A string of recent acquisitions has seen exchanges positioning themselves to get in on the lucrative FX market.
As the multi-trillion-dollar, decentralized foreign exchange (FX) market has come under increasing scrutiny from regulators and as electronic trading technology develops, there are signs that exchanges are encroaching upon a market that has traditionally been the reserve of big banks.
A Centralizing Counter
Traditionally, trading on the over-the-counter (OTC) FX market, which accounts for a notional $5.3 trillion a day in cash, or spot, and derivatives trades, has taken place via a decentralized network of interbank trading platforms.
However, a combination of regulation and new technology has forced the currency markets to re-structure.
Firstly, after a series of scandals, including FX fixing and LIBOR rigging, the largely unregulated FX market has been catching the attention of regulators.
End users are getting used to technology where they have a full view of the market.
As such, in addition to heavy fines levied on banks and tough criminal sentences handed out to rogue traders, regulators have been reviewing and legislating in order to get a better oversight of the market. This is most notably evidenced in the UK’s Fair and Effective Markets Review and the United States' Dodd-Frank legislation.
Moreover, new electronic trading technology has emerged, allowing more and more traders direct access to the market via electronic communication networks (ECNs). This has led to greater transparency in terms of market activity and pricing.
According to Chris Concannon, Chief Executive of Bats Global Markets: “End users are getting used to technology where they have a full view of the market. They are accessing more markets than they could ever do 10 years ago.”
Enter Exchanges
As FX trading becomes more regulated and centralized globally, established equities and commodities venues are positioning themselves to be a central part of this transition.
In recent weeks and months, we have seen both the Deutsche Börse Group and BATS Global Markets, the US’s second largest equities and options exchange, make acquisitions to position themselves as players in the FX market.
Established equities and commodities venues are positioning themselves to be a central part of FX markets.
In March, BATS successfully completed the acquisition of Hotspot FX from KCG Holdings for about $365 million. For BATS, the acquisition was a strategic priority in a world in which investors are increasingly interested in accessing and trading several asset classes, in which FX represents the largest asset class by volume.
While late last month the Frankfurt-based exchange, Deutsche Börse, announced that it would buy German-based institutional ECN platform, 360T, for €725 million. 360T operates an interbank currency Trading Platform, including spot, forwards, options and swap products.
Deutsche Börse sees 360T as a key part of its growth strategy, using it as a way to sell market data and develop futures, FX forwards and swaps trading to boost its Eurex derivatives business, according to one FT analyst.
Teething Pains
However, exchanges still face tough competition from well-established platforms and global banks.
Indeed, BATS’ candle is wavering. Its acquisition of Hotspot FX came shortly after the Swiss National Bank’s decision to unpeg the franc from the euro, which sent the markets into turmoil. Consequently, the cost of credit and Risk Management have been on top of the agenda.
Volumes on the Hotspot FX platform are at multi-year lows.
Hotspot appears to have been affected by these changes taking place in the FX market. In recent months, volumes on the Hotspot FX platform are at multi-year lows, with an 8.6% MoM decline in July – though the exchange maintains that it is due to volatility and that Hotspot remains a long-term business acquisition, of which the month-to-month performance is less important than their overall longer term strategy.
Thus, there is some way to go before exchanges get any real share of the FX pie. Indeed, while OTC markets maybe becoming more concentrated and transparent, exchanges have historically been side-lined by the banks and established ECNs.
As the multi-trillion-dollar, decentralized foreign exchange (FX) market has come under increasing scrutiny from regulators and as electronic trading technology develops, there are signs that exchanges are encroaching upon a market that has traditionally been the reserve of big banks.
A Centralizing Counter
Traditionally, trading on the over-the-counter (OTC) FX market, which accounts for a notional $5.3 trillion a day in cash, or spot, and derivatives trades, has taken place via a decentralized network of interbank trading platforms.
However, a combination of regulation and new technology has forced the currency markets to re-structure.
Firstly, after a series of scandals, including FX fixing and LIBOR rigging, the largely unregulated FX market has been catching the attention of regulators.
End users are getting used to technology where they have a full view of the market.
As such, in addition to heavy fines levied on banks and tough criminal sentences handed out to rogue traders, regulators have been reviewing and legislating in order to get a better oversight of the market. This is most notably evidenced in the UK’s Fair and Effective Markets Review and the United States' Dodd-Frank legislation.
Moreover, new electronic trading technology has emerged, allowing more and more traders direct access to the market via electronic communication networks (ECNs). This has led to greater transparency in terms of market activity and pricing.
According to Chris Concannon, Chief Executive of Bats Global Markets: “End users are getting used to technology where they have a full view of the market. They are accessing more markets than they could ever do 10 years ago.”
Enter Exchanges
As FX trading becomes more regulated and centralized globally, established equities and commodities venues are positioning themselves to be a central part of this transition.
In recent weeks and months, we have seen both the Deutsche Börse Group and BATS Global Markets, the US’s second largest equities and options exchange, make acquisitions to position themselves as players in the FX market.
Established equities and commodities venues are positioning themselves to be a central part of FX markets.
In March, BATS successfully completed the acquisition of Hotspot FX from KCG Holdings for about $365 million. For BATS, the acquisition was a strategic priority in a world in which investors are increasingly interested in accessing and trading several asset classes, in which FX represents the largest asset class by volume.
While late last month the Frankfurt-based exchange, Deutsche Börse, announced that it would buy German-based institutional ECN platform, 360T, for €725 million. 360T operates an interbank currency Trading Platform, including spot, forwards, options and swap products.
Deutsche Börse sees 360T as a key part of its growth strategy, using it as a way to sell market data and develop futures, FX forwards and swaps trading to boost its Eurex derivatives business, according to one FT analyst.
Teething Pains
However, exchanges still face tough competition from well-established platforms and global banks.
Indeed, BATS’ candle is wavering. Its acquisition of Hotspot FX came shortly after the Swiss National Bank’s decision to unpeg the franc from the euro, which sent the markets into turmoil. Consequently, the cost of credit and Risk Management have been on top of the agenda.
Volumes on the Hotspot FX platform are at multi-year lows.
Hotspot appears to have been affected by these changes taking place in the FX market. In recent months, volumes on the Hotspot FX platform are at multi-year lows, with an 8.6% MoM decline in July – though the exchange maintains that it is due to volatility and that Hotspot remains a long-term business acquisition, of which the month-to-month performance is less important than their overall longer term strategy.
Thus, there is some way to go before exchanges get any real share of the FX pie. Indeed, while OTC markets maybe becoming more concentrated and transparent, exchanges have historically been side-lined by the banks and established ECNs.
FX Volatility Impacts Q1 Revenue of Compagnie Financière Tradition
Network, Learn, Grow | FMAS:24
Network, Learn, Grow | FMAS:24
Get ready to mark your calendars for FMAS:24, returning this May! Take a quick glimpse of what awaits at the Sandton Convention Centre in Sandton, South Africa from May 20-22, 2024.
Don't miss out on this 5-second invite packed with energy and urgency!
Secure your free ticket now 🔗 https://events.financemagnates.com/yQx0l?utm_source=youtube&utm_campaign=fmas-is-back&utm_medium=video&RefId=FMAS24+Video+Ad+%5B1%5D
#fmas24 #fmas #fmevents #financeinafrica #traders #investors #affiliates #forexTraders #investmentOpportunities #B2BNetworking #finTech #Innovations #TradingCommunity #BusinessOpportunities #AfricanBusiness #Johannesburg #southafrica
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Get ready to mark your calendars for FMAS:24, returning this May! Take a quick glimpse of what awaits at the Sandton Convention Centre in Sandton, South Africa from May 20-22, 2024.
Don't miss out on this 5-second invite packed with energy and urgency!
Secure your free ticket now 🔗 https://events.financemagnates.com/yQx0l?utm_source=youtube&utm_campaign=fmas-is-back&utm_medium=video&RefId=FMAS24+Video+Ad+%5B1%5D
#fmas24 #fmas #fmevents #financeinafrica #traders #investors #affiliates #forexTraders #investmentOpportunities #B2BNetworking #finTech #Innovations #TradingCommunity #BusinessOpportunities #AfricanBusiness #Johannesburg #southafrica
📣 Stay updated with the latest in finance and trading!
Follow FMevents across our social media platforms for news, insights, and event updates. Connect with us today:
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Here's a sneak peek into the FMAS:24 vibrant atmosphere! Join us at Africa’s premium financial event for a transformative experience that combines the best of finance and technology.
From May 20-22, 2024, the Sandton Convention Centre in Sandton, South Africa, will be the hub for over 3,500 attendees to engage in unparalleled networking opportunities, learn from over 150 industry-leading speakers, and explore innovations from 120+ exhibitors.
Secure your free ticket now 🔗 https://events.financemagnates.com/yQx0l?utm_source=youtube&utm_campaign=fmas-is-back&utm_medium=video&RefId=FMAS24+Video+Ad+%5B1%5D
#fmas24 #fmas #fmevents #financeinafrica #traders #investors #affiliates #forexTraders #investmentOpportunities #B2BNetworking #finTech #Innovations #TradingCommunity #BusinessOpportunities #AfricanBusiness #Johannesburg #southafrica
📣 Stay updated with the latest in finance and trading!
Follow FMevents across our social media platforms for news, insights, and event updates. Connect with us today:
🔗 LinkedIn: https://www.linkedin.com/showcase/financemagnates-events/
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Don't miss out on our latest videos, interviews, and event coverage. Subscribe to our YouTube channel for more!
Here's a sneak peek into the FMAS:24 vibrant atmosphere! Join us at Africa’s premium financial event for a transformative experience that combines the best of finance and technology.
From May 20-22, 2024, the Sandton Convention Centre in Sandton, South Africa, will be the hub for over 3,500 attendees to engage in unparalleled networking opportunities, learn from over 150 industry-leading speakers, and explore innovations from 120+ exhibitors.
Secure your free ticket now 🔗 https://events.financemagnates.com/yQx0l?utm_source=youtube&utm_campaign=fmas-is-back&utm_medium=video&RefId=FMAS24+Video+Ad+%5B1%5D
#fmas24 #fmas #fmevents #financeinafrica #traders #investors #affiliates #forexTraders #investmentOpportunities #B2BNetworking #finTech #Innovations #TradingCommunity #BusinessOpportunities #AfricanBusiness #Johannesburg #southafrica
📣 Stay updated with the latest in finance and trading!
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Join 3500+ Attendees at FMAS:24 | Africa's Premium Financial Event
Join 3500+ Attendees at FMAS:24 | Africa's Premium Financial Event
Looking to expand your network in #Africa? Join 3500+ attendees at FMAS:24, where online trading, fintech, payments, and crypto meet! Connect with industry leaders and innovators for an unmatched networking experience.
20-22 MAY 2024
Sandton Convention Center, Sandton, South Africa
Register now to secure your spot: https://bit.ly/3JbUpCK
#fmas #fmas24 #fmevents #networking #finance #africa
📣 Stay updated with the latest in finance and trading!
Follow Finance Magnates for news, insights, and event updates across our social media platforms. Connect with us today:
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Looking to expand your network in #Africa? Join 3500+ attendees at FMAS:24, where online trading, fintech, payments, and crypto meet! Connect with industry leaders and innovators for an unmatched networking experience.
20-22 MAY 2024
Sandton Convention Center, Sandton, South Africa
Register now to secure your spot: https://bit.ly/3JbUpCK
#fmas #fmas24 #fmevents #networking #finance #africa
📣 Stay updated with the latest in finance and trading!
Follow Finance Magnates for news, insights, and event updates across our social media platforms. Connect with us today:
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Join 3500+ Attendees at FMAS:24 - Africa's Premium Financial Event
Join 3500+ Attendees at FMAS:24 - Africa's Premium Financial Event
Looking to expand your network in #Africa?
Join 3500+ attendees at FMAS:24, where online trading, fintech, payments, and crypto meet! Connect with industry leaders and innovators for an unmatched networking experience.
20-22 MAY 2024
Sandton Convention Center, Sandton, South Africa
Register now to secure your spot: https://bit.ly/3JbUpCK
#fmas #fmas24 #fmevents #networking #finance #africa
Looking to expand your network in #Africa?
Join 3500+ attendees at FMAS:24, where online trading, fintech, payments, and crypto meet! Connect with industry leaders and innovators for an unmatched networking experience.
20-22 MAY 2024
Sandton Convention Center, Sandton, South Africa
Register now to secure your spot: https://bit.ly/3JbUpCK
#fmas #fmas24 #fmevents #networking #finance #africa
Where the Prop Trading Industry Goes from Here | Finance Magnates Podcast
Where the Prop Trading Industry Goes from Here | Finance Magnates Podcast
Explore the tumultuous world of prop trading in this Finance Magnates podcast episode, featuring insights from Head of Axi Select, Greg Rubin.
We're discussing the challenges and shifts caused by MetaQuotes' pivotal decisions affecting MT4 and MT5 users, and how Axi Select offers a unique, realistic path to professional trading, steering clear of traditional prop firm pitfalls.
Tune in for expert analysis on the future of trading and innovative funding models.
The Axi Select programme is only available to clients of AxiTrader Limited. CFDs carry a high risk of investment loss. In our dealings with you, we will act as a principal counterparty to all of your positions. This content is not available for AU, NZ, EU and UK residents. For more information, refer to our Terms of Service. Standard trading fees apply.
This content is provided solely for general informational purposes and should not be construed as financial product advice or an investment recommendation. It has been prepared without considering your personal circumstances.
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Explore the tumultuous world of prop trading in this Finance Magnates podcast episode, featuring insights from Head of Axi Select, Greg Rubin.
We're discussing the challenges and shifts caused by MetaQuotes' pivotal decisions affecting MT4 and MT5 users, and how Axi Select offers a unique, realistic path to professional trading, steering clear of traditional prop firm pitfalls.
Tune in for expert analysis on the future of trading and innovative funding models.
The Axi Select programme is only available to clients of AxiTrader Limited. CFDs carry a high risk of investment loss. In our dealings with you, we will act as a principal counterparty to all of your positions. This content is not available for AU, NZ, EU and UK residents. For more information, refer to our Terms of Service. Standard trading fees apply.
This content is provided solely for general informational purposes and should not be construed as financial product advice or an investment recommendation. It has been prepared without considering your personal circumstances.
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