CLS Bank Market Report Shows FX Spot Volumes Improving in November
- Earlier this month the CLS Bank published its November figures of FX trades submitted for settlement. The group's recent Market Report tthough has shown that the decline was due to a drop in swap volumes with spot improving.
Earlier this month, the CLS Bank published its November figures of FX trades submitted for settlement. According to the data, average daily volumes fell 2.2% from October to $4.89 trillion from $5 trillion (volumes are double counted representing both sides of the trade being submitted for settlement). The month-over-month contrasted with reports from public reporting venues such as the CME, EBS, Thomson Reuters and KCG Hotspot, which all saw volumes improvements during November. As CLS Bank volumes are primarily derived from single-dealer platform (SDP) activity, the decline in trading represented outperformance for multi-dealer platforms (MDP). Although also reacting primarily to FX Volatility Volatility In finance, volatility refers to the amount of change in the rate of a financial instrument, such as commodities, currencies, stocks, over a given time period. Essentially, volatility describes the nature of an instrument’s fluctuation; a highly volatile security equates to large fluctuations in price, and a low volatile security equates to timid fluctuations in price. Volatility is an important statistical indicator used by financial traders to assist them in developing trading systems. Traders In finance, volatility refers to the amount of change in the rate of a financial instrument, such as commodities, currencies, stocks, over a given time period. Essentially, volatility describes the nature of an instrument’s fluctuation; a highly volatile security equates to large fluctuations in price, and a low volatile security equates to timid fluctuations in price. Volatility is an important statistical indicator used by financial traders to assist them in developing trading systems. Traders Read this Term, SDP volumes during 2013 have been much more consistent than those at MDPs (see chart).
On initial inspection, the MDP outperformance appeared to be tied to institutional traders favoring the public ECNs; the euro saw a pick-up of volatility in the beginning of November; typically leading to reduced levels of Market Depth Market Depth Market Depth is a characteristic of a given market and its ability to handle large order sizes without materially affecting the price of the underlying asset or currency pair. Broad-based definitions of market depth characterize it as a function of liquidity and trading volume.In its most simplistic sense, market depth reflects a real-time list displaying the quantity to be sold versus unit price. This in turn is organized by price level and is reflective of real-time market activity. In theory, Market Depth is a characteristic of a given market and its ability to handle large order sizes without materially affecting the price of the underlying asset or currency pair. Broad-based definitions of market depth characterize it as a function of liquidity and trading volume.In its most simplistic sense, market depth reflects a real-time list displaying the quantity to be sold versus unit price. This in turn is organized by price level and is reflective of real-time market activity. In theory, Read this Term on SDPs and smaller ECNs. On a second look, it appears that this wasn’t the case. In the recently published ‘Market Report’ from the CLS Bank, it shows that November’s decline was primarily the result of a 6.2% decline in MoM FX Swap ADV to $781 billion (single-counted). On the other hand, FX Spot ADVs rose 5.1% to $827 billion, representing the SDP market rising in November alongside its MDP brethren. Overall, despite the proliferation of MDP platforms in the market, SDP volumes continue to demonstrate slow and steady growth taking place; representing the central place relationships play in the FX Spot market.
MoM % Volume Changes at Major FX Venues (CLS Bank data is for Spot volumes)
Earlier this month, the CLS Bank published its November figures of FX trades submitted for settlement. According to the data, average daily volumes fell 2.2% from October to $4.89 trillion from $5 trillion (volumes are double counted representing both sides of the trade being submitted for settlement). The month-over-month contrasted with reports from public reporting venues such as the CME, EBS, Thomson Reuters and KCG Hotspot, which all saw volumes improvements during November. As CLS Bank volumes are primarily derived from single-dealer platform (SDP) activity, the decline in trading represented outperformance for multi-dealer platforms (MDP). Although also reacting primarily to FX Volatility Volatility In finance, volatility refers to the amount of change in the rate of a financial instrument, such as commodities, currencies, stocks, over a given time period. Essentially, volatility describes the nature of an instrument’s fluctuation; a highly volatile security equates to large fluctuations in price, and a low volatile security equates to timid fluctuations in price. Volatility is an important statistical indicator used by financial traders to assist them in developing trading systems. Traders In finance, volatility refers to the amount of change in the rate of a financial instrument, such as commodities, currencies, stocks, over a given time period. Essentially, volatility describes the nature of an instrument’s fluctuation; a highly volatile security equates to large fluctuations in price, and a low volatile security equates to timid fluctuations in price. Volatility is an important statistical indicator used by financial traders to assist them in developing trading systems. Traders Read this Term, SDP volumes during 2013 have been much more consistent than those at MDPs (see chart).
On initial inspection, the MDP outperformance appeared to be tied to institutional traders favoring the public ECNs; the euro saw a pick-up of volatility in the beginning of November; typically leading to reduced levels of Market Depth Market Depth Market Depth is a characteristic of a given market and its ability to handle large order sizes without materially affecting the price of the underlying asset or currency pair. Broad-based definitions of market depth characterize it as a function of liquidity and trading volume.In its most simplistic sense, market depth reflects a real-time list displaying the quantity to be sold versus unit price. This in turn is organized by price level and is reflective of real-time market activity. In theory, Market Depth is a characteristic of a given market and its ability to handle large order sizes without materially affecting the price of the underlying asset or currency pair. Broad-based definitions of market depth characterize it as a function of liquidity and trading volume.In its most simplistic sense, market depth reflects a real-time list displaying the quantity to be sold versus unit price. This in turn is organized by price level and is reflective of real-time market activity. In theory, Read this Term on SDPs and smaller ECNs. On a second look, it appears that this wasn’t the case. In the recently published ‘Market Report’ from the CLS Bank, it shows that November’s decline was primarily the result of a 6.2% decline in MoM FX Swap ADV to $781 billion (single-counted). On the other hand, FX Spot ADVs rose 5.1% to $827 billion, representing the SDP market rising in November alongside its MDP brethren. Overall, despite the proliferation of MDP platforms in the market, SDP volumes continue to demonstrate slow and steady growth taking place; representing the central place relationships play in the FX Spot market.
MoM % Volume Changes at Major FX Venues (CLS Bank data is for Spot volumes)