Why NCFX Data is good for you

Without wishing to provoke unpleasant memories of being forced to eat your greens, we would like to explain why consuming high-quality, independent data is good for you, and even better for your portfolio.

What is NCFX Data?

NCFX consumes many data feeds directly from what is known as the ‘ECN layer’ of the market.  An ECN is an Electronic Connectivity Network, and is the closest thing we have, in all its fragmented glory, to an exchange in the Foreign Exchange world.  We then aggregate all the thousands of data points we receive every second and produce a benchmark every 50 milliseconds.

What is different about NCFX Data?

The NCFX Data reflects the mid-point between bid and offer in a currency pair across that particular market, at a given point in time.  The mid-point is the clearing rate for the market, representing the rate at which buying interest and selling interest offsets perfectly.

NCFX Data does not reflect the price that you might receive from your platform, broker or bank, and that is a good thing, because if you would like to know how much your platform, broker or bank is actually costing you, you need to know the market clearing rate to understand that cost.

Why do I need NCFX Data?

Most platforms, brokers and banks are keen to tell clients who ask about data that NCFX Data is the same as their data, but of course this is not true.  This group make their money by charging fees that are embedded (implicit fees) into the price the client gets whereas NCFX charges explicit fees for use of its data.  We are not benefitting from your trading choices; we just measure them.

It should also be quite clear that, in the usual case where an implicit fee is being charged, it is in the best interests of the provider of that service to make sure that you use their data to measure that fee.  By using the bank’s data, you are masking some of the fee you are paying.  That is why they offer free TCA services. Put simply, when you make a transaction with a broker, they buy the currency you require in the market.  They do not carry your risk.  This action causes their experience of the rate to change, reflecting their use of market liquidity.  Using their data means that the change that they have caused in the market is not measured.

It is for this reason that the regulator rules out the use of data from a single bank, broker, or platform (yes, platform) when measuring the cost of an FX transaction.

What does NCFX Data give you?

NCFX Data gives you the market clearing rate in real time.  This means that your total cost of execution against the market clearing rate can always be understood.  From this point of knowledge, you can compare your liquidity providers and select the right ones for the right transactions.  Having knowledge of prior costs should inform trading decisions in the future.  Without having data that uncovers all your trading costs this is not possible.

NCFX Data is far easier to consume than your greens.  It is available as a live data feed, it can be requested from your bank or broker as a benchmark on each trade, or it can be found in all the NCFX Transaction Cost Analysis tools.  NCFX is regulated by the FCA as an Authorised Benchmark Provider.