Conference Dailys TRADETech FX Daily 2019: Wrap-up | Page 4

THETRADETECHFX DA I LY
TECHNOLOGY
news
FOREIGN EXCHANGE
Virtu Financial
extends TCA to
FX and fixed
income
VIRTU FINANCIAL WILL BRING ITS TCA
TO OTHER ASSET CLASSES AS IT LOOKS
TO OFFER MULTI-ASSET ANALYTICS TO
CLIENTS.
London retains top share of
$6.6 trillion global currency
markets amid US decline
GLOBAL CURRENCY MARKETS REACH $6.6 TRILLION AS SHARE IN THE UK
INCREASES, BUT TURNOVER IN THE US DECLINES, ACCORDING TO BIS
TRIENNIAL FX SURVEY.
V
irtu Financial has confirmed an extension
of its transaction cost analysis (TCA)
and market impact models to cover foreign
exchange and fixed income markets.
The US trading firm, which initially con-
firmed plans to expand its TCA alongside the
launch of an outsourced trading desk last
month, said that the move is part of its ongo-
ing aim to provide clients with a multi-asset
TCA offering via its Agency Cost Estimator
(ACE) model.
Using the ACE model and the newly released
FX and fixed income analytics, Virtu Financial
added that clients will be able to use pre- and
post-trade TCA to manage execution costs
and to perform construction analysis.
“Our ACE Analytics product has been the
leading cost and market impact model in the
equity markets for the last 10 years, exten-
sively used by both buy and sell-side firms,
said Kevin O’Connor, Virtu’s head of analyt-
ics and workflow. “Driven by strong client
demand, extending the model to FX and FI
reiterates our commitment to providing a
full suite of broker neutral, multi-asset class
analytics and trade execution solutions on our
global platform.”
ACE model applications include pre-trade
execution strategy selection, performance
benchmarking for trade uniqueness and diffi-
culty, portfolio trading optimisation and port-
folio liquidity metrics, which was previously
not available for FX and fixed income.
Virtu Financial said in August that it would
be revamping the Triton execution manage-
ment system (EMS) and TCA to include other
asset classes, following its acquisition of
agency broker ITG in March.
At the same time, Virtu Financial said it
would be launching Execution Concierge
Service (ECS), an outsourced trading service
using the firm’s multi-broker technology plat-
form and products, combined with its high-
touch trading and global client coverage. The
new trading service will be led by ITG veteran
and Virtu managing director, Jack Pollina.
4
THETRADETECHFX DAILY
Wrap-up
L
ondon has retained its place as the global hub for currency trading while the share of FX trading
taking place in the US declined, as trading in the global market reached $6.6 trillion per day in
April this year.
According to the Bank for International Settlements (BIS) triennial survey on turnover in OTC
FX markets, trading in global markets per day increased from $5.1 trillion per day three years ago,
fuelled by strong growth in FX derivatives trading, particularly FX swaps.
The survey found that while the share of currency trading taking place in the US declined from
20% in 2016 to 17% in 2019, the UK strengthened its position as the leading FX trading hub globally
as its share of FX trading increased to 43% in April this year, despite the spectre of Brexit.
“While New York’s overall market share as a trading hub has slipped, London has increased and
reinforced its position the world’s pre-eminent FX hub,” chief executive of interdealer broker ParFX,
Dan Marcus, commented on the results. “This is testament to London’s long-standing global trading
relationships, concentration of counterparties and continued investment in technology infrastruc-
ture. From a foreign exchange perspective, there is no doubt that London remains a global centre of
excellence.”
At the same time, the share of FX trading taking place in Asia decreased slightly to 20% over the
same period due to a slowdown of activity in Singapore and Tokyo. However, currency trading in
China saw a surge in activity to $136 billion in 2019, up a significant 87% from three years prior.
Matthew Hodgson, CEO and founder of FICC data analytics firm Mosaic Smart Data, also com-
mented that the growth in FX derivatives revealed by the survey marks a challenge for participants
in terms of risk and data handling.
“These more complex instruments bring with them their own challenges – especially when it
comes to managing and monitoring price and risk. The FX markets still lack standardised messaging
or a central ticker, making it difficult for market participants to understand what is going on across
their own FX business,” Hodgson said.
“The FX markets are already the most liquid in the world, creating a huge data challenge. If we’re
going to see these growth trends continue, data handling and analytics systems are going to need
to evolve to keep pace.”