With the month of August behind us, the season of low volatility in the FX market is officially over. After the start of Labor Day week in the US, the currency markets typically become more active.
Some electronic communication networks (ECNs) had a great summer, while others experienced a pullback in client activity. As we will see below, some records have been shattered. Volatility started off quite low in June, but by the end of August it picked up materially as the US dollar faced some challenges to its recent rally.
In the following lines we will take a look at four of the reported results of four major trading venues: Euronext’s Fastmatch, FXSpotStream, GAIN Capital’s GTX and CBOE’s Hotspot.
The firm’s newly-acquired FX trading ECN is the first one under the spotlight. Fastmatch has been on a tear in recent years. After the trading venue was substantially affected by the Swiss National Bank-induced FX crisis in January 2015, it made quite the comeback.
The growing trading volumes of Fastmatch ultimately led to a sale to the deal with Euronext. The EU-focused exchange purchased 90 percent of the company for $153 million back in May.
During the month of August the total number of FX transactions executed via Fastmatch amounted to $373.7 billion. This figure was only a tiny one percent lower than last month’s metrics, however the month had 23 days (when compared to 21 in July). The number represented a third consecutive monthly decline in nominal volumes.
Average daily volumes (ADVs) declined 10 percent to $16.2 billion. Both numbers were substantially higher than a year ago with the total rising 58 percent, while the ADV metric marked a 60 percent increase.
FXSpotStream reported that its overall volume in August increased materially when compared to the previous month. Overall volume totaled $441.9 billion, which is 20 percent higher than in July. Due to the higher number of trading days, the ADV gain was actually lower, marking a 9.5 percent increase to $19.2 billion daily.
Both numbers were about 55 percent higher when compared to August 2016, which was materially slower when it came to FX market moves.
August was the second best month for FXSpotStream this year so far and could be a signal that generally higher volatility is around the corner.
GAIN Capital GTX
The institutional trading subsidiary of GAIN Capital, which has a Swap Execution Facility (SEF), an ECN and a Swap Dealer, reported a record month in August. The metrics shot higher, causing GTX to snatch the title of fastest growing company year-on-year from Fastmatch.
Total trading volumes transacted via GTX came in at $357.3 billion, which is higher by 33 percent when compared to July and by 66 percent when compared to a year ago. ADV were marked at $15.5 billion daily, which is higher by 21 percent when compared to last month and by 66 percent when compared to August 2016.
Trading volumes executed via the ECN and the SEF facilities at GTX totaled $279.8 billion, which is a company record. Trading via the venue was slightly more active than in January this year. The figure was higher by 86 percent when compared to the same month last year and by 32 percent when compared to July.
The swap dealer facility of GTX reported that a total of $77.5 billion changed hands during the month, with ADV amounting to $3.4 billion daily. Both numbers were higher by 19 percent when compared to a year ago.
Hotspot is the biggest amongst the FX ECNs here. The subsidiary of CBOE marked a 10 percent monthly rise in total volumes, to $622.7 billion. The figure however was flat when adjusted for trading days, with ADV coming in at $27.1 billion.
Trading activity at Hotspot was also materially stronger when compared to last year, posting a healthy rise of 20 percent in total volumes and by about 17 percent in ADV. While CBOE’s trading venue registered the slowest year-on-year growth, it is important to note that the company’s nominal base is still substantially higher compared to that of its peers.