Monthly volumes settled on CLS Bank were reported late this month, presumably due to end of the year and quarterly auditing that took place for the final figures were able to be released. For December average daily volume (ADV) of submitted trades to CLS, combining the settlement and aggregation services, was 885,203, down 8.3% from 965,462 in November. However, total ADV volume in dollar terms was only down 0.2% month over month to $4.61 trillion $4.62 trillion in November; thus indicating fewer trades with larger average sizes. (Note – dollar figures are double sided and include calculations from both sides of the trade)
The dollar decline outperformed larger declines that were seen from the major OTC FX ECNs such as Hotspot FX, EBS, and Thomson Reuters. As such, the data continues to prove that despite the ease of sourcing liquidity from Multi Dealer Venues, the bulk of trading continues to be relationship based. This is especially true among larger market participants trading an excess of one yard/day where they are able to realize the cost savings of relationship based liquidity despite the addition costs in place due to integrating feed aggregation. During 2012 we saw volumes from FXall remain strong as it began to report combined trades of both ECN and relationship transactions on its platform. Similarly, EBS announced the launch of a relationship based platform EBS Direct to run alongside its ECN EBS product.
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For more on the pros and cons of relationship and ECN liquidity, check out Forex Magnates Q4 Industry Report where the topic was discussed in length.