Day 1 Macau IFXEXPO Review
Along with Conversion Pros, Forex Magnates is hosting the IFXEXPO in Macau, Asia’s largest B2B Forex event. The conference features
Along with Conversion Pros, Forex Magnates is hosting the IFXEXPO in Macau, Asia’s largest B2B Forex event. The conference features two days of presentations and panel discussion in addition to the large group of exhibitors. Events for day one included panel discussions on Mobile Trading, Liquidity, South East Asia’s FX & CFD market, and the Chinese trading market. Presentations from leading industry firms were given about the binary options and forex payments industry, Google Adwords, and 2013 global and South East Asia economic trends.
Moderating the Mobile Trading Panel was Forex Magnates’ Adil Siddiqui. Overall, panelists stressed the importance of providing mobile solutions for clients as customer behavior and interests are demonstratring an increasingly mobile based lifestyle. With regard to Asia, panelists singled out China as a region that was specifically seeing huge growth in mobile trading. Speaking in the panel, Vinod Muthukrishnan from Market Simplified stated “Mobile isn’t the future, it’s already here. We already have a partner client who is planning a mobile only brokerage with zero physical presence.” In terms of volumes, he added “Most fx brokerages are now clocking between 10-20% of their volumes on mobile, and the more speculative the asset class, the higher the percentage of mobile traders. Our mobile trading volumes averaged across the globe grew more than 50% last year with Asia as a huge growth engine”
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At the Liquidity Panel, which was moderated by Mitch Eaglstein of Boston Technologies, panelists discussed the current state of the sector. Topics discussed were A vs B-Book, importance of relationships to source quality liquidity, ‘last look’ policies, and rejections rates. In regards to the A/B Book, Harpal Sandhu, CEO of Integral stated “brokers have been shifting from B Book to A book.” When it came to relationships, Stephen Lynch from Nomura answered a question of “If technology can entertain many liquidity providers, why can’t you use 100 LPs?” which Lynch answered, “Liquidity is based on relationships. At Nomura we are correlation traders, any flow that comes to us is correlated against other trade flow to manage the risk.” He added that they base their pricing on relationships which are “are based on credit, pricing, technology, and volumes.”
The event concludes tomorrow with another load of events.
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could someone elaborate here on the difference between A-book and B-book order flow and why is this point would be worth highlighting?
A-Book are trades that a sent to the market, B-Book is held on the broker’s books. Meaning, if Integral is saying that their clients are moving from B to A, it means that being a market maker is becoming either harder or less profitable, and therefore makes sense to just send all trades to the market (STP) and earn revenues on the spread markup or commision
what about holding onto some smaller trades (aggregation) and then offsetting with book A at an average price at the end of the trading day, or every hour or as your risk calculations dictate? Is cost of carry that expensive?
yes, ppl do that based too. They create risk guidelines and trade when appropriate.
There is even aggregation for A-Book/STP trades, since bank backoffices don’t want thousands of small tickets from retail to process, for different reasons. Software like Harmony Netlink or dealhub can automate this.
P.S. will there be videos from the panels?
@Andy, I imagine the internalization process is highly automated for most brokers.. look at shops like Oanda, they’ve been doing MM profitably since nearly the start of online retail trading and I don’t recall them ever having humans on a dealing desk. It’s all netted out and the difference hedged via algos and automation… smart really.
@Andy – There will be videos from the discussion panels. We will produce them subsequent to the conference and they will be publicly available – it may take some time though.
Jack: sure, for Oanda. But there are others that do not internalize any trades and want to get rid if them in/near realtime. Some are not even authorized to do so.