TradingScreen, FXall Compete for Axa's Affections

TradeEMS will provide Axa with improved transaction cost analysis (TCA) and greater flexibility, according to Lee Sanders, head of foreign exchange (FX) and money markets execution at the firm.

Last week, FX Week reported that Axa had grown dissatisfied with Thomson Reuters' FXall after 10 years of use, but Sanders insists TradeEMS will serve as an addition to, rather than a replacement for, the request for quote (RFQ) platform.

"The first thing an EMS provides is a little bit more flexibility within the electronic environment than an RFQ," he says. "RFQs have worked perfectly well for the last 10 years and will continue to do so, but I think that an EMS format is the more likely to be sought after, moving forward, as it affords us more flexibility in the way we operate."

Sanders says TradeEMS will simplify the TCA process, produce cleaner data and ease connectivity to the major banks that Axa serves.

"It's very hard to get the kind of connectivity that you want from an order management system (OMS) and if you do get it, it's very singular," he says. "An EMS has a good model where it brings everybody together within its EMS, you release your orders to that system, and you find all those people there not only in RFQ but request for stream (RFS), algorithms and other order functionality. So I think that's the real benefit for us─it just gives us a lot more ease in that connectivity to where we're going to do the business and how we want to do it. It also gives more transaction cost analysis either during or post trade and the RFS gives us useful pre-trade capability. We can also use it as another pre-trade risk system."

The first thing an EMS provides is a little bit more flexibility within the electronic environment than an RFQ. RFQs have worked perfectly well for the last 10 years and will continue to do so, but I think that an EMS format is the more likely to be sought after, moving forward, as it affords us more flexibility in the way we operate.

Testing Times
Axa is currently in the process of testing TradeEMS, but Sanders declines to set a date for the project's completion. He also refutes the suggestion that TradeEMS might eventually take FXall's place, saying that one will always be required as a back-up to the other and that he hopes the competition will result in innovation.

"My point to existing RFQ platforms is that these developments are a focus for the FX industry and the service provision from them needs to reflect this," he says. "There is definitely room for several players in this space and many firms will probably use more than one provider trying to pull the best functionality from each EMS or RFQ platform. What will differentiate them going forward is the amount of services they offer."