Trends in FX Trading 2014

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Signs of the Emerging All-to-All Market Structure

GreySpark Partners presents a report exploring signs of the emerging all-to-all (A2A) market structure for flow FX trading in 2014. The report examines how, with increasing frequency, buyside firms are meeting other buyside firms on the other side of spot FX trades within market venues that were previously considered for use only by FX broker-dealers. Since 2008, the frequency of indirect buyside-to-buyside spot FX trading within inter-dealer venues has increased, and investment banks must adapt their currencies business and dealing models to remain competitive in the space.

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Prime brokerage technology platforms operated by the inter-dealer spot FX venues are an example of the innovative technology solutions facilitating growth in indirect buyside-to-buyside trading volumes. This gradual shift in the nature of spot FX liquidity allows buyside market participants to demand that more types of e-commerce and e-trading agency trading services are sold to them by the sellside.

The report also examines how e-commerce and e-trading trends are affecting the markets for FX options and NDFs. In both markets, GreySpark is not predicting the rise of A2A market structures. However, streamlining of the wide range of FX options products made available by the sellside in 2014 is promoting more trading of the instruments on multi-dealer platforms.

Published on: 13 Oct, 2014

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Trends in FX Trading 2014 – Table of Contents

  • 1.0 Flow FX
    • 1.1. All-to-All Becomes a Reality
    • 1.2. The Convergence of Flow FX and Equities Business Models
    • 1.3. Adapting the Sellside Business and Dealing Model
  • 2.0 FX Options
    • 2.1. The End of the Cambrian Explosion
    • 2.2. Increasing Instrument Standardisation and Electronification
    • 2.3. Business as Usual for Market Makers, for Now
  • 3.0 FX Non-deliverable Forwards
    • 3.1. Regulation, Interrupted
    • 3.2. Possible Ways Forward
    • 3.3. Preparing for the Future
  • 4.0 The Rebalancing of the FX Market