Nicholas Pratt
Nicholas Pratt

FX Liquidity Aggregation An old concept with a new face

Nicholas Pratt looks at the efforts of liquidity aggregation providers to develop innovative features and the importance of long term relationships between liquidity providers and takers.

First Published: e-Forex Magazine 53 / Liquidity Management / July, 2013

Liquidity aggregation has become a staple feature of the FX market, and for some people it has developed almost to the point of commodity-status where it is difficult to think of new ways to differentiate one service from another. Yet for others FX liquidity aggregation remains a complex and technically challenging undertaking in an increasingly fragmented marketplace which continues to see a proliferation of trading venues. “Liquidity aggregation was complex in the past and will continue to be complex in the future,” says Ralf Behnstedt, chief executive and managing partner of FXArchitects, a consultancy company specialized in design, development and implementation of Foreign Exchange related business models. The original appeal of liquidity aggregation was obvious, says Behnstedt. It gave banks the opportunity to broaden the spectrum of offered currency pairs, increase trading revenues and manage risk based on the best bid offer price. Furthermore, for the many banks that did not have...continued

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