The dramatic drop-off in liquidity in global foreign exchange markets has prompted Barclays Capital to add new functionality to its BARX electronic trading platform.
It introduced the Powerfill+ suite of online FX tools on September 9, an upgrade that will allow clients using the platform to present anonymously bids and offers that would form the prices seen in the system by other BARX users.
Barcap believes it will offer all BARX users tighter spreads and deeper liquidity. “The differentiating factor is that our clients’ liquidity is now going to be available as part of our liquidity to other clients,” Tim Cartledge, the bank’s London-based head of BARX FX trading, told asiamoney.com.
“It’s no surprise that the liquidity in the market is a lot thinner than it was a year-and-a-half ago, and so the ability to generate maximum liquidity for our clients is paramount. Because BARX has such a large client base globally, the orders from those clients can be a significant part of our liquidity.” It has more than 10,000 users around the world.
Barcap may have seized upon a key market trend as FX liquidity has fallen dramatically since August 2008. Spot FX liquidity is around 30% of what it was then, although it has stayed relatively steady since January 2009.
“We are not seeing any signs of returning to previous levels of liquidity, which is why it is a good time to introduce a solution that is able to replace the liquidity,” says Cartledge.
Other key features in the Powerfill+ update are increased ease of use and anonymity.
Anonymity has always been a key function in the BARX FX system, which is purely electronic and has no human intervention. But Barcap took it one step further with the new iceberg feature, where a user executing a large order can choose to show a fraction of that order and so hide his true intentions from other BARX users.
The bank has also enhanced the user functionality, so clients can now access seven different order types with a single click.
Barcap was voted top for single-bank electronic trading platform for financial institutions in Asiamoney’s recently concluded FX Poll 2009, with 19.24% of the votes, trumping second-placed Deutsche Bank which garnered 14.96%. In 2008, it came in a distant second in the category with 16.84% of the votes to Deutsche’s 26.27%.