Weekly review: Reuters shakes up FX platform sector; EUR plumbs new depths

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Thomson Reuters got the week off to a brisk start with the announcement it was buying FXall, the leading FX platform with non-financial corporates and asset managers, in a deal worth about $643 billion.

The deal, which saw Thomson Reuters pay $22 per share – a more than 80% premium on FXall’s $12 February list price – consolidated its position as the world’s leading FX ECN. The takeover is seen as complementary, given that Thomson Reuters services mainly banking clients, while FXall is focused on the buy-side. The success of the venture will depend on how the acquisition is managed, but it came as FXall reported record average trading volumes in June, while Thomson Reuters’ volumes dipped. Meanwhile, Icap’s EBS, the previous market leader, came out with a much-anticipated set of new rules for clients trading on its platform, after an extensive consultation period since it installed Gil Mandelzis as chief executive. The move was an attempt to eradicate technology and latency arbitrage that has favoured certain market participants. EBS says it will actively monitor and report disruptive behaviour, such as flashing (manual or otherwise), pulsing, self-matching and out-of-region quoting. Repeated offending will be considered a breach of the dealing rules. The firm will be hoping the initiatives placate some serious concerns from some of the leading market makers over the integrity of the EBS platform. As if that was not enough action in the sector, Tullett Prebon, the interdealer broker, became the latest firm to launch a trading platform with its tpSpotdeal offering. Here at EuromoneyFXnews, we make that the eighth new platform in what has been a hectic last three months for the sector. EUR heads south for the summer In the market, the euro continued to dominate proceedings and lose ground after the European Central Bank’s (ECB) decision to lower its deposit rate to zero. EURUSD dropped to a two-year low as most agreed the ECB was happy to let its currency join the USD and JPY among the ranks of funding currencies. Bearish sentiment on the euro is all very well, but where will the buyers come in? We highlighted a timely survey from Société Générale, which, among other things, suggests hedge funds are waiting until $1.05.More bad news for EUR came as China’s FX stockpiles stagnated, suggesting lessening reserve diversification was undermining another critical support for the single currency. Away from the EUR, the prospects for the JPY look to be improving as we get deeper into the summer, although that is naturally predicated on the intervention intention of the authorities in Tokyo. On the move... Elsewhere, the FX world keeps turning, with a plethora of hires among the world’s biggest FX banks and some interesting developments in the retail space. Finally, if you have not read it, our analysis of this year’s Euromoney FX Survey continues with a look at the developments in the important real-money sector.