Several media outlets have reported today that Thomson Reuters is looking into the FX trades of Lucid Markets, one of its clients on the Thomson Reuters Matching platform. The issue reportedly relates to whether or not Lucid used multiple connections to place trades through the platform.
The issue is relevant in that Thomson allows for one connection for order execution and another connection for backup/redundancy purposes. Using more than one live connection for order execution would represent an unfair edge when placing trades–particular those that are high frequency (HFT) in nature. This is particularly sensitive in an environment that has put HFT under substantial scrutiny due to perceived market impacts of such trading behavior as well as widely-held views that HFT shops have succeeded due to having advantages over other market participants in terms of speed, access to data and other secret tools.
In a statement released by the company a spokeswoman indicated, “As the operator of one of the largest FX dealing communities, providing a level and fair playing field for the community is paramount,” In addition, “Thomson Reuters takes any accusations seriously and uses all the tools at its disposal to enforce its rules.”
The company did not indicate in its statement whether of not the trading was discovered by the company or self-reported by Lucid Markets, the potential number of trades in questions or if any other clients were being reviewed for such trading. Inquiries into Thomson Reuters have not been returned at this time.
FXCM acquired controlling stake in Lucid Markets for $176 million in June 2012.