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Screenshot of a breaking news alert e-mail from Q2 2017
Knight Capital’s Hotspot FX, similar to all other Forex ECNs we have already seen (except Thomson Reuters), reported a nice rise in June FX volumes to $31.3 billion average daily volume, up 11% over May. A more interesting development was Hotspot FX’s admission that:
in the second quarter of 2012, Knight modified the reporting of Knight Hotspot FX notional dollar value traded volume to count one side of the transaction. The company previously counted total client volume to include both sides of the transaction.
Essentially, as we understand it, Hotspot FX was double-counting its revenues, such that when (for example) a $1 million cross occurred between two parties on its system, it would itself report $2 million of volume. For those of you familiar with our charting of Hotspot FX’s volumes (as per below), you’ll now be seeing much lower total numbers:
While we commend the Knight Capital and Hotspot FX people for making this admission and correcting their reported volumes, we now know that Hotspot FX is indeed a much smaller business than previously thought, as compared to competitors such as FXall, ICAP-EBS, and Thomson Reuters.
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