Our open trading environment is the best model for greater transparency and clarity at a challenging time for the FX industry

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FX is in the news for all the wrong reasons right now. Regulators around the world are investigating possible manipulation of foreign exchange rates and our own governor – Bank of England governor that is – was recently hauled over the coals by a House of Commons Select Committee.

The Select Committee had a point. With twenty or so traders from the big banks’ brokerages suspended over the last six months, is the Bank of England itself being sufficiently rigorously overseen? One of its staff who had regular dealings with the FX industry has been suspended, and questions are being asked about the Bank’s lack of effective response to concerns raised about potential rate-fixing some eight years ago. That was back in the alternative, pre-crash universe – but even so…

Against the backdrop of the Financial Conduct Authority’s (FCA)  investigation into rate-fixing at London’s FX, London’s position at the centre of the FX market worldwide makes this investigation one to watch – even if its findings are going to take over a year to be published (they have a massive amount of data/evidence to go through).

The central charge is that traders are alleged to have colluded in setting certain key exchange rates in the £3bn-a-day forex market. With the global FX market worth more than £3 trillion a day and London accounting for approximately 40% of all FX trading, this is one serious allegation.

Let’s hope Martin Wheatley (head of the FCA) is wrong when he told MPs that 10 banks are now helping with its investigation and that the allegations “… are every bit as bad as they have been with Libor.”…which led to banks paying $6bn in fines with traders found to have used online chat rooms to collude in setting the Libor rate.

So in the face of all this, it’s a comfort to know that our legacy as a company is as robust and flexible as our trading platform environment. Our parent company is X-Trade Brokers (XTB). Originally a Polish company trading in financial derivatives, XTB was founded in 2002. Twelve years later the company is now established in more than 15 countries in Europe, South America, and Asia.

Our company mission is to provide an effective and convenient environment (trade-from-anywhere: work, home or abroad and on any device) for trading and investing in OTC derivatives on Forex, amongst other things. It’s also good to be part of a global group that has won awards… Our most recent being the Best Institutional Provider (Forex Report Awards, 2014).

Founder and managing director of X Open Hub, Jakub Zablocki, is very confident about the completeness of our solution for banks and forex brokerages. In a recent interview with FX Report he reiterated that our hedging solution, xRisk, is deliberately designed to be the most rigorous and comprehensive, helping clients minimize risk:

xRisk helps to control scalpers through its system methodology which controls every trade – even the smallest – which is passing through the brokerage’s system.”

In this way ‘high frequency’ traders can be kept track of, and xRisk makes it possible to take only that part of each individual trade’s risk that the brokerage wants to take: the rest goes automatically – crucially without any dealer intervention – to the bank’s nominated liquidity providers.

The unique trading platform we have developed enables speed of executions four times faster than any comparable system on the market. For this reason, Jakub is clear that the issue of so-called ‘toxic flow’ is something that the liquidity providers are going to have to address, sooner rather than later. For him, toxic flow is actually traders’ normal flow, it’s just that market participants are better – in terms of speed and response – than the liquidity providers.

The challenge, Jakub says, is to convince the banks’ brokers that the Android open philosophy for the Forex market which X Open Hub’s unique trading platform is based on, is the best concept for the market.

More than that, our trading platform capability and the philosophy underlying it signposts the future of the industry – providing not only advantages of greater speed, flexibility, and adaptability, but also greater transparency. Transparency making for greater clarity is exactly what the Forex industry needs now, more than ever.

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