The reasons behind the initiation of an FX position are almost as diverse as the participants in the market itself. Some believe that technical analysis is the only true way to trade FX; others believe that yield alone drives rates.
Over the years, I’ve come across other beliefs. One dealer used to take cable positions on the basis of which way a crane he could see out of the window was pointing. We had a period when we traded on whether the tide was in or out. It should come as no surprise to hear of a company that bases its trading decisions on what it says is contained in the Bible.
Word reaches me that a new netting system aimed initially at foreign exchange prime brokers (PBs) is about to be unveiled by EBS and Traiana.
The service has the working name of NetLink and has apparently been developed in response to customer demand. It is no secret that many in the industry are moaning about the cost of processing tickets through CLS even though – as I reported a couple of weeks ago – the settlement utility has taken steps to lower its charges. Pre-netting trades is seen as an obvious way of reducing costs.
There is a certain amount of irony in EBS’s involvement, given that its successful FXNet business was effectively destroyed by the advent of CLS, which – as readers of this column will be fully aware – only accepts trades on a gross basis. EBS’s move could perhaps be seen as a protective measure should FXMarketSpace, the Reuters and CME joint venture, ever get the go-ahead to pre-net trades through CME clearing.
