FastMatch, Inc., the FX ECN platform which was recently acquired by Euronext, today revealed its central tape for FX, a new market data product that aims to increase market transparency and help traders evaluate best execution performance.
The new solution is modelled on similar projects for other asset classes such as equities, and consists of ECNs, banks and other financial institutions engaged in the FX market, to provide a last-sale data feed with price, size and timestamps. The idea itself makes sense due to the decentralized and international nature of the FX markets, and the lack of a single regulatory authority sitting above it.
The intention is to set up FX Tape as a “central reference point for Spot FX transacted prices helping market participants evaluate best execution performance.”
Participation will be voluntary under an open access model, with FX Tape offering commercial incentives to encourage ECNs to contribute data. This includes allowing contributors to obtain a percentage of the net revenue generated by FX Tape according to the volume they contributed with.
In other words, ECNs and other contributors will get more credit the more trades that they provide, which creates a financial incentive for a diversified set of participants to start reporting.
By default, the trades will be collected in aggregated and delayed fashion to minimize market impact, and possibly to reduce costs compared to the case where those trades are disseminated in real time. While the service will consolidate data from several resources, the product will be distributed to market participants and vendors via FastMatch’s and Euronext’s distribution networks.
In order to compete with other ECNs that already provide market data, such as EBS and Thomson Reuters, we may expect the new product to provide FX data at less cost, at least to bring it in line with what is available for market participants.
Commenting on the launch, Dmitri Galinov, CEO of FastMatch, said: “FX Tape is a significant stepping stone to building a more transparent market globally while providing a way for market participants to monetize their trade data. This product is the culmination of three years of dedicated effort.”