Data continues to be at the heart of everything that FX traders do, and whilst FX markets claim to be transparent, to what extent is this true? Data for FX is less available than in equities, but traders are still able to conduct sophisticated and robust analysis with what is available. However, many of our buy side members are still running into challenges where actionable conclusions cannot be drawn, or the quality of utilisation causes issues.
This is true for both the data that they collect internally, and for the data provided by banks, platforms and other third parties. To be able to make trade data work harder, our members need to clarify exactly where they see data benefiting their execution and where their inability to access it puts them at a disadvantage.
Current Challenges & State of Play:
There is a general feeling amongst buy side firms that TCA is relatively sophisticated and transparent for spot transactions, but when looking beyond spot current data provision isn’t up to scratch
Data sets are very large and buy side generally cannot afford to store this huge amount of data, so cloud-based solutions are preferred – especially for smaller managers
The buy side also don’t have the time nor money to build large data sets, and even if there was a desire to, there is a consistent challenge in identifying the right data to collect
Swap data streaming is only a recent phenomenon and streaming for forwards at any size is still not provided meaning there is no price transparency on these products
Pressure is created by initiating competition, which inevitably breaks relationships and trust among banks/buy side
The sell side still have access to large amounts of data that the buy side do not
The buy side wish list
Most asset managers would like to see a form of smart/suggestive execution modelling using individual data sets for the bilateral RFQ swap/outright mode
Forward points data accuracy needs to improve
Buy side to be able to access more data from the sell side
There is a need for an independent mid in Swaps which will create a single, accurate, universal benchmark and enable the buy side to be able to compare banks performance more effectively
The ability to compare with peers on LPs and banks
Greater access to more granular and accurate data to allow the buy side to make better decisions
For data to be a value-add in building better relationships with clients, not just to comply with regulation
For the buy side to collect data internally and have more control so there is less reliance on they platforms and liquidity aggregators
Many do still run into challenges where actionable conclusions cannot be drawn, or the quality of utilisation causes issues”
There is a general feeling amongst buy side firms that TCA is relatively sophisticated and transparent for spot transactions”
Greater access to more granular and accurate data to allow the buy side to make better decisions”