I traipsed off down to Canary Wharf this week to see a demo of the latest bells and whistles that have been added to Barx, Barclays’ FX platform. Ostensibly, the addition of ‘PowerFill Orders’ gives Barclays a wider range of algorithmic capabilities. I say ostensibly, because as I’ve written before, I’m not entirely sure that the demand for algos is as great as we’ve been led to believe.
They clearly do have a use – whenever I’ve been at conferences where the buy side has been asked whether or not they will use algos, they invariably say they will. So maybe Barclays is being exceptionally clever and delivering the tools for tomorrow today.
That said, the lack of availability of ‘PowerFill’ down an API might limit their use.
What Barclays is doing is though is trying to increase its liquidity pool on Barx. It now allows clients to put in their own bids and offers, which are not displayed to other users. Barclays admits it is trying to build a community of price takers and makers, which will increase the efficiency of its internal matching on the fully automated Barx. I wrote about the importance of internalisation in May’s Euromoney.
The benefit for clients is that they get to save at least part of the spread – and in the marketing gimmicks common to equities, Barx tells them how much better off they are when they do this. The system also has some other nice features, many of which would appear to make it effectively Mifid compliant, even though spot FX is pretty much exempt from the looming Directive. I have to say I was pleased to hear that Barx does not offer a fix. Later versions are likely to include the ability to enter time-delayed orders, which will allow clients to create their own, backed up by a clear audit trial, but minus the potential of having their order front run – whoops! I mean, risk-managed – by the bank. Other banks are also in the process of finding ways to encourage internal liquidity. Keep watching this space for further details.
