BestX RFQ Par Introduces a New Way to Look at Hit Ratios

The relationship between sell and buy side in FX markets has been eased in recent years by the advent of better data and analytical tools, however, this evolution has itself created occasional tension thanks to different interpretations of the data. One instance of this is hit ratios – a buy side client, or a third party, can provide a liquidity provider with their win rate, but is it a true reflection of that LP’s efforts?

A new model for predicting fixed income trading costs

BestX, the execution quality analysis provider, has launched a new tool for fixed income traders to support their pre-trade capabilities.

The ‘Expected Cost’ model is currently in a beta phase, meaning it is being tested by traders as it is still under development, to enhance its potential capabilities and deliver feedback on performance.

“The latest product which came out this weekend, released a new feature,” explains BestX co-founder Pete Eggleston. “Coming up with a model to estimate the cost of transacting in each month, at a given time of day, and a size or number of units for a security. We have that model in FX, they are common models in equities but to our knowledge that does not exist in fixed income.”

FX market more interested in liquidity and data access than algo risk

The BIS markets committee might be fretting over how execution algos can exacerbate risk in the FX market, but others are more interested in what it thinks about liquidity indicators and access to data.

For those unwilling to accept any meaningful execution risk on their FX trades, trading on a risk transfer price with a dealer is the way to go – but there can still be a place for algos.