NCFX Unveils Forwards365
Posted by Colin Lambert. Last updated: October 10, 2023
New Change FX has released a new streaming swap data service, NCFX Forwards365, and announced plans to launch a live basis stream in the coming months, Basis365.
The new service, as the name implies, provides a price calculation for every business date out to one year, rather than an interpolated price. Paul Lambert, CEO of NCFX, says the new service provides granularity for market participants looking to trade to a specific date or plan their rolls. “This means, when the trader goes to the broker for a price, they have a very good idea of the price that broker is seeing.”
The pricing on Forwards365 is calculated from the perspective of the market-maker, and as such provides an accurate view of pricing from the market-maker’s point of view meaning that all users can understand pricing in real time. For traders, NCFX says the new service provides an accurate view of where the neutral price for a given tenor is trading to triangulate with their own view of the price and their inventory. It adds that users can connect to data via FiX or call the New Change FX RestAPI when live or specific data is required for trading or modelling. Data can also be seen in real-time curves via the New Change FX user screens.
Lambert says the new service is attracting interest from both the sell and buy side, but that the former is probably moving quicker. While this might sound counter-intuitive given the banks are the major market makers in FX swaps and forwards, he explains that the demand is being driven by the need for better data. “The problem for major players in the market is the third-party data they have been using is influenced – sometimes heavily – by their own data, thanks to their position in the market. This can create problems with compliance and the banks want to stay ahead of any potential issues there. We have seen before how regulators’ attitudes to certain practices can change over time – and it can lead to an expensive experience.”
Smaller banks are also keen on the service, he adds, mainly because Forwards365 gives them guide rails and accurate pricing for dates in currency pairs that may not be their speciality, but which features in crosses they quote their own client base.
As well as Basis365, Lambert also believes that the launch of the forwards data can help NCFX build out its TCA services. “TCA is only as good as the data you measure it against,” he observes. “We are now connecting with our clients to deliver spot and forwards data, to help them with Alpha generation and pricing services.
“There is still more to do,” he continues. “In the bigger picture the FX swaps market is evolving and hopefully this is an evolutionary step closer to the right solution that builds confidence in pre-trade tools. Good TCA, good pre-trade tools, and good management of the book helps traders make smarter decisions.
“Were confident we have something unique and will take transparency and fairness forward in the FX swaps market,” he concludes. “It has been a long and complex process to systematise the construction of accurate curves without using any interpolation, but the result is superb. Users can be sure that each point that they need to find a value for is individually calculated rather than being subject to what is inherently guesswork when using interpolation. This, coupled with the fact that users can stream 365 days of data rather than having to calculate each point will deliver significant change to the electronification of the swaps market.”