TM FX: Thomson Reuters Pushes Higher Standards for FX Trading

Thomson Reuters is raising the bar for forex trading.

The technology vendor has announced the publication of a new proposed Matching Rule Book, applicable to the entire Thomson Reuters Matching community, designed to reflect a higher standard for acceptable trading behaviors in foreign exchange.

The new Rule book, developed in consultation with market participants over the last 12 months, and in response to detailed analysis of trading activity on Thomson Reuters Matching platform, is intended to encourage behaviors that will sustain primary markets, bolster trading and maintain market integrity. The new book will include revised and/or new guidelines encouraging natural interest at top of book, maintaining high certainty of execution and providing a fair and orderly trading experience for all market participants.

Similarly, the publication wants to discourage trading behavior that is viewed as abusive, fosters or encourages market manipulation or disorderly conduct, as well as trading that does not promote liquidity for the market as a whole.

“As an FCA-regulated trading venue, Thomson Reuters has a responsibility to guard that the trading behaviors and practices on its Matching platform comply with the Market Conduct rules that govern MTFs,” said Phil Weisberg, global head of FX, Thomson Reuters, in a release. “Through a combination of platform controls and behavioral rules, the new updated Rule Book will seek to enhance liquidity for all clients trading on Thomson Reuters Matching.”

Thomson Reuters Matching includes platform controls that can influence trading behavior, including minimum quote life that ensures longevity of orders in the book and gives counterparties a fair chance of trading those orders. It also will promote a minimum tick size that helps achieve the right balance between tight spreads and stability of prices. The changes also introduce a proposed randomization of order processing pilot, to be run in a selected currency pair, to randomize execution and further facilitate a more equitable trading environment.

Additionally, Thomson Reuters is proposing a tightly defined set of trading rules that are intended to reduce the use of trading techniques that may lead to violations of market conduct rules and are intended to foster genuine interest to trade and high certainty of execution.

By issuing new rules, Thomson Reuters proposes a proactive, transparent and consistent approach to enforcement, including surveillance and reporting of client trading activity, client notification of activity that unless modified could lead to a breach of the rules and sanctions based on penalties other than the application of fines or removal of firms from the platform.