Obviously, the fact that prices are frequently gapping does cause some tension, but most leading e-commerce providers seem to recognise that being in the business requires a ‘win some, lose some’ approach.
More worrying is talk that several platforms slowed or even shut down because they were unable to process the number of tickets going through. It is a wonder why some banks still deliver retail, micro and client trades to their back offices without using an aggregation service.
For instance, during the excitement of last Thursday (May 6), several banks apparently stopped streaming prices. The result was an immediate spike on the multibank platforms at the market’s hub – such as EBS, Reuters and the CME– as well as on those single-bank platforms that kept streaming.
Andy Coyne, CitiFX’s head of FX prime and G10 e-commerce, is in no doubt that the main problem was caused by pressures on the back office. He says Citi processed more than 1 million trades without any problems, which, he concedes, would not have been possible two years ago. Coyne says that Citi recognized it had to plan for big-ticket days and that included utilising Traiana’s NetLink and developing Citi’s own proprietary netting systems. As a result, he says, only 280,000 tickets were ultimately delivered to operations for further processing. The rest were successfully aggregated, relieving pressure on the back end and allowing the bank to keep its CitiFX Velocity platform up and running without interruption.
Although Coyne won’t be drawn on the subject, a number of major banks were forced to settle some trades outside of CLS because their back offices couldn’t cope. This must be a major worry and will no doubt increase the attractiveness of Traiana’s NetLink and the CLS Aggregation Service. Coyne admits: “I think these are such important initiatives to ensure the smooth running not only of CitiFX, but also the wider FX market.”
Naturally, Gil Mandelzis, Traiana’s chief executive, agrees: “The extreme volatility of last week highlighted the value of Harmony and the Harmony NetLink service. By working with banks to aggregate tickets before they hit the back office, NetLink helped banks handle a very significant number of tickets.”
