Citadel to Give FX Clients Outside Check on Trade ResultsBy
Market maker to provide independent trade analysis via BestX
Measurements will include transaction costs, market impact
Citadel Securities LLC, the electronic market maker founded by Kenneth Griffin, wants to give clients a closer look at its foreign-exchange trades.
The company, which said it more than doubled its currency volumes last year, plans to give clients an independent check on their FX deals. For customers who opt in, Citadel Securities will send trading data to BestX, a technology and analytics firm, which will crunch the numbers, measure transaction costs and market impact, and send results to the client.
The service will be available by the end of the year. It echoes a move by JPMorgan Chase & Co., which teamed up with London-based BestX this year to give clients outside analysis of its FX algorithms. Dealers in the $5.1 trillion-a-day currency market are rolling out ways to analyze trading alongside efforts to clean up the industry after banks were fined billions for rigging FX rates. At the same time, asset managers are also facing regulatory pressure to prove they’re not being overcharged by brokers.
“The FX marketplace could benefit from more transparency,” Kevin Kimmel, global head of electronic FX at Citadel Securities, said from London on Monday. “Independent transaction cost analysis is a critical step in this direction.”
The currency market is difficult to analyze because it’s over-the-counter and splintered across many platforms that list different quotes. There’s no standard price for a transaction, and costs can vary depending on creditworthiness and style of trading. Pete Eggleston, Oliver Jerome and Aman Thind, all of whom formerly worked at Morgan Stanley, founded BestX in 2016 with the idea of creating an industry standard for analyzing transaction costs.
Citadel Securities is one of several non-bank market makers, including Virtu Financial Inc. and XTX Markets Ltd., that have expanded in currencies in recent years as Wall Street banks cut staff and rejigged operations in response to stricter regulation. The firm has been hiring ex-bankers to beef up its foreign-exchange business.
In February, it added James Edwards, formerly at JPMorgan Chase & Co., and Rashelle Salimi, previously at Bank of America Corp., to handle sales and relationship management. Evran Ozkul joined from Goldman Sachs Group Inc. as an e-FX trader in May.
“We continue to grow our overall volumes even amidst low market volatility,” Kimmel said.
The company says it has traded currencies with more than 100 counterparties on a disclosed basis.