FXT in the Press
February 1st, 2018

FX Transparency comes to Australia: expect a shake-up

The global foreign exchange monitoring and consulting company which represents asset owners and managers, FX Transparency, has appointed a representative for Asia Pacific, based in Melbourne. The firm delves into the opaque world of FX, which, for big Australian investors at least, is both huge and not-well understood.

click here for full article:

FX Transparency comes to Australia: expect a shake-up

September 11th, 2017

State Street fined $35 mln by SEC for hidden markups

Currenex and FX Connect Parent Company Fined $35m by the US SEC

State Street has agreed to settle with the US financial watchdog over its fraudulent actions.

“The SEC order finds that State Street’s scheme to overcharge transition management customers generated approximately $20 million in improper revenue for the firm.  According to the announcement, State Street used false trading statements, pre-trade estimates, and post-trade reports to misrepresent its compensation on various transactions…”

“Agreeing to a fee arrangement and then secretly tucking in hidden, unauthorized markups is fraudulent mistreatment of customers,” said Paul G. Levenson, Director of the SEC’s Boston Regional Office that investigated the overcharges.

Hidden Last Look

In a separate SEC order, the agency finds that State Street failed to inform subscribers to its government securities trading platform called GovEx that, despite marketing the system as “fair and transparent”, it provided one subscriber with a ‘Last Look’ trading function that allowed a short period of time for the subscriber to reject a match to a submitted quote.

“The subscriber used Last Look to reject 57 matches that each had a $1 million face value,” the SEC elaborated. “State Street did not inform the counterparties that their orders had been rejected with Last Look.  While developing Last Look, State Street even told one subscriber that the platform did not have Last Look functionality at all.”

For the full article, click on the link below:


May 26th, 2017

P&I: More info, but no teeth in new foreign exchange code

Later this month, money managers, pension funds, brokers, banks and other participants in the foreign-exchange market will be asked to sign off on an FX Global Code of Conduct that industry sources said will result in more information to assess execution quality and trading cost.

However, more information won’t necessarily translate into better execution or cost savings for pension funds and other asset owners that will continue to have the responsibility for monitoring their FX trades, they said. For the full article see the link below:


July 27th, 2016

State Street to pay $530 million to resolve forex fraud claims

Custody bank State Street Corp (STT.N) said it has agreed to resolve all pending litigation and regulatory matters in the United States related to its indirect foreign exchange business.

State Street said it expects to pay a total $530 million for the settlements, which would be fully covered by a previously established reserve, according to a statement on Tuesday.

The U.S. Justice Department said in a statement that under the settlement, State Street “admitted that contrary to its representations to certain custody clients, its State Street Global Markets division (SSGM) generally did not price FX transactions at prevailing interbank market rates.” For full article see link below.


July 21st, 2016

HSBC forex traders charged with criminal fraud but cleared on an internal HSBC probe

HSBC forex traders charged with criminal fraud

The latest legal and regulatory concerns related come from an alleged situation of HSBC’s FX desk front-running a large corporate currency transaction. The profit estimated for the bank, $8 million.

HSBC internal probe ‘cleared’ top forex traders

The HSBC review, conducted in the wake of a sweeping foreign exchange rigging scandal that erupted in 2013, was led by an external lawyer and found no breach of its code of conduct.

July 15th, 2016

Euromoney: Uncertainty stalks GBP trading post-Brexit

FXT views the prevailing condition of high geopolitical uncertainty coupled with declining multi-asset market liquidity and unprecedented interest rate markets (~$12 trillon of developed market government bonds with negative yield) as a dangerous cocktail for FX transaction costs as the US presidential election looms…

Full article: http://www.euromoney.com/Article/3568604/FX-Uncertainty-stalks-sterling-sales-and-trading-post-Brexit-vote.html

December 26th, 2014

P&I – Big Changes Are Coming Following FX Crackdown

Major changes are coming following FX crackdown
Investors seek more tranparency, better execution from firms
By Rick Baert | December 22, 2014


Last month’s $4.4 billion in fines against six major banks over foreign exchange price manipulation has spurred FX trading along the same path as trading in equities and fixed income: more transparency and greater use of electronic venues.
It also meant a move toward more 24-hour FX pricing and less use of traditional FX benchmarks.

What’s spurred the latest move is the announcement in November that Citibank NA, HSBC Holdings PLC, J.P. Morgan Chase & Co. Inc., Royal Bank of Scotland PLC and UBS AG received a combined $3.4 billion in penalties from U.S., U.K. and Swiss regulators for manipulating foreign exchange benchmark rates to benefit certain traders from 2008 to 2013. Separately, the U.S. Treasury Department’s Office of the Comptroller and Currency issued a combined $950 million in penalties against Citibank, J.P. Morgan Chase and Bank of America Corp. for “unsafe and unsound” FX trading practices.

The penalties come as asset owners are paying closer attention to their FX trades, a trend that began after lawsuits in the late 2000s, including those filed by the state of California and the $177.8 billion Florida State Board of Administration against custody banks over FX pricing.

“Foreign exchange is still viewed as somewhat of an ancillary market, but the fines were another wake-up call,” said John Halligan, president of Global Trading Analytics LLC, a Rutherford, N.J.-based trading cost analysis consultant.

Added Steven Glass, president and CEO at Zeno Consulting Group LLC, Washington: “The bank fines have raised the issue onto (asset owners’) radar screens. They will reach out to their asset managers and ask what they’re doing to get best execution on foreign exchange so that they’re not being taken advantage of.” Zeno monitors trading issues for asset owners.

While foreign exchange is getting a closer look from asset owners, William Atwood, executive director of the $14.1 billion Illinois State Board of Investment, Chicago, said even with more transparency, the FX market is still dodgy for asset owners because it’s not heavily regulated.

“We were closely monitoring our FX program” since the spate of custodian lawsuits, Mr. Atwood said. “We re-examined our approach to how we monitor foreign exchange trading. We now require our managers to seek best price and execution away from our custodian (State Street). So (FX) trading has improved, but it has kind of created a false sense of security. The market is fairly unregulated. I’m not that entirely comfortable with FX. We keep a close eye on it.”

What made the announcement of the fines so concerning to institutional investors is that banks were shown to have manipulated the World Markets Reuters Closing Spot Rates, the most widely referenced FX benchmark globally, according to the Commodity Futures Trading Commission. The benchmark is used to set the relative values of different currencies, which reflect the rates at which one currency is exchanged for another.
Tough to shake

The use of electronic trading venues allows more 24-hour FX pricing away from benchmarks like the WM, sources said, although the dependence on the WM spot rate would be tough to shake.

“WM is so ingrained in everyone’s investment process; it’s a colossal undertaking to change that,” said James McGeehan, co-founder and CEO of FX Transparency, a Framingham, Mass.-based currency risk consultant. “The use of WM rates is written into many investment mandates and fund prospectuses for valuation and index tracking purposes. Additionally, it’s the FX rate of record in many derivative contracts, options and products such as total return swaps. There are other firms pitching alternate fixing solutions to the WM, but there will be a long period to vet these solutions and the eventual adoption may take longer than anticipated, given the aforementioned legal and operational entrenchment of WM.”

However, Ross McLellan, founder and president of asset servicing analytics provider Harbor Analytics, Hingham, Mass., said transition managers have been among the first to shift to using electronic venues and take advantage of a 24-hour FX market. “In transition management, when large trades are made in a short period of time, many transition managers have moved away from benchmark trading … to trading in unison with the equities. Three or four years ago, banks would guarantee the 11 a.m. (Eastern time) WM benchmark for all your orders. That would aggregate more liquidity and let the banks make money for larger orders. Most market participants knew the banks were making more, although what was more concerning was that banks were working in conjunction with each other. We obviously don’t know the extent of that, but we do know, because of the fines, it was going on.”

While most in the FX market might have known about the collusion that eventually led to regulatory scrutiny, many asset owners were more focused on how their custodians were pricing FX trades under standing instructions. What the bank fines did was widen scrutiny by asset owners of the entire FX trading process.

“Not long ago the focus was on custodian markups on standing instructions trades, now it’s on the whole process,” said Mr. McGeehan. “From currency risk inception at asset purchase, to measuring market risk undertaken until execution time, to how major market-making banks price risk transfer, to the benchmarks used for trading and valuation such as the WM — in essence the entire foreign exchange pricing mechanism.”

“The first step everyone can take is to let your managers know that you’re watching,” ISBI’s Mr. Atwood said.

Mr. Halligan of Global Trading Analytics said among asset owners, transparency is “what they really want. With that, people are much more comfortable, they have something concrete in terms of numbers to hold on to.” The Illinois State Board uses GTA to monitor its foreign exchange trades.

Richard Kos, founder and president of investment and fiduciary consulting firm Kos Consultants, Madison, Conn., said he expects to see the agency model of trading, where the broker just executes trades without holding inventory, to become more prevalent in FX trading, as it has with fixed-income trading. “No plan sponsor is an expert in foreign exchange,” Mr. Kos said. “That’s not what they do. You have to make sure the agent is trustworthy.”

November 13th, 2014

FX Transparency Partners with oneZero to Offer FX Transaction Cost Analysis to Retail Brokers

BOSTON, Nov. 12, 2014 /PRNewswire/ — FX Transparency (“FXT”), the largest independent provider of FX transaction cost analysis (FX TCA) to the institutional space globally, today announced a partnership with oneZero Financial Systems, a provider of institutional trade-routing software to the Foreign Exchange market, to bring rTCA™ to the retail forex broker community. rTCA™ is a version of FX Transparency’s flagship transaction cost analysis reporting developed to fit the needs of the retail currency market.

“The retail FX trading community is littered with claims of tight bid/ask spreads, but no independent source has actually measured those claims until now. rTCA bridges the gap between retail FX conventions, and institutional analytics and best practices,” said James McGeehan, CEO of FX Transparency. “Our history and success creating exacting analyses of FX trading costs for the world’s most demanding asset managers will now help top-tier retail brokers fight false claims and win more business.”

“This is a way for the serious retail brokers to really separate themselves from the competition with the credibility that comes from being measured by a truly independent source,” said Stephen Leahy, Head of Business Development at oneZero Financial Systems.

Increased competition for new business in the retail FX space, as well as rising regulatory scrutiny surrounding execution quality are driving a market need for independent, third-party measurement of trading costs.

“We know FX TCA, and oneZero has the domain expertise in the retail currency market, so it’s a very complimentary fit,” added McGeehan.

About FX Transparency, LLC

FX Transparency is the largest independent provider of foreign exchange transaction cost analysis (FX TCA) and currency-execution consulting globally. FX Transparency was founded in 2009 and has offices in Framingham, Mass., and London. For more information about FX Transparency’s TCA services, please visit our website at www.fxtransparency.com.

About oneZero Financial

Founded in February 2009, oneZero Financial Systems develops low-latency software systems for the foreign exchange, commodities, and futures markets. The oneZero Hub combines liquidity aggregation, smart order routing, and retail platform connectivity for brokers and money managers in a stable and fast software environment. oneZero Financial Systems serves over 80 clients around the globe from our Cambridge, MA headquarters and London, England support office. For more information, please visit www.onezero.com

SOURCE FX Transparency, LLC

January 27th, 2014

More Transparency Leads to a Drop in FX Trading Costs

“Pre-agreed” spread arrangements with custodian banks are helping pension funds to save on standing instruction FX trades:

Read Article

October 23rd, 2013

Introducing Benchmarks into the FX Trade Execution Process

As FX Transaction Cost Analysis (TCA) gains momentum, selecting a provider that possess domain knowledge and expertise in foreign exchange is a key ingredient to gain performance uplift:

Read Article

Request a Sample Report

FX Knowledge Blog