e-Forex July 22
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With Neill Penney, Group Head of FX at LSEG<br />
THE E-FOREX INTERVIEW<br />
Neill, please give us a brief overview<br />
of how the LSEG business is<br />
structured and the comprehensive<br />
suite of trading platforms, data and<br />
compliance tools that it offers to FX<br />
market participants?<br />
Within the Capital Markets division<br />
we have two trading venues:<br />
Matching and FXall. FXall helps<br />
customers trade with their banks,<br />
while Matching enables banks<br />
and other market makers to trade<br />
with each other. Matching plays an<br />
important role in the structure of<br />
the FX market, it has primary market<br />
status and as such, it is trusted by<br />
the industry for price discovery and<br />
for reference data. Matching also<br />
feeds into the WM/R benchmark<br />
(the 4pm fix), an industry standard<br />
benchmark trusted across the global<br />
FX community. This sits in our Data &<br />
Analytics division, which also boasts<br />
Workspace. Workspace provides<br />
customers with news, market<br />
data across all asset classes, and<br />
analytical tools to inform their trading<br />
decisions.<br />
Looking more broadly, part of<br />
LSEG’s Data & Analytics business<br />
distributes real time and non-real<br />
time data to banks and buyside<br />
participants globally. It is the pretrade<br />
information our customers need<br />
to help them understand where the<br />
market is, formulate their trading<br />
strategies, and be able to trade at<br />
the right time. This takes customers<br />
to FXall and Matching, where they<br />
can complete their trades. Finally,<br />
LSEG’s post trade division includes<br />
<strong>Forex</strong>Clear, a market leading clearer<br />
of NDFs which has also recently<br />
started clearing FX options and FX<br />
swaps.<br />
Some of the linkages between these<br />
services are more established than<br />
others, and some we’re working on<br />
as the FX market evolves. There is<br />
a clear link is between our desktop<br />
and trading venues, with orders<br />
going through our FX trading<br />
desktop to our trading venues. Our<br />
desktops give us a notable footprint<br />
in the market which attracts unique<br />
liquidity into our venues. In turn,<br />
the venues being more liquid creates<br />
better market data, which makes our<br />
market data more relevant to our<br />
customers.<br />
We’re also improving connectivity<br />
between our trading and clearing<br />
services. Last year, we announced<br />
FXall is expanding traders’ access<br />
to cleared workflows for FX OTC<br />
trades by building connectivity to<br />
<strong>Forex</strong>Clear, enabling customers who<br />
have traded on FXall and wish to<br />
clear on <strong>Forex</strong>Clear to have their<br />
trades sent through automatically.<br />
As LSEG matures and the market<br />
evolves, we will find more of these<br />
connections because we understand<br />
the importance our customers<br />
place on well-designed end-to-end<br />
solutions.<br />
What do see as the biggest<br />
challenges currently facing the FX<br />
market and where will the industry<br />
find the solutions to them?<br />
There are two key challenges –<br />
‘something old’ and ‘something<br />
new’. The ‘something old’ is the<br />
continued industry focus on moving<br />
towards greater automation, driven<br />
by a number of factors. The pressures<br />
on our customers to trade with less<br />
risk and more efficiency continue<br />
unabated, while the impact of the<br />
pandemic has increased the demand<br />
for greater automation.<br />
Trade Performance Reporting (TPR) allows our customers to analyse their trade execution, identify new opportunities<br />
to improve their trade performance, enhance their provider selection and demonstrate best execution<br />
With most small tickets automated,<br />
the challenge facing the industry now<br />
is to automate the big tickets. Algos<br />
are the solution the market is moving<br />
towards. This introduces additional<br />
hurdles to overcome such as how<br />
customers can fit algos into their<br />
trading workflows and how to ensure<br />
they can control what the algo is<br />
doing if market conditions change<br />
during its execution. This is something<br />
we are currently working on, looking<br />
for solutions that work uniformly<br />
42 JULY 20<strong>22</strong> e-FOREX
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