I would appreciate if Traders with first-hand experience of Institutional Platforms (Hotspot, Currenex, FXAll, Lava) and Interbank Platforms (EBS, Reuters), could comment. Also, those who have direct knowledge of these platforms.....
Over the past few months, several disturbing accounts of interbank 'etiquette' have been relayed by authoritative internet posters that, IMO, speak credibly on the subject.
The major complaint across Institutional ECN (Currenex) and Interbank Platforms (Reuters, EBS), is "busted trades". Or what is otherwise known as a "bank reversal".
Essentially, this is a trade executed by a private trader, counter-partied by a bank, that at some time in the future, is canceled or "reversed" by the bank, effectively canceling their original sale or purchase.
Under most intra-day styles (scalper), the private trader has already closed the profitable position and is left with a now OPEN position (ex if a Bank cancels their sell order, the trader still has an open short position, presumably to close his long which was 'canceled' by the bank).
To confound matters, notification is not made directly to the Trader by the Counter-party Bank . Rather notification is made to the Traders Prime Broker, who in turn, is expected to notify the Trader in "a timely manner".
This introduction of notification delay only compounds the problem. I've heard it can take "hours" for a Trader to get notification an interbank trade was previously canceled. In real life, the market can be several hundred pips OFF MARKET, from this point...
This can drastically slash a traders capital, empty their account, or put them into deep debt; as their closed position is reopened and presumably unattended for hours, after-the-fact...
Why would a Prime Broker sell out a Trader?
The answer is simple: to preserve a relationship between the Prime Broker and the Offended Bank (ie Coveted Liquidity Provider). Which relationship is more important? That between a private, HNW Trader and Deutsch Bank? Or DB and Citibank??
Lets Name Names. I've read from several traders, bank reversals are common on Currenex. FXAll? Don't know. Lava? Don't know. Hotspot? Don't know. Happens on EBS and Reuters....
This is a major concern and seriously begs the question: whats the point?
A Traders livelihood is at the sole whim of a Counter-Parties good graces....
The second disappointment pertains to scalping.
Apparently, Banks routinely target scalpers who trade big size (+20 MIO) for a few pips or very frequent (automated).
By target, we're talking bank reversals on orders. Or having them booted from a provider for "unfair" trading practices.
This is disturbing because either a Prime Broker acts as bucketshop by operating a deal-desk and taking exposure on the Traders positions....or, they bend like reed when one of their liquidity providers whose been whacked a few times runs crying to the Prime Broker - either reversing the trade (leaving the trader screwed) or having the Trader booted from the liquidity network...
I've even heard banks will complain if they take a big hit on a longer-term directional trade... They'll just cancel cause they don't want to take a loss..
Frankly, this is all beyond ridiculous and pure robbery. Categorically untradeable.
If anyone could share their experiences on the Institutional and Interbank Platforms, it would be much appreciated!
Thanks In Advance.
Over the past few months, several disturbing accounts of interbank 'etiquette' have been relayed by authoritative internet posters that, IMO, speak credibly on the subject.
The major complaint across Institutional ECN (Currenex) and Interbank Platforms (Reuters, EBS), is "busted trades". Or what is otherwise known as a "bank reversal".
Essentially, this is a trade executed by a private trader, counter-partied by a bank, that at some time in the future, is canceled or "reversed" by the bank, effectively canceling their original sale or purchase.
Under most intra-day styles (scalper), the private trader has already closed the profitable position and is left with a now OPEN position (ex if a Bank cancels their sell order, the trader still has an open short position, presumably to close his long which was 'canceled' by the bank).
To confound matters, notification is not made directly to the Trader by the Counter-party Bank . Rather notification is made to the Traders Prime Broker, who in turn, is expected to notify the Trader in "a timely manner".
This introduction of notification delay only compounds the problem. I've heard it can take "hours" for a Trader to get notification an interbank trade was previously canceled. In real life, the market can be several hundred pips OFF MARKET, from this point...
This can drastically slash a traders capital, empty their account, or put them into deep debt; as their closed position is reopened and presumably unattended for hours, after-the-fact...
Why would a Prime Broker sell out a Trader?
The answer is simple: to preserve a relationship between the Prime Broker and the Offended Bank (ie Coveted Liquidity Provider). Which relationship is more important? That between a private, HNW Trader and Deutsch Bank? Or DB and Citibank??
Lets Name Names. I've read from several traders, bank reversals are common on Currenex. FXAll? Don't know. Lava? Don't know. Hotspot? Don't know. Happens on EBS and Reuters....
This is a major concern and seriously begs the question: whats the point?
A Traders livelihood is at the sole whim of a Counter-Parties good graces....
The second disappointment pertains to scalping.
Apparently, Banks routinely target scalpers who trade big size (+20 MIO) for a few pips or very frequent (automated).
By target, we're talking bank reversals on orders. Or having them booted from a provider for "unfair" trading practices.
This is disturbing because either a Prime Broker acts as bucketshop by operating a deal-desk and taking exposure on the Traders positions....or, they bend like reed when one of their liquidity providers whose been whacked a few times runs crying to the Prime Broker - either reversing the trade (leaving the trader screwed) or having the Trader booted from the liquidity network...
I've even heard banks will complain if they take a big hit on a longer-term directional trade... They'll just cancel cause they don't want to take a loss..
Frankly, this is all beyond ridiculous and pure robbery. Categorically untradeable.
If anyone could share their experiences on the Institutional and Interbank Platforms, it would be much appreciated!
Thanks In Advance.
Do you have any credible sources to back this up that you can post?
...you make me laugh.
