K&KGC - Key findings from 6th ATF Global Summit
The Alpha Trader Forum Foreign Exchange regularly attracts the cutting edge buy-side thought leaders of foreign exchange trading. With MiFID II now being live, the traders are planning to take their trading to the next level with the expectation that internal resources will be re-allocated in the best interest of their clients rather than regulatory remediation.
Over 57% of the FX buy side traders who attended the Global Summit now already use FX trading algorithms and another 20% are now planning to trade with FX trading algorithms.
There are still market efficiency challenges, especially in the Swap and Forward market and the buy-side are now in agreement that electronic all-to-all trading initiatives are now needed for this part of the FX market. K&KGC has historically assisted the fixed income buy-side head traders with consolidating their specifications and requirements for electronic all-to-all bond trading with the Alpha Trader Forum since 2013. K&KGC is now prepared to assist the foreign exchange buy-side head traders and other market participants to take foreign exchange trading to the next level to eliminate the inefficiencies in this market. Futures is an alternative solution suitable for some buy-side head traders which was also discussed at the ATF Global Summit. FX Options is another area that is still to a large extent traded over voice but there are already solutions in the market to trade these electronically.
Best execution and top 5 venue reporting is part of every buy-side’s priority list. The key focus will be around accessing better real-time data for more informed decision making.
The implementation of MiFID II did not have any detrimental impact on the overall FX liquidity. The main complaints were about operational challenges with third party systems. There are still remaining reporting challenges around time stamping and standardisation among the counterparties of the appropriate tagging of orders. Many continental European buy-side firms have made an effort throughout 2017 to register their funds under the UCITS regime to avoid the necessity for trade and transaction reporting.
The GFXC update of Principle 17 in the FX Global Code in December 2017 was well received by the buy side. There is a general interest among the buy side to implement the Global Code within their firms even if it is not a regulatory requirement.
The next Alpha Trader Forum Foreign Exchange is 7th June 2018 in London.