The Last Look…
Posted by Colin Lambert. Last updated: December 17, 2024
Taking a look at the most read columns of the year is an instructive process and highlights the importance – and the level of emotion around – the FX platforms.
Of the top 10 columns of the year – one was most read by a long way – just four did not involve one or more of the FX platforms. Three were about other bugbears of mine, naturally; the obsession with best executionand why top-of-book isn’t necessarily fulfilling that requirement; the performance of currency managers and why bank desks should be allocated more FX risk; and the GFXC’s work on data, specifically, who owns it? While the fourth was yet another reflection on a friend lost following tragic death of Gio Pillitteri.
The rest of the top 10 is all platforms, including my thoughts on the closure of EBS Forwards and the change by LSEG FX to introduce increments on Matching in certain pairs – both of which were top 10 news stories. There were a few thoughts on fill rates and volatility – there will be more on that in the new year, as well as the dire February volume data from EBS, largely thanks, it seemed, to the Lunar New Year, but wasn’t all about that.
The top two columns, however, were about the same firm, and one move – something that could reverberate further through the industry in 2025. While I was “struggling” in Fiji to come up with a programme for a conference, news broke that Bloomberg was planning on introducing brokerage. The first column discussed whether or not, LPs would say “enough is enough”, and while I was confident (when am I not?) in my view that they would make a lot of noise and do nothing, conversations since then suggest to me that may not be the case.
On the same subject, by far the most-read was a follow up detailing the planned brokerage charges by Bloomberg, and the likely monetary impact on LPs. I doubled down on my view, however, it does seem as though several LPs are actively pushing certain clients down different channels – ideally an API to their pricing engine, but in some cases to providers who offer cheaper brokerage or different models.
It is hard to make clients change how and where they trade, so I am still fairly sure that Bloomberg’s FX business won’t be seriously impacted, but the firm has eroded a little goodwill it seems – and that means it might like one thing in 2025, volatility. Talking to people in the industry, they are genuinely upset by the move and one interesting point of view has been how, if markets go quiet and customers have more time to consider their execution options, LPs will simply make it more attractive through their pricing to trade elsewhere.
Again, my sense is this is still noise, but as the saying goes, ‘there is no smoke without fire’, so while we won’t know how Bloomberg’s FX volumes are trending, it might be worth paying attention to the grapevine a little closer for snippets of information.
And with that, I will close out the 2024 columns by thanking everyone who engages with me on these issues – we may not always agree but I genuinely value all opinions. In too many markets, the debate is along business lines with everyone standing in the camp that will make them more money. That is the case to a degree in FX, naturally, but there is also a sincere desire to improve the market structure, balance unfairness where it exists, and maintain the asset class’ position at the top of the table.
And yes, I know that’s only my view, but that’s the benefit of writing a column!
Wishing you all a very happy and prosperous 2025.
