Nicholas Pratt
Nicholas Pratt

Liquidity, Independence, Analytics and Transparency - Why some Institutional FX ECNs still stand out from the crowd

Nicholas Pratt explores why Institutional FX ECNs are appealing to increasing numbers of trading firms many of whom value anonymity, low-latency and the ability to use special order types.

First Published: e-Forex Magazine 79 / FX e-Commerce and Platforms / December, 2017

In 2015 it was widely considered that FX electronic communication networks (ECNs) were in a sweet spot. The apparent ease of trading offered by ECNs was cited as a crucial contributor to the growth in FX market turnover during the last decade to the plus $5 trillion traded every day. The potential for FX ECNs was seemingly spotted back in 2012 when an unprecedented number of new FX ECNs or trading platforms were launched. Depending on your definition of an ECN, there were as many as eight debuted in the opening half of 2012. The attraction of an ECN is easy to see – primarily there is the independence and flexibility compared to a single dealer or counterparty, an advantage that was all the more apparent following the SNB crash in January 2015. Others will cite the depth of order book on an ECN, the multiple order types, the customised liquidity pools and the trading anonymity. And then there is the technology. By using an ECN, FX traders can get access to deep and diverse liquidity, aggregation and...continued

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