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Where Can I Find Deep Liquidity in FX?

  • #41
  • May 13, 2015 8:55am May 13, 2015 8:55am
Quoting cabeltrader
Does anyone have experience with NewEdge/SocGen?
Yes. Your country of incorporation shouldn't matter unless it's on a blacklist, but you'll need to show your financials. I guess this will be the same at any bank as they will care more about the reputational risk than the money they can make from your business.
  • #42
  • May 13, 2015 9:13am May 13, 2015 9:13am
Banking KYC process usually takes 2-3 weeks. Money origin is also not a problem, banks accept explanation about portfolio investments,
all banks accept BVI and similar jurisdictions, and it's very easy to set up a new company acceptable jurisdiction, takes couple of weeks.
The most important if you have enough funds! All the rest can be solved easily
  • #43
  • May 13, 2015 9:14am May 13, 2015 9:14am
Atom8 also offers a MT4 feed that is better than Dukascopy. It has 17 banks on it as LP's.
Number #1 in PnL and Pips on Dukascopy Trader Contest since 2011
  • #44
  • May 13, 2015 2:23pm May 13, 2015 2:23pm
Quoting M967
Try this if u have enough funds http://www.abnamroclearing.com/en/sp...ing/index.html
Thanks, I'll take a look.

Quoting shrike
{quote} Yes i doubt this going to happen. Banks have become very selective on which clients they onboard. 10 years ago it was different, basically deposit 1M (some even less) and you were good to go. Rabobank was the go-to bank for smaller firms. But they quit the PB business all together (after one of their clients had an expensive accident), as did a few other banks, others downsized their PB operations and threw out clients that were considered too risky and/or did not produce enough business.
Thanks for the post. Rabobank PB seemed like an interesting product, it is unfortunate that they quit the PB business.

Do you know for a fact if having a PB results in significant price/liquidity improvements? Or if the price improvement is just not paying comissions to intermediates?
  • #45
  • Edited 2:54pm May 13, 2015 2:44pm | Edited 2:54pm
There're several things that PB banks offer single dealer platforms like BARX, Velocity, Neo, etc.
1.Unlimited liquidity, that guarantees execution of clients orders. Usually it's 150m per day but can be increased easily.
2.No partial execution on any size of order, comparing to partial execution of ECN brokers (20m order executed by 15 -20 smaller , be prepared to that)
3. No commissions, only spread based trading.
4. Higher spreads but can be discussed on client's monthly flow.
5. No middle man.
6. No margin, only credit based relations
But PB can offer also ECN access if client wants, "everything for your money, mate"
PoP can offer also very good conditions if you know right people, the only thing is partial execution and 20m max.order size.
You need PoP with own platform and direct agreement with LP banks, all others venues like CNX, FXALL will be more expensive.
  • #46
  • May 13, 2015 9:28pm May 13, 2015 9:28pm
Quoting M967
There're several things that PB banks offer single dealer platforms like BARX, Velocity, Neo, etc. 1.Unlimited liquidity, that guarantees execution of clients orders. Usually it's 150m per day but can be increased easily. 2.No partial execution on any size of order, comparing to partial execution of ECN brokers (20m order executed by 15 -20 smaller , be prepared to that) 3. No commissions, only spread based trading. 4. Higher spreads but can be discussed on client's monthly flow. 5. No middle man. 6. No margin, only credit based relations But PB...
Prime brokers are reluctant to take on clients who don't have at least $25 million under assets. This has come about after the SNB fiasco and credit has suddenly become more important than price.

Some Margin FX Brokers who don't have those assets but have large client deposits equally fail the Prime Broker current/updated requirement and have been looking for credit elsewhere.
Why? because client funds are "meant" to be segregated even though some "were" used for prime broker collateral.
Prime brokers then found out "the hard way" that what they really had was nothing except client funds which they couldn't claim on.
The game was up and they got kicked.

So now whats evolving is 1st tier brokers. Those who have assets to meet the PB requirements.
The next is 2nd tier brokers who will need to use 1st tier brokerage credit or margin to hedge their clients activities
The 3rd is totally B-Bookers who don't worry about hedging client flow.

One thing about FX the game never stops even from a brokers point of view.
  • #47
  • May 14, 2015 2:49am May 14, 2015 2:49am
Quoting TheMaxx
{quote}Yes. Your country of incorporation shouldn't matter unless it's on a blacklist, but you'll need to show your financials. I guess this will be the same at any bank as they will care more about the reputational risk than the money they can make from your business.
Quoting M967
Banking KYC process usually takes 2-3 weeks. Money origin is also not a problem, banks accept explanation about portfolio investments, all banks accept BVI and similar jurisdictions, and it's very easy to set up a new company acceptable jurisdiction, takes couple of weeks. The most important if you have enough funds! All the rest can be solved easily
Thanks for the posts!

Citi denied to do business with using as the motive solely the country of incorporation. And in fact, I was quite surprised by it. I think it has some to do with the volume of my business, and it may be the case that if I was big (for a Citi's client standards), the country of incorporation would not be an issue.
  • #48
  • Edited 3:38am May 14, 2015 3:14am | Edited 3:38am
Quoting M967
There're several things that PB banks offer single dealer platforms like BARX, Velocity, Neo, etc. 1.Unlimited liquidity, that guarantees execution of clients orders. Usually it's 150m per day but can be increased easily. 2.No partial execution on any size of order, comparing to partial execution of ECN brokers (20m order executed by 15 -20 smaller , be prepared to that) 3. No commissions, only spread based trading. 4. Higher spreads but can be discussed on client's monthly flow. 5. No middle man. 6. No margin, only credit based relations But PB...
Thanks for the answer. You seem to have a lot of the answers that I am looking for!

1. One PB enables me to use other banks platforms as well? That is, if DB is my PB, can I use BARX, Matrix, Neo as well as Autobahn? Or could I be able to access those banks liquidity in some fashion similar to a client of theirs would?

2. What kind of spreads are charged for a 150M clip, for example? Or what range of spreads are used according to different types of client?

3. Why do you say 20M max order size? Is this a thing? If so, why is that? (I had a higher limit than 20M on a MT4 platform, I don't really get the point here)

4. From an operational standpoint, what is the difference between a credit and margin approach?

5. What kind of costs would I incur to structurate and to maintain the technology part of a PB setup?



Quoting lasty
{quote} Prime brokers are reluctant to take on clients who don't have at least $25 million under assets. This has come about after the SNB fiasco and credit has suddenly become more important than price. Some Margin FX Brokers who don't have those assets but have large client deposits equally fail the Prime Broker current/updated requirement and have been looking for credit elsewhere. Why? because client funds are "meant" to be segregated even though some "were" used for prime broker collateral. Prime brokers then found out "the hard way" that what...
Thank for the answer! There are some interesting points.

Just for curiosity, I was told that is possible to open a PB account with HSBC and UBS with 5M. It was not a direct information from the banks, but someone else telling me this. It would be nice if someone could confirm it.
  • #49
  • May 14, 2015 4:23am May 14, 2015 4:23am
I know very well Citi, they accept most of jurisdictions but now they stopped accepting new clients after SNB and looking for a buyer of their FX business.
Your half a yard flow is not serious for institutional providers and PB.
About UBS and HSBC: you can simply open corporate account with one of them and they will provide you with platform and credit as PB, its the simplest way.
Don't tell them anything about trading or something like that, just open current account first.

PB allows you to choose one platform to use. Don't know the spread for 150m. Spreads strongly depend on your monthly flow and relations with bank.
It's relationship business!!! You can get very, very low spreads if you give 3-4 yards flow. Every bank interested in flows, that's why DB,Citi, etc. provide its pricing to everywhere, I mean ECNs. Flow its like oxygen for them.
you must understand how FX market works, all orders that don't meet counterpart inside bank's clients and traders then drop to the street (all ECNs) you see 500k, 5m, 2m, etc. on any ECN platform. On bank platform you don't see that because you make order, it's 1st tier flow. 20m order max because of partial execution that brings wider spreads. Banks give only 80% in credit of your collateral. No costs, only spreads!
  • #50
  • May 14, 2015 11:33am May 14, 2015 11:33am
One aspect you're overlooking so far is last look vs non-last look liquidity.

Other than the LMAX & CME exchanges and the non-last look feeds at EBS/Reuters/Hotspot, every other bank/PB/PoP/ECN's "depth" is really just a complete farce. They could show you 100M deep at 3 pips on every pair if they all wanted to, there's no guarantee any of it is there come execution time.

The only liquidity that counts is non-last look, either exchange-based (LMAX/CME) or the platforms with specific non-last look feeds (EBS, Reuters, Hotspot, possibly others).
  • #51
  • May 14, 2015 11:43am May 14, 2015 11:43am
Quoting actalis
{quote} Funny business is IB charging up to 3 times as much in overnight rollover than FXCM...
LIBOR +/- 0-150 BPs = 3x FXCM's swap rates? I highly doubt that...
  • #52
  • May 14, 2015 1:51pm May 14, 2015 1:51pm
Quoting Trader KGB
One aspect you're overlooking so far is last look vs non-last look liquidity. Other than the LMAX & CME exchanges and the non-last look feeds at EBS/Reuters/Hotspot, every other bank/PB/PoP/ECN's "depth" is really just a complete farce. They could show you 100M deep at 3 pips on every pair if they all wanted to, there's no guarantee any of it is there come execution time. The only liquidity that counts is non-last look, either exchange-based (LMAX/CME) or the platforms with specific non-last look feeds (EBS, Reuters, Hotspot, possibly others).
Yes, that's very important point. Last look kills everything. What I know exactly that single dealer platforms has no last look, CFH clearing also has no LL, Velocity no LL
FIXI has LL. FIXI has very expansive infostructure because they are classical middle man. Biggest ECN players like FXALL, CNX, 360t has LL.
  • #53
  • May 14, 2015 1:52pm May 14, 2015 1:52pm
Quoting Trader KGB
{quote} LIBOR +/- 0-150 BPs = 3x FXCM's swap rates? I highly doubt that...
I was actually being kind by saying it's only 3x the rates, it's actually often worse than that, basically the difference between getting paid vs. getting charged... I'll indulge you with an example:

Let's assume you hold a long position overnight of GBP100K at 1.5000 GBP/USD

  1. FXCM (and most FX brokers) applies an Interest Rate Swap which reflects the difference between interest rates in the 2 currencies. In this case the GBP has a slightly higher rate than the USD (approx 0.5% vs. 0.13%). So the broker will pay you interest for holding that position (minus its own margin)

  1. Interactive Brokers charges an interest rate of roughly benchmark + 1.33% (total of 1.46%) for the USD150K that you borrow and pays you an interest rate of benchmark -0.5% (equivalent to 0%) for the GBP100 you hold.

Liek I said, the difference between the 2 is earning interest vs. being charged:

FXCM pays you 1.20 USD for each day you hold that position
IB charges you 6.01 USD for each day you hold that position

Btw Trader KGB, it takes 20mns to open demo accounts with both brokers and verify this over a couple of days so don't trust me and do your own due diligence... I hold large positions sometimes over several weeks so that's a topic I've really investigated (sometimes at my own expense).

IB is my broker of choice for futures and sometimes for intraday FX positions, but their overnight financing policy is just plain outrageous...

http://www.interactivebrokers.com/en/index.php?f=interest&p=schedule

  • #54
  • May 14, 2015 2:22pm May 14, 2015 2:22pm
Very true. What is called cost of carry and can cost serious money
  • #55
  • May 14, 2015 10:38pm May 14, 2015 10:38pm
Quoting actalis
{quote}Btw Trader KGB, it takes 20mns to open demo accounts with both brokers and verify this over a couple of days
One must jump through hoops "over a couple days" simply to verify FXCM's swap rates?

If they are indeed more advantageous at FXCM vs IB, then I stand corrected. IB is not the most competitive anyway if trading under 500k-1M position sizes.

I'm of the viewpoint that if one is trading any strategy where swap rates are critical, then you should be trading FX futures, where you'll receive an implied swap rate far more competitive than any bank or broker will offer (and for US traders, far more tax advantageous too).
  • #56
  • May 14, 2015 10:40pm May 14, 2015 10:40pm
Quoting M967
{quote} CFH clearing also has no LL, Velocity no LL
If that's truly the case, they certainly don't advertise it...
  • #57
  • May 15, 2015 12:29am May 15, 2015 12:29am
Quoting M967
I know very well Citi, they accept most of jurisdictions but now they stopped accepting new clients after SNB and looking for a buyer of their FX business. Your half a yard flow is not serious for institutional providers and PB. About UBS and HSBC: you can simply open corporate account with one of them and they will provide you with platform and credit as PB, its the simplest way. Don't tell them anything about trading or something like that, just open current account first. PB allows you to choose one platform to use. Don't know the spread for...
Thanks again for the answers.

Opening an account and then talking with the bank about trading is a very interesting approach and it hadn't crossed my mind. Thank you.

Is there any way to learn about their product offerings before in fact becoming a client? That is, getting live streams, examples of RFQ prices, and other things like that.

What kind of deposits and volumes are the tipping point to start looking to establish relationships with the banks?
  • #58
  • May 15, 2015 12:37am May 15, 2015 12:37am
Quoting Trader KGB
One aspect you're overlooking so far is last look vs non-last look liquidity. Other than the LMAX & CME exchanges and the non-last look feeds at EBS/Reuters/Hotspot, every other bank/PB/PoP/ECN's "depth" is really just a complete farce. They could show you 100M deep at 3 pips on every pair if they all wanted to, there's no guarantee any of it is there come execution time. The only liquidity that counts is non-last look, either exchange-based (LMAX/CME) or the platforms with specific non-last look feeds (EBS, Reuters, Hotspot, possibly others).
Thanks for bringing that point up.

From what I have gathered from my talks, I should be looking to use last-look liquidity as this results in an improvement from the pricing I would get in using non last-look. Is this true in your experience? (I was also told that some kinds of flow should look for non-last look liquidity, if I remember correctly these were HFTs and news traders).

Also, supposedly, the LPs that frequently are not there when the execution time comes are removed from the stream (according to almost all the brokers I've talked with). The tricky thing is that I haven't found yet a decent way to evaluate how the execution of a specific company is before becoming a client and knowing for a fact if your orders get well executed or not. Do you have any insights on this issue?
  • #59
  • Edited 5:20am May 15, 2015 3:10am | Edited 5:20am
Quoting cabeltrader
{quote} Thanks again for the answers. Opening an account and then talking with the bank about trading is a very interesting approach and it hadn't crossed my mind. Thank you. Is there any way to learn about their product offerings before in fact becoming a client? That is, getting live streams, examples of RFQ prices, and other things like that. What kind of deposits and volumes are the tipping point to start looking to establish relationships with the banks?
Which broker are you now trading with?
  • #60
  • May 15, 2015 3:28am May 15, 2015 3:28am
http://www.admd.com/

https://www.intlfcstone.com/

https://www.jpmorgan.com/mdapi/08BSI..._MD_intro.html
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