June 18: JFX.com
JFX.com was launched by Jiffix Markets, a team of former directors from Synthesis Bank in Geneva. The platform is targeted at private and professional investors and is designed by former foreign exchange traders. Jiffix says it provides pricing from nine Tier 1 banks including BNP Paribas, Citi, Deutsche Bank, Bank of America, JP Morgan, Morgan Stanley, Royal Bank of Scotland, Barclays Bank and HSBC. JFX claims that its advantage is providing aggregated prices from nine liquidity providers where many of its competitors provide only a single pricing reference. The company is based in Cyprus and has a European license.
June 12: MoltenMarkets
MoltenMarkets is an independent company based on First Derivatives' platform using Kx Systems’ kdb+. MoltenMarkets is an FX ECN focused on attracting the high-frequency trading community. It offers high speed round trip execution and complete transparency. The company appears to be targeting HFTs, hedge funds and active traders. They also offer a pre-trade system for long-only asset managers and large hedge funds as well as a custody offering to serve asset managers and investment funds. MoltenMarkets claims to offer a “range of innovative FX trading products that utilize the very latest technology, bringing true transparency of pricing while ensuring provable best execution for every trade.”
May 30: TraFXPure
TraFXPure was launched by interdealer broker Tradition Ltd. in partnership with Barclays, BNP Paribas, Deutsche Bank, Royal Bank of Canada and UBS. This ECN appears to be targeted at the interbank market and seems to be designed specifically as an alternative to the existing primary markets. It offers spot currencies cleared by CLS and is available to any participant who can settle via CLS. The company claims that execution logic and uniform and transparent pricing ensures fair execution for all. It offers transparency by fully disclosing counterparties post-trade. Initially, this was seen as a platform on which banks could participate without interference from high-frequency traders. But Tradition claims that the system will allow algorithmic traders to participate but will not permit the disruptions seen on other platforms. This system seems to be another attempt to launch PureFX, which was announced two years ago but never went live.
May 30: LiquidityFX
LiquidityFX was launched by smartTrade Technologies. This is a packaged FX aggregation and smart routing system targeted at Tier 2 banks that want to expand their FX dealing business. LiquidityFX provides connectors to more than 25 ECNs and single-dealer platforms, aggregates the liquidity and provides sophisticated smart order routing functionality. It is being sold as a packaged system that banks can host in their own environment or as a hosted platform located close to the FX markets in Equinix NY2. It will soon launch in London and Tokyo.
May 16: FX SpotStream
FX SpotStream was launched as a bilateral trading solution supported by Bank of America Merrill Lynch, Citi, Commerzbank, Goldman Sachs, HSBC and JP Morgan using technology provided by smartTrade. This service has a very different model. It provides connectivity to multiple liquidity providers and displays their pricing to clients through a single API. It allows clients to choose their liquidity provider and route directed orders through a single connection. Participating clients must have a direct relationship with one or more desired liquidity providers. FX SpotStream is hosted in Equinix NY2 and London and will soon open in Tokyo. It does not charge a brokerage fee for the service.
Stay tuned…
In the coming weeks, we’ll aggregate a list of all the single bank platform launches and technology refreshes. Big banks are investing very heavily in their FX infrastructure. In addition, we’ll report on all the TCA products being launched to help the buyside get a better handle on this very opaque asset class.
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5 Comments to "Is FX Hot? The Marketplace Says Yes":
jeley
25 June 2012
Great post. Why do you think these are all launching now? Coincidence or is there some catalyst?
Comments (8)
candyce
25 June 2012
Hi John,
I think that FX is hot because that's where banks are able to profit right now. As you know, investment generally goes to the asset classes that are making money.
FX is a heavily fragmented market with very little transparency. Many of the new platforms are offering an aggregation service, which should help their customers gain access to better pricing, deeper liquidity and better transparency. But in some ways, I suspect that having so many platforms launch in such a short time probably adds confusion for the buyside. (two more platforms were announced after I published my original blog post last week!)
The growth in electronic trading in FX has been explosive over the last few years. Analysts estimate that over 60% of spot FX trading is now being done electronically. But that still gives room for growth in electronic trading. Additionally, regulation is starting to enter the picture, particularly concerning swaps. This is creating new opportunity for banks and vendors alike as we’re required to move swap trading away from the voice trader and onto an exchange.
This market is still dominated by traditional players who are trading FX to support other business (e.g., multinational corporates doing FX trades to support global transactions or hedging currency and interest rate exposure). This creates lots of opportunity for organizations that want to use FX as an investment vehicle and for HFTs who find the lack of transparency attractive for their strategies.
Comments (28)
Anonymous
25 June 2012
Do you have any opinion on how these new offers compare or compete with electronic platforms like ICAP's EBS?
candyce
26 June 2012
In the case of TraFXPure, I think the objective is for the banks to create an alternative to EBS. MoltenMarkets is deliberately trying to provide a venue for HFTs while other venues are trying to create speed bumps to prevent HFT interference. In most cases, the banks are looking for more options to capture liquidity and serve customers outside the primary markets.
Comments (28)
Anonymous
02 July 2012
Very interesting post Candyce
With FX being a market with average daily volume of over $4trn - I guess we might whether the FX market is fragmented - relative to other asset classes with lower ADV, even with these new FX entrants
One other observation - it seems that almost every venue has a subtly different connectivity protocol - as a strong advocate of standards, it never ceases to amaze me how many different messaging formats, execution workflows and operating practices still apply - for sell side and buy side greater consistency across venues might facilitate connectivity in this "fragmented" market