R5, the electronic venue for trading emerging market foreign exchange, is expanding to Singapore while there is increased demand for algorithmic trading in developed markets.
The Monetary Authority of Singapore has given regulatory approval to R5 to launch in the country which is strategically important due to the significant volume of trading in emerging and local market currencies.
Jon Vollemaere, chief executive of R5, told Markets Media: “A year from now we anticipate between 50% and 60% of our volume to come from Asia. We plan to open an office in Hong Kong in the next year and launching in Shanghai at some point.”
R5 was developed after banks found an increase in demand for emerging markets currencies but found it difficult to trade in markets dominated by voice broking. The fintech firm went live with its London clients during the fourth quarter of last year to trade non-deliverable forwards in 10 currencies – seven in Asia and three in Latin America – where there are on-shore capital controls. The firm aims to launch spot trading in six currencies this quarter – China, Russia, Turkey, South Africa, Mexico and Thailand.
“Many of our Singapore clients were involved at the inception of R5, seeking an electronic alternative for NDFs and emerging market FX to better service their customers and hedge their risk,” lexapro generic added Vollemaere. “We will be focussed on the enhancing the currencies we support, such as enabling non-standard amounts and maturities for NDFs.”
Regulators have also encouraged electronic foreign exchange trading to increase transparency following their investigations into price rigging. Spot foreign exchange trading is not covered by MiFID II, the incoming regulations covering European financial markets from 2018, but that does not mean the asset class completely escapes increased scrutiny. MiFID II expands best execution requirements to non-equities and although spot FX is not included in the mandate, it is unlikely to be excluded when asset managers start monitoring execution across other asset classes more carefully.
David Mechner, chief executive of Pragma Securities, an independent provider of algorithmic trading tools, told Markets Media: “The FX market is changing very quickly and we are hearing from our bank clients that they are getting a lot more requests from the buyside who want to use algos to trade FX.”
Pragma Securities has launched a new execution algorithm designed to improve average execution performance against the daily 4pm WM/Reuters foreign exchange benchmark fixing which was changed in February last year. After the FX rate-rigging scandal, the calculation window for the WM/R benchmark was extended from one minute to five minutes for the most liquid currencies.
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