"It is set to become a global electronic trading venue and source of liquidity for short-dated FX forwards, building on the company’s global reputation for e-trading spot FX," Icap claims in a press release. "The system also uses market data from the award-winning Icap-owned EBS platform, the source of the spot FX market, and is therefore ideal data for forwards calculations," it adds.
Icap says i-Forwards will now be available in other major financial markets, including Asia and the Americas, and will build a global e-book in forward FX. "Forwards traders universally regard price and liquidity as being of paramount importance and the opportunity to electronically execute with straight-through processing is compelling. Trading forwards through Icap provides access to an orderly market and a global book of counterparties and liquidity," says Don McClumpha, product manager, Icap Electronic Broking, Europe.
"We worked closely with the EBS management team to build on their expertise in running a global FX currency book, which is reflected in the design of our offering for e-forwards trading. We are fully confident this will become the electronic venue of choice for professional forward FX traders," he adds.
However, at least initially the platform will only cover short dates and will not offer prices for periods longer than one week. This might reflect the fact that despite the seemingly total commoditization of swaps, particular in standard dates, many banks are reluctant to trade electronically. According to one senior market source, voice brokers still play an important role in getting business done. "Nobody wants to show their hand in forwards," he says. "If you do you simply move the price one spread away from you."
To other traders outside the forward market, this seems a minor point, as spreads are virtually non-existent. But in a marginal business that many banks seem to be effectively giving away as a funding service to clients, it is clearly an issue.
Icap recognizes this and says that i-Forwards complements its existing voice offering. It adds that the platform’s functionality, which includes request for quote, split amount trades, spot restricted orders, drip-feed orders, minimum amount entry, full STP capability and flexibility of interaction with Icap’s voice liquidity pool, will differentiate it from e-commerce rivals.