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April 13, 2016

Thomson Reuters Introduces Randomization Mechanism for FX Spot Matching Service

Randomization mechanism introduces brief delay thereby reducing the importance of speed and enabling greater inclusiveness and transparency in FX trading markets

NEW YORK/LONDON To further improve the overall trading experience for its FX matching participants, Thomson Reuters will introduce a new randomization mechanism on its Spot matching venue. The service is planned to launch in production for an initial three pairs in June. 

Randomization in electronic trading refers to deliberately adding delays to messages received from market participants. Thomson Reuters new randomization mechanism further enhances the fairness of its matching platform by mitigating speed as the primary determinant of execution. Market participants can also be less concerned with the effect that minor performance differences among price distribution and order gateway components have on trading outcomes. 

The mechanism introduces a short delay of several milliseconds before processing orders, during which the mechanism groups similar orders into batches.  Similar orders are defined as those with similar intents, including: hitting the bid, lifting the offer, and placing a bid or order at a specified price level.      

The randomization mechanism is further differentiated in its ability to detect, distinguish and batch together only those orders that are competing with one another.  This provides market participants who can respond within a minimum response time with an equal chance of being processed against the limit order book first.

“By reducing the emphasis on speed as a determinant of success in trading activities, Thomson Reuters expects an enhanced matching venue experience for all market participants,” said Phil Weisberg, global head of FRC Trading at Thomson Reuters.  “The randomization mechanism further demonstrates Thomson Reuters commitment to facilitate fair and efficient trade execution and to provide the market with technology solutions that deliver an equitable trading experience for all participants.”

“Thomson Reuters randomization ensures fairness in the electronic FX market by eliminating the need to continuously invest in infrastructure and faster and faster technology,” added Alex Gerko, co-CEO, XTX Markets.

Thomson Reuters FX transaction venues facilitate trading across all major currencies and its customer footprint covers over 120 countries. Over 20,000 traders from asset managers, banks, corporate treasurers and hedge funds use Thomson Reuters award-winning transactions platforms to trade over $350 billion in average daily FX volumes.

More on Thomson Reuters FX services can be found here


Thomson Reuters
Thomson Reuters is the world’s leading source of news and information for professional markets. Our customers rely on us to deliver the intelligence, technology and expertise they need to find trusted answers. The business has operated in more than 100 countries for more than 100 years. Thomson Reuters shares are listed on the Toronto and New York Stock Exchanges. For more information, visit www.thomsonreuters.com.

 

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