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Screenshot of a breaking news alert e-mail from Q2 2017
American FX platform provider Molten Markets considers its new solution for fund managers to be the first innovation of its type for 18 years
Many concerns have been raised about the transparency of FX execution recently, bringing about a market need for technology firms to keep pace with regulatory change and adapt their solutions accordingly as jurisdictions across the globe set increasingly demanding parameters.
Investigation of custodian banks pricing of standing instruction business is ongoing, and regulators continue to study the issues surrounding FX market activity at the time of the industry standard daily benchmark fix at 4pm London time. The fallout from these investigations has already led to many suspensions and resignations of dealing staff across the globe.
For fund managers, their asset owner clients, and their counterparty banks alike, Molten Markets considers that there is now huge demand for solutions that move electronic trading to a much higher level, enabling a data-driven transparent proof of best execution to be generated.
On this basis, Molten Markets has quietly built and deployed what it considers to be the only dedicated FX trading platform designed specifically for fund Managers to be launched in the past 18 years. The first client of InstiFX is now live and trading with their chosen panel of counterparties.
In terms of functionality, each trade will be managed through the embedded execution management system which is supported by a unique pre-trade analysis of execution options. This particular system is undergoing patent approval at present.
Each trade is able to be executed with a choice of trading counterparties through a wide variety of manual and automated trading methods and is reported on through real-time TCA (transactions cost analysis) to demonstrate best execution.
“The move away from trading at benchmark fixing times is critically important” stated John Atchue, co-founder of Molten Markets in a corporate statement.
“Long before the current investigations into “the Fix”, it was very clear to all market participants that the FX market is heavily distorted by the sheer size of transactions being accepted by banks as zero-revenue risk transfer trades at 4 pm London time. This was always unsustainable, but until now there has not been a reasonable alternative” concluded Mr. Atchue.
“The key to our solution is that we have finally cracked the problem of how to do FX TCA properly, adopting real-time implementation-shortfall style TCA from the equities markets, while solving for the lack of a National Best Bid and Offer (NBBO) in FX. The solution requires real-time management of vast amounts of data, which our chosen infrastructure is uniquely capable of delivering” added Simon Wilson-Taylor, President and CEO of Molten Markets.
The company’s co-founder Francisco Heredia, concluded by stating that “We began showing the production version of InstiFX to clients in Q4 2013. The clients we have already signed include the largest fund managers in the world, which is clear evidence of the demand for our ground-breaking solution”.