Interbank Spot: quotBank Reversalsquot Make it a Fools Game???
I would appreciate if Traders with firsthand experience of Institutional Platforms (Hotspot, Currenex, FXAll, Lava) and Interbank Platforms (EBS, Reuters), could remark. Additionally, those who have direct knowledge of those platforms....
Over the last couple of months, many disturbing accounts of interbank 'etiquette' happen to be relayed by authoritative online posters that, IMO, talk credibly on the subject.
The major complaint across Institutional ECN (Currenex) and Interbank Platforms (Reuters, EBS), is busted trades. Or what is otherwise known as a bank alteration.
Basically, this can be a trade implemented by a personal trader, counter-partied by a bank, that at some time later on, is reversed or canceled from the bank, effectively canceling their original sale or buy.
Under many intra-day styles (scalper), the personal trader has closed the profitable position and can be left with a now OPEN position (ex if a Bank cancels their sell order, the trader still has an open short position, presumably to shut his long which was 'pinpointed' from the bank).
To confuse things, notifiion is not made directly to the Trader from the Counter-party Bank . Rather notifiion is made to the Traders Prime Broker, who in turn, is expected to inform the Trader in a timely manner.
This introduction of notifiion delay only compounds the issue. I've heard it could take hours to get a Trader to get notifiion an interbank trade was previously canceled. In actual life, the market could be a few hundred pips OFF MARKET, from that stage...
This can drastically slash a traders funds, empty their account, or put them into deep debt ; as their closed position is reopened and unattended for hours, after-the-fact...
Why would a Prime Broker sell out a Trader?
The answer is simple: to preserve a relationship between the Prime Broker and the Offended Bank (ie Coveted Liquidity Provider). Which relationship is more important? That between a personal, HNW Trader and Deutsch Bank? Or DB and Citibank??
Lets Name Names. I've read from many traders, bank reversals are common on Currenex. FXAll? Don't know. Lava? Don't know. Hotspot? Don't know. Happens on EBS and Reuters....
This really is a major concern and critically begs the question: whats the point?
A Traders profession is at the only real of a Counter-Parties good graces....
The second disappointment relates to scalping.
Seemingly, Banks routinely target scalpers who exchange big dimensions ( 20 MIO) to get some pips or quite frequent (automated).
By goal, we're talking bank reversals online orders. Or having them booted out of a supplier for unfair trading practices.
That is disturbing because either a Prime Broker acts as bucketshop by operating a deal-desk and accepting exposure on the Traders positions....or, they bend like reed when among their liquidity providers whose been whacked a few times runs crying to the Prime Broker - either reversing the trade (leaving the trader screwed) or having the Trader booted in the liquidity system...
I've even heard banks will whine if they take a big hit on a longer-term directional trade... They'll just cancel cause they don't wish to take a loss. .
Frankly, this is all beyond foolish and pure robbery. Categorically untradeable.
If anyone could share their experiences on the Institutional and Interbank Platforms, it would be much appreciated!
Thanks Beforehand.