Bats offers forex clients tool to create bespoke liquidity pools

Bats Global Markets has launched a new customisable private market for forex customers. Hotspot Link will enable clients to create a bespoke liquidity pool by choosing who they see quotes from, the size and currency pairs. Its price feeds from the nominated liquidity providers are consolidated into a single view.

Banks Bats Launches New FX Liquidity Pool

Bats Global Markets has launched Hotspot Link, a customizable, private market for foreign exchange after entering the asset class last year.

Exchange operator Bats completed its acquisition of Hotspot, an institutional foreign exchange platform, in March 2015.

The firm said in a statement that trading participants can use Hotspot Link to choose from a broad range of bank and non-bank market-makers to create a customized liquidity pool of continuously-provided quotes, as well as quotes offered on a request-for-quote/stream basis. Customers can opt to build a personalised pool by choosing, for example, who they see quotes from, the size, and the currency pairs. Streaming price feeds from preferred liquidity providers are consolidated into a single view.

Quoting and execution takes place in Hotspot Link separately from the Hotspot ECN in order to lessen market impact and fill more orders. However the new service uses the existing Hotspot network, infrastructure, and clearing relationships so post-trade processes are the same for both pools.

Consultancy Celent said in a report on the FX market last November: “Celent has observed tremendous demand for flexible technology that allows users to create the FX trading ecosystem desired, incorporating minimization of transactional economics and ease in creating a holistic FX market view that meets their needs.”

For example, last year Thomson Reuters combined access to all of its FX transaction venues onto one platform citing dramatic changes in how customers interact with markets.

Bats reported 11.5% market share last year for FX with a growing portion executed on Hotspot’s new London matching engine. Hotspot launched a London matching engine last September, which has average daily volumes of just under $1bn and is continuing to grow. Hotspot posted average daily volume of $24.1bn in December, 11.6% more than a year ago, and total monthly volume traded was $529.8bn.

This week the Bank of England published its semi-annual foreign exchange turnover survey for the October 2015 reporting period. The bank said the average daily reported UK foreign exchange turnover was $2,148bn in October 2015, 21% lower than a year earlier and the lowest daily turnover since October 2012. Turnover in all products and most currency pairs fell over the six months to October 2015.

Today ParFX, an electronic foreign exchange platform, said it had launched trading in Hungarian forint as well as additional currency pairs in CLS, the bank-owned physical settlement system that was set up to eliminate settlement risk in the FX market.

Gary Harcombe, senior spot emerging markets trader at UBS, said in a statement: “The Hungarian forint has met a number of important milestones in recent years, becoming one of the world’s top 25 most traded currencies, and more recently, gaining eligibility for CLS settlement. There is strong appetite amongst foreign exchange investors to trade the HUF.”

ParFX said approximately 90% of Hungarian forint trades are executed outside of Hungary’s domestic borders.

Dan Marcus, chief executive of ParFX, said in a statement: “The addition of the Hungarian forint and other currency pairs is in line with our aim to increase ParFX’s global reach – both in terms of the range of participants and currencies traded.”

ParFX was designed by interdealer broker Tradition and launched in 2013 with 14 banks, including Citi and JP Morgan, amongst its founding members.