Bloomberg recognised in two categories at the 2021 FX Markets Best Banks Awards

Bloomberg dealt with strong customer demand for deeper liquidity and more efficient and consistent electronic trading solutions brought on by two years of remote working

• Best vendor for dealing technology
• Best market data provider

The Bloomberg terminal has, without a doubt, been the centrepiece of many FX professionals’ trading setups for a long time. And, while the terminal serves as a source of invaluable data in global markets, it also enables firms worldwide to analyse the markets and execute their positions on the same platform.

The symbiotic relationship between data and execution capabilities on the Bloomberg terminal certainly came to the fore in 2020 and 2021 as market participants grappled with the Covid-induced disruptions to the world’s economies. While both of these years brought their own set of challenges and circumstances, they also highlighted the value of a reliable trading and dealing platform upon which market participants could rely to execute and hedge their positions regardless of the conditions. 

Faster marketplace access

“One of the benefits of having a Bloomberg terminal on a trader’s desk is that when they log in from home they get the exact same experience as when they are in the office,” says Tod Van Name, global head of FX electronic trading at Bloomberg. “For our clients, the transition to working from home was quite seamless. The challenge for many firms was more about how to manage risk as employees traded from home. This introduced additional concerns for compliance and risk teams, and our platform provided a familiar environment that provided continual oversight into what people were doing.”

With hundreds of banks making markets on Bloomberg’s FXGO platform, not only can market participants have access to deep liquidity in every major currency and every instrument offered in the FX space, but they can interact with the market in myriad ways, be it request for quote, streaming, application programming interface or automated solutions. As all FX players access the market differently, the key selling point of the platform is that it offers market participants all the workflow tools they need to help them execute in the marketplace according to their own internal protocols.

“We’re not a one-size-fits-all platform,” says Van Name. “Market participants want a solution that meets their needs, from price transparency at the beginning of the lifecycle all the way through to confirmation, matching and settlement. As a negotiation platform, we have a very flexible and very powerful solution that allows clients to follow their internal protocols and compliance regimes, and still have very fast access to the marketplace.”

While traders began to slowly return to the office in 2021, many financial firms continued to insist on having solutions that allow their staff to effectively execute their jobs irrespective of whether they are in the office or at home. This sustained a strong demand for electronic trading solutions that facilitate the transition from one trading environment to another, and provides undeniable consistency in how employees interact with the marketplace.    

“Many firms have come to the realisation that it’s just good practice to leverage electronic trading,” points out Van Name. “The transparency that it provides in terms of how people are trading and hedging is a lot easier to manage from a compliance and post-trade reporting perspective with electronic trading than doing it manually.”

Trading and analytics synergy

FX has always been a highly electronic market, but Van Name explains that the pandemic has fundamentally changed FX towards an even higher degree of electronification.

“The number of users trading electronically in the marketplace is higher now, and the number of trades and notional volume going through electronically is certainly higher now than it was pre-pandemic. This is testament to the fact that the innovation and efficiency electronic trading can provide has been well adopted by the market.”

And it is when the pandemic first struck in March 2020 that many market participants observed first-hand how resilient the FX market has become through the consistency of pricing, spreads and reduced downtime that electronic markets provide during times of stress. This especially rings true on relationship trading platforms such as FXGO where banks are much more willing to quote aggressively and continually when they know who they are quoting.

“Our platform is very conducive to that,” says Van Name, “which is really important in times of stress, when market participants are really just trying to manage their risk appropriately.”

The presence of Bloomberg’s terminal in more than 140 countries adds further to the depth of FXGO’s reach, both on the liquidity and the data fronts, but also in better access to regional clients. 

“The onshore markets are a very strong selling point for us because we have participants in a lot of regional markets,” explains Van Name. “This fuels not only our trading platform, but also the data that people need to hedge risk across all currencies. There is a definite synergy between our electronic trading platform and how we nourish our analytics platform.”

The synergy between data and trading is increasingly important in today’s FX market. Market participants are particularly keen to use data to help them optimise their workflow, maximise the efficiency of their trading operations and minimise their transaction costs. 

And, while FX liquidity abounds, not all liquidity is the same. Participants thus want to be able to quantify where they can best participate in the marketplace in order to reduce their risk, costs and impact on the market.

Concrete data decisions

“When buy-side clients are in the market, they don’t want anyone else to know what and where they are trading, nor do they want to drive the market away from them,” says Van Name. “Providing them the tools that allow them to measure that is a really important part of their decision-making process.”

To this end, in 2021, Bloomberg introduced a tool on the FXGO platform that allows its users to assess the quality of their participation in the FX marketplace. Market participants can now measure the fill ratio of their trades as well as quote response times, spreads and market impact, among others. Having access to such data is not only extremely beneficial to traders before placing a trade, but it is also particularly useful to justify their trading decisions to shareholders, clients or management based on concrete data.

“We’re finding that data is becoming a much more important part of the decision-making process now than it used to be,” says Van Name. “Buy-side clients are constantly asking for more ways to be able to do that. Even the banks are asking for more data. They want to know how effectively and efficiently they’re providing liquidity to price-takers and looking for ways to calibrate that so they can win market share, or do it more profitably.”

Many firms in the market, however, do not have the capacity or infrastructure to handle and analyse large volumes of data. They look to data providers like Bloomberg to process raw data and give them access to the next level of data.  

“Our aim is to deliver to our clients the ability for them to pick the level of data and degree of analysis they wish to consume in order to incorporate that into their trading workflow,” says Van Name. “We don’t provide recommendations for our clients, we just give them the tools so they can very quickly adopt a trading programme or process using our data that makes it much easier for them to execute.”

Bloomberg was voted the Best vendor for dealing technology and Best market data provider at the 2021 FX Markets Best Banks Awards. 

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