Trends in FX Trading 2017

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All-to-all in All but Name

This report explores significant shifts in the global spot FX trading environment that took place between 2015 and 2017. 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.

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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.

Published on: 6 Mar, 2017

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