K&KGC - Key findings from the ATFs 2nd half 2018
At our 9th Alpha Trader Forum (ATF) Foreign Exchange on 4th October 2018, the buy side had an opportunity to discuss the recent positive developments around the availability of new types of FX data services for improved decision making. The evolution of improved data goes in line with the developments of the skillsets on the FX trading desk towards more data scientists.
The buy side also had the opportunity to review the consolidated K&KGC benchmark results showing the most successful foreign exchange trading algorithm providers used by the buy side today. This buy side lead initiative sets the starting point for a richer taxonomy within algorithmic foreign exchange trading in the industry. This is something that is needed with the rapidly increasing sophistication of foreign exchange trading algorithms.
Execution management systems (EMS) and transaction cost analysis (TCA) are also maturing technology areas within foreign exchange. With limited buy-side budgets, it is mainly a choice between multi-asset or best-of-breed. Even if the buy side would identify their ideal solution, their legacy order management system (OMS) may limit their choices. There still remains additional challenges such as receiving the required time stamps for accurate TCA analysis if one is trading auto FX with custodians.
The buy side also had the opportunity to discuss the viability of all-to-all trading within foreign exchange. This type of solution could theoretically resolve some concerns for FX derivatives trading but it is likely to remain on a few buyside’s wish list for the coming years ahead.
Similar to other asset classes, there are a few buy side who are looking at dealing foreign exchange instruments direct with electronic market makers.
Thank you to all the buy side and sponsors who contributed to the ATF autumn meeting. The 7th annual Alpha Trader Forum Global Summit on 6th – 7th February 2019 in London will be our next opportunity to discuss these and a few other challenges further. Looking forward to see you there!