Two thirds of traders not getting “fair execution” on FX

FX market participants agree transparency has not improved and trust in the market remains an issue.

The majority of foreign exchange (FX) market participants have agreed traders do not get fair execution when trading.

A poll of banks, institutional and professional proprietary traders – authored by FX multi-lateral trading facility, LMAX Exchange – found transparency and trust in FX remains a problem.

A significant 65% of respondents said they do not believe they get fair execution when trading FX.

Most also said they do not feel transparency has improved, and there is a continued lack of trust in the execution of FX.

Due to this, 71% of those surveyed stated FX trading “will [in future] move away from venues running proprietary capital risk to execution-only venues”.

Discussing the results, LMAX said more urgency is needed to achieve transparency and improve fairness of execution.

Chief executive officer of LMAX, David Mercer, said that despite the introduction of the BIS’s global code of conduct for FX, the code “is too narrow in focus and impossible to enforce.”

Mercer has called on regulators to take urgent action to improve transparency in FX, adding: “This is one of the clear pain points that has arisen from our surveys of industry sentiment over the last year.”

The report concluded: “That a majority of respondents do not feel they are getting best execution or having their interests protected should be a wake-up call to an industry that purports to be focused on restoring trust.”