol, Shell and Total.